Zoning out to the local news last night I was snapped back into reality as the reporter stated the latest economic prediction: the recession will last into 2010 and that unemployment rates will sit around 7.5% next year. It seems like awfully dismal news. In fact aren’t we trying to boost our moral right now? I am sure you have noticed the early holiday season beginning mid-October, the declining gas prices (thank you OPEC- for fueling our addiction to your oil!) and not to mention the constant parade of financial advisors still encouraging to invest; buy low, sell high. But how am I supposed to buy low when I have no money to spend?

It’s not that long ago those experts were trying to explain this financial crisis we are in. While I have had my fill of CNN experts and Financial Analysis’ jumbled messages blaming the housing industry, the banking industry and countless others, I have found some clarity. It is a refreshingly simple video that explains the “Mortgage Banking Meltdown.” Colorful, descriptive graphics relay a complex issue with simple narration in under 3 minutes. I found that the few minutes it took to watch this video did a much better job than three plus months of news anchor chat.

Beyond explaining one of the reasons behind our financial woes this video evokes a powerful question for the housing industry:

What will the Broker’s do?

The video shows how Brokers profit from the one-time fees associated with obtaining a mortgage. This trend became highly popular due to its high profitability rates for Brokers. Who can blame them; it’s capitalism at its best. Yet, it is clear, through the current situation that these practices are going to have to change. Enter: the big question. instead of talking about it, I’ll let you watch the video below. They do a much better job of explaining it than I would - that’s why i’m here writing about it! 

Prediction 2009: Banks who have been trashed by the sub-prime mortgage era will raise expectations for Brokerages handing out their mortgages. Brokers are going to have to be more careful as to who they approve. Buyers will truly have to be credit worthy. If we’re lucky some affordable housing might develop out of this mess because that is what we really need. If unqualified buyers hadn’t been approved for houses that are way above their reach, there might be a smaller mess to clean up. But that is a whole other topic…

So is this transformation a bad thing? Probably not. But it is like taking three steps forward and now five steps back. It may be slow for a while but it will straighten out. There is light at the end of the tunnel.

Make sure and watch the video. You know it got me talking, but I want to know what you think.