At the start of the week, the Mortgage Bankers Association conference in San Francisco was overrun with angry protestors. “Jail them, don’t bail them” they shouted as beleaguered mortgage professionals rushed into the event.
Things came to a head when Karl Rove, former deputy chief of staff to George W. Bush was almost handcuffed by protestors at the convention, an attempted citizen’s arrest for “treason”.
And then today it was reported in the New York Times that several hedge fund managers are set to take action against mortgage lenders who ease lending criteria on mortgages that are facing default. The managers say that a mass easing of criteria will be detrimental to their mortgage-backed securities.
William Frey, the president of one of the funds, Greenwich Financial Services, told the paper that he was acting to protect the firm’s investments. “Any investor in mortgage-backed securities has the right to insist that their contract be enforced,” he said.
So the US mortgage world is facing attacks and criticism on both the professional and public front. But will this sentiment reach our waters?
On a public front, the UK mortgage industry isn’t exactly the top of the nation’s Christmas card list. The FSA has banned 21 brokers in 2008, and the Government has had to bail-out mortgage lenders with £37bn of taxpayers’ money. The whole industry has been painted black.
So could we see demonstrations at upcoming mortgage events? Will protestors try and arrest Darling or Brown?
And what about a professional lash back? Could our Government’s desire to help troubled mortgage holders be a disaster to our securitised markets? What will an easing of criteria mean to our institutions who hold securities?
We can’t say how angry public and professional Brits will become as the year comes to an end. Repossessions will continue to rise, redundancies too and people are looking at a bleak winter as the markets remain frozen. So who do they blame? The mortgage industry might not have to look far for an answer.
How can the mortgage world protect itself? By sticking together.
Advisers and lenders, who will continue to come under fire well into 2009, need to show a united front. Any mudslinging must be abated until times are better.
If we are going to be pelted by rotten fruit from the stocks, we need to stand side by side and stick up for the good quality, valued advice the majority of brokers have always given to their clients.