TheMReport — News and strategies for the evolving mortgage marketplace.
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feature Tools of the Trade Tracking the latest data is integral to a company's success, but deciphering which tool will work best for the organization can be overwhelming to even the savviest leader. By Phil Britt T hough the real estate recovery is slow when taken on a national basis, the price trends in different local markets are quite different, running from stagnant to quick. For example, prices in the San Jose, California, market were up 3.2 percent and up 2.8 percent in San Francisco, while Hartford, Connecticut, showed a decline of 0.4 percent in February, according to the home price index from Lender Processing Services (LPS). The local trends themselves may not be immediately recognizable and can shift subtly. "Lenders need to know the trends so that they can underwrite loans properly," said Gary Painter, research director of the Lusk Center for Real Estate at the University of Southern California. "It's more important to know this when the market is going down than when it is going up. The markets always move faster on the downside than the upside." In lending, as well as any other business, it also essential to recognize when a market has hit an inflection point and has started to move in a different direction than it had been, Painter added. As such, it is critical that lenders and investors recognize market trends and tread carefully in an area that has yet to hit bottom. Just as important, they don't want to miss out on participating in a mortgage market that is stabilizing or appreciating. If they recognize trends quicker than their peers, lenders can earn additional profits, or do a better job of cutting losses. Painter cautioned that the difference should be weighed against the cost of technologies that provide this information. Lenders and investors in lenders' securities, it seems, largely see the quicker, better information well worth the investment. To properly track market trends, lenders are using the newest tools provided from companies like LPS, RiskSpan, and RealtyTrac. The M Report | 27