Why not try rural housing? There's another government loan program targeted at rural America that's worth a look for originators facing a slowdown. Here's a first-hand account from someone who is a big fan of the program

Mortgage Banking, Feb, 2004 by Tony Evans

I'VE BEEN IN THE MORTGAGE LENDING BUSIness for 27 years. I've watched loan officers starve to death, declare bankruptcy with hardly anything to declare and borrow money from family and friends.

On the other hand, I've seen loan officers driving BMW sport coupes and living in beach condos with underground parking. These people, however, are few and far between.

If you are or ever were one of those eating out of a tin can at dinnertime, you could have survived--prospered even--had you known about a mortgage program that has more than $500 million in the kitty to hand out each year in all 50 states. Some states get more, some get less, but every state gets a share.

Are you one of those dreamers looking to originate a loan on that million-dollar property and counting your money before the ink is dry? Wrong idea, wrong direction.

Years ago I was one of those floundering around, going to the same real estate offices with a dozen donuts and interest-rate fliers tucked under my arm. Then, quite by accident, I attended a loan seminar in Santa Barbara, California, if for no other reason than it was free and I had nothing better to do.

Hundreds of millionaire wannabes huddled in the lobby of this beach hotel with smiles, briefcases and a fist full of business cards. But, strangely enough, fate had a hand in directing me to another doorway down a deserted hallway, where a seminar was just beginning.

The placard taped to the door read: "Welcome to the USDA Rural Housing Guaranteed Loan Program Seminar."

Upon entering, I noticed a lot of empty chairs. I was one of eight in attendance. I wasn't sure this was where I wanted to be, but sat down quickly so as to not embarrass the two people conducting business on a small stage. I was handed a brochure, and after 10 minutes of listening and glancing at the brochure I knew I was onto something different--something "hot."

That was 13 years ago. What was hot then is still hot. This particular loan program works like a charm. The money rolls in during good times and, better yet, even when so-called bad times arrive. Which leads me to ask: What are your origination plans when the refi euphoria packs it in and interest rates stabilize?

To get into this arena where the competition is scarce, first you must be a lender to qualify. There is another way to circumvent not using your ware-house line, but I'll get to that in a moment. Right now, here is some guidance for you to consider.

* Step 1: If you're a mortgage banker, you already (by state law) have a banking license.

* Step 2: You need to get licensed and approved by your state Rural Housing Division (RHS)--U.S. Department of Agriculture (USDA). The application is only two pages long, the procedure is simple and it takes about three weeks to get on board.

* Step 3: I suggest getting on the approval list with a lender such as Chase Manhattan Mortgage Corporation's Wholesale Division, Deerfield Beach, Florida, or some other lender that participates in this program. Chase Manhattan's Wholesale Division is one of the secondary market purchasers of Rural Housing Guaranteed loans, and pays attractive rebates to lenders via pricing and service-release premiums. More on that coming up.

Assuming you have completed steps 1, 2 and 3, you're set to go--except for a few other important issues: Where are the borrowers going to come from, and who in your office is going to package the loan for submission to RHS for the guarantee certificate and Chase Manhattan for the purchase?

Maybe, in your case, borrowers are not the problem--but believe me, packaging the loan correctly will be. It took me a while to get used to the program's special requirements, because it is a bit complicated, but once you get the hang of it you'll find the loan program is the best thing to hit your office in a long time.

Now let's talk about the financial perspective of using the RHS' no-money-down and no-mortgage-insurance program. This is just an example:

* $125,000 loan amount/sales price (both the same)

* Interest rate: 6 percent, 30-year fixed

* Origination fee: 1 percent of loan amount ($1,250)

* Pricing and service release premium (SRP) rebates based on a free 30-day lock

Pricing rebates from Chase Manhattan's Whole-sale Division and others that purchase the Rural Housing Guaranteed Loan product are attractive, and can make up much more of your income just on a single loan. Service-release premiums are higher in some less-populated and rural states in the United States. It's possible that you could make more money on just one Rural Housing Guaranteed loan than you would on any other product on the market. It's not uncommon to show a profit of more than $6,000 on a $100,000 loan.

And here's the best part of the RHS loan program--the benefits for borrowers. Compare these features with your other loan programs.

* No money down--100 percent financing

* No mortgage insurance required--not ever

* Thirty-year fixed rates with no loan limits (some income limits apply)

* New or existing homes accepted