Mortgage Scene: A Weak Economic Recovery: Good News for Lenders?(Brief Article)

By now you've heard the scintillating news that the U.S. economy has turned the corner and the worst is behind us. And if you believe that, I have some Enron shares I'd like to sell you .

Yes, maybe the economy is turning, but if you're banking on a return to soaring stock prices and really low unemployment, as they say on 'The Sopranos': fuhgeddaboutit!

Analysts and historians who study economic trends and the stock market tend to believe that the past is prelude - that whatever's ahead of us has already occurred somewhere in history. But I tend to think that, no, it's a whole new ball game and that normal growth may not return for several years. (Think of Japan, but not as bad.)

If you're a mortgage banker you may think that my prediction is not good news for this industry, but actually, a slow economy, one in which there is growth, albeit anemic growth, may be the best operating environment for many.

Here's why: when rates rise and fall dramatically, some firms make a ton of money, but a whole lot more get hammered. But when rates are fairly stable, even less-than-terrific interest rate managers can earn a living.

Still, the key to success in mortgage banking - going forward - will reward firms that can manage their rate risk and that know how to market to their customer base, regardless of whether those customers are consumers or other mortgage bankers. This is good news for excellent marketers like Countrywide, Citicorp, GMAC, Freddie Mac, WaMu (and many others), but bad news for firms like Household Finance.

The current low-rate environment is not likely to change any time soon. The Federal Reserve may be done cutting rates, but one thing's for certain: there is no way in hell the Fed is going to ...