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I have been part of the mortgage banking industry since 1983 — 39 years to date through different housing markets. And while my more recent roles were more senior in stature, my mind tends to think like I did when I was a top loan originator in Denver back in the very beginning.

In fact, it was the skills I developed selling loans that helped develop my ability to influence policy leaders and others in industry during my time as Federal Housing Commissioner and as CEO of the Mortgage Bankers Association. Selling loans or influencing policy leaders is nothing more than selling an idea and providing the leadership so that other people will agree.

So when I talk to loan originators today, I harken back to my early days when fixed mortgage rates were over 14% and there were absolutely no refinances to be had. In many ways it was similar to today, with one exception: When I started, I hadn’t been spoiled by a housing market like the one in 2020 and 2021. I hadn’t been fed refinance volumes the likes of which had never before been seen in the US.

Frankly, I think the Federal Reserve over-shot the market and as a result it did a huge disservice to the U.S. economy, especially the mortgage and housing sector.

It created a massive demand for home purchases as consumers competed to win a sales contract and get a home with a low single digit interest rate. It resulted in outrageous house price appreciation of approximately 34% nationally in just a two-year period. It boxed out many first-time homebuyers who found themselves unable to compete against buyers willing to place a non-contingent offer above full price.

But what’s worse is that the Federal Reserve, along with the stimulus legislation provided by Congress in response to covid, put an excessive amount of spending power (cash) in the hands of consumers.

The spending spree caught an entire nation off guard as it was underprepared to support the massive demand for goods and services. Supply chain shortages, many of which remain still today, meant that everything from new cars to basic random length lumber costs skyrocketed.

The nation, exhausted with two years of cabin fever due to covid, began traveling literally everywhere all at once. The subsequent shortages in labor to staff airports, airlines, hotels, restaurants, and more drove prices up and availability down.

For mortgage lenders, the result is akin to having an all-night binger in college only to be faced with a horrific hangover the next day. It means a massive contraction in demand for mortgages, tighter margins, corporate layoffs and “right-sizing,” and concerns about what the future may hold.