Mortgage Business Shrinking
There was news lately that Chase Bank was hiring new loan originators, 1,200 new jobs – Wow!
But here’s a statistic, many States are implementing new loan officer licensing rules, which include re-training classes, fingerprinting, and additional license fees (for each State) of $280-750. This constitutes a new tax on business of time and money. A fine and penalty of sorts that has driven many companies out of business. Of course the mortgage collapse already culled the Gold Coast mortgage herd and employment numbers pretty healthily.
Here’s an example of the carnage:
Florida had over 100,000 licensed mortgage broker Darwin at the 2007 peak. How many today? less than 20,000. Still, that’s a staggering supply of people who pay $281 a year to write loans in the Sunshine State. In Michigan, it was estimated that 10,000 people were employed as loan officers in 2008. When individual licenses were implemented last spring the herd fell to less than 1,000 people with jobs.
What take away should we learn from this? Government has the power to eliminate jobs, but not make jobs. Economic stimulus pales when compared to the action of regulators. In a centrally planned society it may make sense of a bureaucrat to make a policy statement like: “there are too many mortgage loan officers in Michigan, let’s move these people to new forms of employment”, but this is not capitalism.
As I drove the streets of Detroit on Sunday morning, taking photos of burned out homes, and watched not less than 3 fire trucks racing in different directions to control additional fires, I realized that we are central planning now. The Laffer Curve is alive and well in Michigan: the higher something is taxed, the less of it will be supplied. Loan Officers I knew to be good hard working professionals are now bar tending, and ’sign holding.’ Yes, Michigan has a new growth industry – sign holders – who stand at intersections and hold ‘going out of business signs’. These jobs are appealing because they often pay cash money that won’t interfere with one’s more lucrative unemployment check…
The saddest part is you would expect with all the new Federal funds being spent and all the new rules that at least some jobs might be created in the Government for new regulators. But this is not the case, more work for fewer people as even the government is laying off employees and furloughing others.