SAN FRANCISCO — At a conference marred by protesters and poor attendance, U.S. home lenders gathered grim-faced over the last three days to take stock of a once high-flying industry battered by a record housing downturn.
The easy-to-get subprime mortgages that helped drive home prices higher during a five-year boom have all but vanished while sinking property values and rising foreclosures have wiped out many of the companies that would typically have been prominent at this week's Mortgage Bankers Association meeting.
Attendance was half of last year's 4,000, according to industry publication Inside Mortgage Finance, and many vendors this week said the mood has never been so glum.
“Everyone is sitting around the booths twiddling their thumbs. This is the worst, and I have been coming to these since 1985,” said Barry Malone, a sales executive for a mortgage software provider called Financial Industry Computer Systems.
When the MBA last held its annual conference in San Francisco three years ago, one in five home loans were subprime and that mortgage market was valued at $625-billion (U.S.). Subprime mortgage kings such as Countrywide chief Angelo Mozilo could attract thousands when he would speak at an MBA event during the industry's boom years.
Countrywide has vanished along with dozens of subprime specialists. The crash that wiped out that high-risk business has sucked much life out of the conference.
“A whole sector of the business is gone. If people aren't making loans, they aren't getting flood insurance, title searches, credit checks,” said Bryan Horn, a salesperson for DataVerify which runs checks on potential home buyers.
This week, key industry panels were not led by flashy mortgage entrepreneurs but no-nonsense government officials who now manage nearly the entire mortgage industry.
Fannie Mae and Freddie Mac are still the two largest U.S. sources of housing finance but regulators seized the firms early last month.
Conservative loans guaranteed by the Federal Housing Administration that were shunned during the housing boom are now the bread and butter business for many mortgage companies.
“If you told someone two years ago that FHA would be doing this much business they would laugh in your face,” said Mr. Horn.
As in past years, the gathering featured popular entertainment and marquis speakers such as Karl Rove, the former adviser to President George W. Bush. The uplifting music often preceded a grim message and special guests were the target of angry protesters.
“Well, we're certainly not in Kansas any more, Toto,” John Courson, the new president of the Mortgage Bankers Association told attendees as upbeat intro music faded at the opening session of his conference.
“This is my 50th year and I have never, ever seen a tornado like this,” he said.
Mr. Courson has more on his mind than the general woes of the industry since his trade association is seeing its membership dwindle just as it occupies its newly built Washington headquarters.
“That decision was made, obviously, in a different climate, a different real estate climate than we see today,” Mr. Courson said of the MBA's purchase of its headquarters that is currently about two-thirds vacant and eager for tenants.
“But this association has been around 95 years. We are not going away,” he said in an interview with Reuters.
On the opening day of the conference, protesters carrying placards denouncing the government's banking bailout marched around the front of San Francisco's Moscone Centre.
During the opening session, one protester casually walked up to the stage where the chief executives of Fannie Mae and Freddie Mac were speaking with the companies' main regulator.
“On behalf of the public, I have a question,” the woman said, beseeching the executives to help a woman in Northern Virginia facing foreclosure.
On Tuesday, several protesters sneaked past security to cat-call during a panel discussion featuring Mr. Rove.
“We've been beaten up for the last two years,” said David Kittle, the incoming MBA chairman. “Still, the mortgage market has never closed down and we are making better loans now that we have made in 15 years.”
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