09/09/2026
One of the hardest things about running a mortgage company is to resist bringing on new people during the good times to handle all of the new loan volume. When the market slows, the hiring of these new people will be your downfall.
"But George, I can just lay off my new loan processors and underwriters when the market slows." Unless you're a psychopath, you develop a personal relationship with your loyal employees. You won't lay them off in time to save your company.
What happens is that a mortgage company owner, especially the ones without loan servicing income, will quickly lose a ton of money in the first three to four months of a slowdown. After four months, they are deep in debt, and they they will have quickly exhausted their personal savings. Invariably, they are forced to close their company.
Remember, this is old man Blackburne. My tiny company has survived for 46 years. We survived the S&L Crisis. We survived Dot-Com Meltdown. We survived the Great Recession. In our 46 years, we have seen on the order of 10,000 mortgage companies open and eventually fail. Ten thousand! Even Countrywide.
Blackburne & Sons survived because we stayed tiny. Because we are tiny, our overhead is low. We can survive by closing just a handful of deals. If the total market for small commercial hard money loans contracted from 12,000 commercial deals per year to just 1,000 deals, it didn't matter. We just needed sixty closings per year to stay open.
It's like what your mother would say when you got your heart broken by some girl. There is always another trolly-girl-real-estate-crash coming down the track. For your company to survive, keep your staff small.
It has been 18 long years since the last big real estate crash. The next real estate crash is likely to be a doozy. So keep your staff small. Go ahead and lose a ton of deals because you lacked the staff to process them. [Some people crave money so badly that they just can't leave money on the table.]
Blackburne and Sons is hungry for small, remote, and unusual commercial deals. We quoted a hypothecation this month, which is a loan against an existing mortgage. Our customer was buying a note from a bank that was in default. We were happy to offer him a loan to finance part of the note purchase. https://hubs.la/Q04wDYnH0