Adam Madorsky posted the following on August 6, 2007 at 9:44 am.

I think it is going to get worse before it gets better - I recently left the Wholesale Marketplace where I have made a very good living for the last 11 years in favor of the Retail Market where I recently hung my own shingle. It is a very competitive market place which is good for the consumer and obviously bad for those of us in the business. Those of us with a good understanding of the business and the marketplace will survive. I heard the other day that 48,000 mortgage professionals (some yes some no) have been laid off since late 2006. It is interesting that while the secondary market has currently lost its appetite for Asset and Mortgage backed securities, that treasuries have not benefited more. One would think that the institutional investors that would normally use this paper to boost yields in pension funds, money market funds and the like would flock to govies - that money needs to go somewhere, right?. Last week the economic news was very bond friendly and we did not see commensurate rate improvements in treasuries and therefore conforming products. Now, more than ever, it is important to have a good understanding of Agency Product to be able to offer our client base options that FNMA / FHMLC offers with doc waivers and so forth. The disappearance of the 80/20 has made it necessary to rely on MCM and Home Possible product - even down to the EA1 which offer great terms relative to the Alt A and Sub-Prime options. Recent tax advantages regarding MI and Reduced MI rates for the above products also make these conforming options attractive to those who are down payment challenged (not to mention expanded / generous ratios). At some point the decrease in housing demand and therefore slump in housing prices coupled with a relatively attractive interest rate climate will stabilize at a level where prices are affordable for traditional doc level consumers. In other words, things will return to the way they used to be. People will buy homes that they can afford. The advent of the high LTV stated products with little or no asset requirements has helped fuel artificial demand in the housing market, raising home prices. I say artificial meaning that this is a market segment that was previously unable to participate in the market place due to income and asset requirements. In the meantime, the mortgage industry will shrink to a level that can service the reduced demand. So tighten your belts – This may last a while.