A year of market turmoil sets stage for a year of leadership.

When I reflect on 2007, I am struck by the irony of the most challenging year our industry has faced in quite some time.

From an economic perspective, it was a year in which our collective financials suffered from house-price depreciation and rising foreclosures, among other factors. As a result, confidence from capital-markets investors eroded, and liquidity, subsequently, became constrained. In short, 2007 was a tough year.

However, 2007 gave our industry an opportunity to lead by underscoring the need to have all lenders and originators fairly and responsibly make homeownership available to and sustairiable for consumers across America. The path we choose to follow to capture this opportunity will largely determine our industry's future for years to come.

In a free-market economy, buyers and sellers--with regulatory oversight--are expected to act responsibly for their mutual benefit. When this behavior breaks down, only two corrective courses of action exist: industry participants must assume accountability and respond appropriately, or the government intervenes with protective regulations and legislation.

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Our industry has been challenged to think beyond narrow self-interests, consider what is right and step up to the plate to help consumers while also safeguarding investor interests. Achieving this balance is crucial to encourage global capital-markets investors to continue to fuel real estate lending for a wide spectrum of Americans over the long term.

Early in 2007, the American Securitization Forum (ASF), New York, provided guidance on effectively modifying loans in a way that could still honor the contractual obligations inherent to investor agreements. This guidance accelerated servicer activity in developing case-by-case solutions for at-risk consumers, considering their personal financial circumstances and honoring investors' contractual requirements.

In an effort to connect with customers, a number of mortgage servicers reached out to their customers months in advance of adjustable-rate mortgage (ARM) resets, set up dedicated teams of experts skilled in finding solutions for consumers and provided additional toll-free numbers to make contact easier. Despite these efforts, industry statistics still showed that more than half of customers in foreclosure had never contacted their servicers.

Enter HOPE NOW. This alliance, formed in October, harnesses the strengths of mortgage servicers, not-for-profit counselors, capital-markets investors and the power of the U.S. government to help at-risk consumers. HOPE NOW seeks to encourage customer contact with either the mortgage servicers or a not-for-profit counselor. Further, the HOPE NOW initiative will improve the working relationships between servicer and counselor for the benefit of the customer.

By the end of December 2007, the HOPE NOW alliance--through its membership--had access to nine out of every 10 consumers in America who have a subprime ARM, had mailed more than 490,000 letters to at-risk borrowers and rolled out a new pilot technology platform to strengthen the work process of servicers and counselors.

In addition to the formation of the alliance, U.S. Treasury Secretary Henry Paulson also engaged in an effort to encourage further collaboration between the public and private sectors. The focus was on developing a "fast-track" process that would more quickly enable consumers to get a refinance or loan modification. While a half-million consumers had already paid off or refinanced their subprime ARM loans in 2007, another 1.8 million homeowners have loans scheduled to reset by the end of 2009. This impending volume drove the need to develop a quick-response process to help a large number of consumers who have managed their existing mortgage payments well, and are simply caught in the current whirlwind of market forces.

For the approximately 1.2 million consumers in this group who had shown they can and want to maintain a relatively clean payment history, here's how the "fast-track" process works:

* First, the servicer determines if the consumer qualifies for a refinance under loan programs and credit standards that exist today, including the Federal Housing Administration's (FHA's) FHA Secure program.

* If the consumer does not qualify and it's determined he or she will likely not be able to manage the higher ARM interest rate, the consumer is offered a five-year extension of the existing interest rate.

* As a final step, in all cases, if the consumer does not qualify for a fast-track solution, the more detailed case-by-case modification process is still available. Sadly, this last action--the continued availability of the step-by-step approach--is often ignored in the media, but continues to be a primary tool to try to help every consumer.

By consistently following these steps, our industry will make the most of every interaction with consumers in need, keep them in their homes whenever possible and consider foreclosure only as an absolute last resort.

The fast-track process is possible because of the American Securitization Forum's great work to standardize requirements. This allows all servicers to pre-screen their customer base and customize process steps even before contact with the customer occurs. And while not a permanent solution, the fast-track solution will help families buy time to remain in their homes at a monthly payment amount they have shown they can manage. It also buys time for the housing market to stabilize and for lenders to make more refinancing options available to these consumers. Further, servicers that apply these principles can channel more time and energy to case-by-case reviews of consumers who, today, are not able to manage their existing payments.

These efforts show that by working together at a national level, our industry, the government, capital-markets investors and not-for-profit credit-counseling agencies can help more people find sustainable ways to remain in their homes. In each of these solutions, the balance between consumer and investor needs remains paramount; the industry has not required legislation to inspire appropriate actions. Effective action by lenders and servicers should go a long way to put our industry on solid footing in the years ahead.

The real work begins this year. We must successfully execute the changes we introduced in 2007 to help at-risk consumers find viable solutions to avoid foreclosure. Effective collaboration between the public and private sectors should avoid the risk of undesired outcomes--one of which is legislation that fails to support the best interests of our customers, our industry or the overall health of the economy. It's up to us as an industry to respond in the right fashion, and Wells Fargo looks forward to ongoing collaboration with you. The industry has a real opportunity to lead in 2008; it is up to each of us to decide how.

Michael J. Heid is co-president of Wells Fargo Home Mortgage in Des Moines, Iowa.