In This Industry Downturn, Adapt or Get Out.

In a recent interview, MILA CEO and founder Layne Sapp summed up the current state of the industry best, saying, "Some of us are staying up late at night wondering what we're going to do next."

In a moment of candor, Mr. Sapp seemed worried but then he snapped out of it. When asked about declining loan volumes, tight profits and how his young nonconforming firm was going to survive (and thrive) in the quarters ahead, he had an answer: move into new markets, utilize state-of-the art technology, introduce new products and watch costs.

Over the past few months, MILA (like many firms) has trimmed its workforce. At the same time it's looking at new opportunities by expanding into the Southeast and then the Northeast using AEs and loan brokers. Yes, the industry is facing troubling times, but that doesn't mean it should sit still, hunker down and do nothing.

If lenders and servicers do nothing, they most assuredly will be out of business. Let's face it, these are uncertain times. From the beginning of 2001 to the end of 2005, residential mortgage bankers funded an eye-popping $14.3 trillion in home mortgages, with refis running as high as 75% in some years.

With rates at historical lows, refis were only part of the picture. The purchase market has been on fire as well with new and existing home sales setting new records. But alas (as we all know), the party is over. And as Mr. Sapp pointed out, it's time to adapt - adapt or get out.

Mortgage banking has always been a boom or bust business. If you want to be polite, we can use the word cyclical. To many, especially to newcomers, it probably seemed as though the good times would last forever. But let's face it - did anyone really think the Federal Reserve would keep the overnight fed funds rate at 1% forever?

Long-term rates, historically speaking, are still at decent levels, and most importantly, the U.S. job picture looks quite good with the unemployment rate at a very low 4.7%. There will be homebuyers out there and new mortgages to service - there just won't be as many as last year, which means the pigeons will be fighting for ...