My friend Rob Shulman, Esq**, owner of Mutual Abstract Corp in New York, New York, asked me that question this morning.

What does that mean?

     â€œIn coal mines, where poisonous coal gas released from the earth during the mining operation is a risk to the workers, they used to use canaries to warn the miners of impending danger.

Since canaries are more sensitive to the noxious vapor, and will die of exposure before a human, the miners would take them in little cages down into the mine shaft.If the canary died, it was time to get the miners out. “

     Was American Home Mortgage the first canary in the mortgage industry? Perhaps, it was New Century Mortgage, Thornburg Mortgage, Greenpoint Mortgage, First Magnus, National City Mortgage, Accredited Home, Countrywide Mortgage, Trump Mortgage (that’s a laugh!)….need I go on. I can think of a few more that might be slamming the doors soon, but am afraid to mention them in writing.

     I must say this is all very sad because it is the good guys and the solid borrowers who are suffering the most. On the good side, the dead beats and the dead wood are getting weeded out faster than the dandelions in my front lawn, but the roses are being cut too soon.

     My best lenders are being roped into the mess and are eliminating loan programs that they cannot sell to Wall Street.Good loans for good people are not closing and are not being funded! Why is this happening and for how long? It is happening because of greed on Wall Street and it can take a very long time to hit rock bottom.I think there are still many more lenders who will not be able to hang on for much longer. Many lenders have only enough money to last a few months and need to sell mortgage portfolios to raise more money to lend out again.If they cannot sell these loan pools, then they cannot make more loans.If they cannot make more loans, they cannot raise more capital and so on.

     The problems arising now are: people are losing jobs and affiliate industries such as appraisers, title companies, contractors, moving companies and others are being affected. When an industry goes out, there is a spider affect into other industries.

How many canaries need to die before this is over?Sadly, many more……..

-Dale Siegel

** Rob Shulman is the owner of Mutual Abstract Corporation The Company has been the major coop lien search provider in metropolitan area since 1961 and has seen many strong years in the market.Rob has not seen a slowdown in business yet, but is anticipating a blip in activity due to market conditions. He is gearing up for a slowdown, but will not be a canary!!If you have any questions about the metro area market feel free to reach out to Rob at: rshulman@mutualabstract.com