Why Financial Reform Won't Work: Part 1

I have been ranting about financial reform legislation and how it won't work and will probably have horrible unintended consequences but before today, I didn't spell out why I feel that way.  Today, I decided to spell it out after I received a email from Barack Obama's people telling me to call Senator Grassley and convince him to vote for the combined bill.  The email came in with the subject of Urgent and claimed the legislation is the "boldest overhaul of the financial system since the Great Depression."  I like the use of the word boldest in this sentence because bold does not equate to intelligent, well designed, or effective.  Once, my co-blogger after drinking for twelve hours, stole a golf cart at a NASCAR race and proceeded to drive in small circles turning left and screaming, "Guess who I am?  I'm a NASCAR driver."  This was a bold move, one of his boldest.  It does not qualify as one of his most intelligent or positive moments and it could have landed him in jail.  Sometimes bold moves, while funny as hell, are not good ideas.

What I hate most about the legislation is the creation of a  Consumer Financial Protection Bureau.  You might wonder why I could hate something that sounds so innocuous and the answer lies with where it will be housed:  The Federal Reserve.  We are supposed to be comforted by the fact that it is an autonomous bureau with a single director.  Look, there is no independent agency or bureau in all of Washington D.C., I don't care what they are intended to be.  Furthermore, how autonomous were you when you lived under your parents roof?

The Federal Reserve is one of the 5 major players that created the crisis we find ourselves in and they have no business being anywhere near a bureau intended to protect consumers.  They fueled the crisis, failed to recognize it, and then sold consumers down the river in the bailout mess.  Putting a Consumer Protection Bureau there is like assigning lions to be security detail for gazelles.

Another key element of the package is regulatory control and accountability for the ratings agencies.  The problem with this is that the regulators have to understand what the agencies are doing and what the products are they are actually rating.  Half the instruments Wall Street are trading are so convoluted that people within the firms trading them don't know what they are.  How could a regulator possibly know what the ratings agencies are doing or what they are rating?  Someone smart enough to get it isn't going to work as a regulator, nope, they will go to work on Wall Street inventing new instruments of debt and new ways to sell it.  Don't even get me started on the corruption inherent in regulation anyway.


It's very simple; Consumers need to protect themselves.  If we have gotten so collectively stupid that we think the government can protect us than we are totally screwed as a nation.  The government couldn't protect us from September 11th, then the government created the conditions for the housing crisis, and I'm not sure if you noticed; the government can't fix the economy either.  The best the government can do to help the consumer is encourage financial education in the schools and mandate more economics courses for our students.  Even that won't solve the problem.  When people want to do stupid things (think NASCAR story above), they will find a way to do them. 


The email from Barack's people claimed that the bill would end the exploitation of the consumer by ending hidden fees and pages of small print.  The pages of small print you get with a loan application are there because of regulations, trust me when I say we would have preferred to not send you fifty pages of documents to get your loan approved.  If you think there is small print now, just wait.

The truth is, when I was a loan officer, my customers didn't read the disclosures I sent them.  They looked at two things:  their monthly payment and their closing costs.  They signed fifty pages of disclosures without reading them.  Most of my customers would get their loan package and call me and ask for the Cliff Notes, which I was more than happy to provide them.  If you really ever read a loan package and understood everything in it, you probably would not want to get a loan.  There is a clause in most loan documents that if you make any material changes to your home without notifying your mortgage company they can call the note due and demand full payoff.  How many people know that?  How many people know that and tell their mortgage company that they turned a bedroom into a stripper lounge?

I don't have the answers on how this gets better but I think it starts with us getting smarter, which is not too promising and quite frankly, makes me fear for the future.

But Wait...There is more....

This my follow up to Turd’s last entry…and I agree this blog is a complete clusterfuck. But clusterfuck’s make the world more interesting. What is the fun in everything running smoothly? The world would be a boring place and I don’t do well with boring.

The Barbie Doll's return basically annoyed me. Yes, there was fear and uncertainty about my future….but what really bothered me was that she was going to plop her Happy Ass down in my sanctuary….the Beach Office. This office had been my escape from the torture of sitting on Gilligan’s Island and being surrounded by the Mortgage Devil and his Minions. After spending that late fall, winter, and Spring in the Beach Office I had grown fond of The Edsel…he was like the Grandpa I didn’t have anymore. I was starting to warm to Turd (her passion for football was admirable) and life was a little more tolerable at the Beach Office.

Then…the Barbie came back. I knew she was going to take over this office and staff it with “her people” and I was going to be pushed out of there. I was certain that I was going to be left spending my days on the Island. This fear certainly wasn’t unfounded…I vividly remember being pushed to the back office at the Beach when The Barbie returned. A few days after she was re-hired, I slipped in the back door and went right to my office. Basically, no one knew I was there. I was unpacking my shit and getting myself set up for the day when I overheard the following conversation between the Barbie’s Husband aka The Controller and “her staff”:

“Her Staff” – I need my old office space back.

The Controller – We will get you whatever office you want.

“Her Staff” – But Turdy and A-Hole already have the office space we want.

The Controller – Doesn’t matter…they can go sit on the fucking balcony for all I care. This is our office now. Not theirs.

“Her Staff” - *school girl giggling*

So, yeah that was confirmation of what I already knew…I was heading back to Gilligan’s Island. I sat and stewed for about five minutes and then I stepped out the office and made a point to say “Hello” to everyone on “her staff” and The Controller. They all grew quiet and I left them wondering exactly how long I had been in the office. The Controller eventually asked how long I had been in the office…with my best poker face I gave a vague response of “ a little while”. I wanted him to wonder if I heard exactly the extent of an asshole he really could be.

Before the infamous meeting, I had more conversations with the Mortgage Devil than I had in…ohhhh, the past six months combined. It was a constant theme of “she will take business from us…we need to stay united against her and make her look bad…you need to keep me posted on everything you see or hear that she is doing for the sake of “our team”…" peppered in between that agenda were some personal remarks about her betraying him when she left the Bank of Hell the previous year. That part of the dialogue bordered on sounding like a scorned lover more than a competitive business concern…but I will leave that speculation for another day. The Mortgage Devil had done a good job of convincing me that my office space concern was trivial compared to the ramifications of her return on my future.

The day of the “Meeting” had arrived. I had steered clear of both offices that day and rolled into the Bank of Hell around noon to do some paperwork before this meeting. I got bored quickly and headed out for some lunch. When I came back I saw the Mortgage Devil was in his smaller office with his door closed. I couldn’t see who was with him, so I assumed it was the Douchebag from Josey Wales. Then I saw that the Douchebag was in the Enabler’s office…not the Mortgage Devil’s. So, I am thinking it must be a customer. I am on my phone and then I am summed in to the Mortgage Devil’s Big Office for the Big Meeting. As I hang up the phone, I see the door to the Little Office open and outcomes the Mortgage Devil and…THE BARBIE!! Son of a Bitch!!! They were having a meeting before our Big Meeting? My head was spinning….what the hell is going on? I walk into the meeting and we were blindsided as Turd mentioned earlier. I started to understand what Joe Theismann felt when Lawrence Taylor hit him blindside and snapped his leg. Well…not nearly as painful…but similar in the shock and surprise. Now I understood what the meeting between the Mortgage Devil and Barbie BEFORE our meeting was about...he was setting us up. FUCK!!!

Turd had no clue they had a meeting before our Big Meeting. She was already in the office where the meeting was to take place. Obviously, I had no chance to tell her about this little fact. The whole thing unraveled in about a 10 second span.

Well, Turd summed up the rest of the Big Meeting well in the previous entry so I don’t want to be redundant. But I will say that I…like Turd...was so pissed off by being mutually screwed that it drove us together and made us allies and friends forever.

Ohhh...and Turd...I was never invited to your Baby Shower. Apparently, the Mortgage Devil and his Minions lost my invitation before they had a chance to mail it to me. I never knew about it until after we left the Bank of Hell and you told me about it. So, you weren't snubbed...well at least not by me.

Me and A. Hole

This blog is a complete clusterfuck.  I swore it would be chronological but then I have used it as a platform to bitch about the consolidation of banking and the government's role in the housing crisis.  I have determined the format to be FUBAR and thus, I have decided today I will blog about what I feel like.  After all, this is my blog.

It is common knowledge that A.Hole and I were not friends at first sight.  The Barbie Doll's return prompted us to be friends because fear and uncertainty are powerful motivators.  I promised a month ago to blog about the infamous "Sitdown" that entrenched us as allies, but I didn't.  Check out The Bitch is Back if you don't know the back story.  I guess my check back tomorrow really meant, "Wander back in a month or so, I might or might not actually tell you what happened."

The Mortgage Devil called a meeting with his boss, a guy so salesman slick that every single time I saw him I was reminded of the scene in The Outlaw Josey Wales with the dude on the ferry who changed his tune depending on which side was on the raft.   The meeting is going to be with me, A. Hole, the Douchebag from Josey Wales, Barbie, and the Mortgage Devil.  For weeks the Mortgage Devil had been prepping us on all we should be upset about and vent to our superiors and he told us all the concerns he would raise at the meeting.  Let me be clear, when the Mortgage Devil called a meeting, I usually didn't attend.  On the rare occasions I did, I would stroll in late and look annoyed and spend the majority of the meeting fantasizing about being a pirate or being drunk at Happy Hour.    This meeting however, was important for my career.  Or at least that was the bullshit story I was fed.

I rolled in early and eight months pregnant, wearing a strapless dress as a skirt.  I was wearing a shirt, I swear.  The Barbie introduces herself and asks, "Wow, do you always look this great pregnant?"  I respond, "It is hard to say, this is only my second time."  She doesn't seem to be the dragon slayer I was expecting; in fact, she seems awfully nice and wanting to impress.  I find it hard to hate her during our small talk and now, I am confused.

Before the meeting the Mortgage Devil goes over the things he is concerned for us for and encourages A. Hole and I to tell the slick seersucker suit wearing asshole from Josey Wales everything he has said.  We walk into the most awkward meeting of all time.  The Barbie and The Devil haven't been in the same room for months.  There are rumors all around that the demise of their partnership was a sordid affair which led to her rapid departure and this fact is not lost on me or A.Hole as we sit down to face our future.

The meeting starts and the Mortgage Devil tells seersucker suit guy that his best loan officers have concerns.  A. Hole and I elucidate the concerns we have been fed by the Mortgage Devil and then wait for him to back us up, and we wait.  He gives his boss, Seersucker Carpetbagger, a glance that looks to be saying, "Look at these whiny bitches, you deal with it."  Here is where it goes awry.  Seersucker Carpet Bagger tells us in not so polite terms that we are in fact, whiny bitches, and we need to get on board.  He regales us with stories of loan officers who prosper in competitive markets and wonders why we suffer from such low self esteem that we would be threatened by Barbie's return.  The Barbie Doll seems hurt and defensive and reassures us that she wants life to be good for us and has no idea why would be worried about her hurting our business or happiness.  A. Hole and I are so floored we say nothing, which is an absolute oddity and a freaking miracle.  We endure a twenty minute lecture where our boss, the Mortgage Devil, nods his head at every critical thing the Seersucker Carpet Bagger tells us.  We have been thrown under the bus.  The Mortgage Devil set us up to look like whiny bitches and get shit off his chest and then turned coat on us and played Polly fucking Anna.  Surprising?  Nope.  Disappointing?  Hell Yes.

I get in my Volvo, the official car of libertarian loan officers, and immediately call A.Hole on his cell phone.  We are both furious and ranting and raving. A. Hole and I both realized we were completely set up and our higher ups now were laboring under the impression that we were scared little fear mongers with no competitive spirit.  The Mortgage Devil had slipped one by us and nothing is more painful than that.

I was so upset by the tongue lashing of the Seersucker Carpetbagger that I called my Operations Manager, the Enabler, and threatened to quit.  She reassured me that everything would be fine and that the Mortgage Devil was just trying to make things right by me and A. Hole.  Extremely pregnant, I realize I won't be fighting  this battle at the moment and so I stew.  I spend the last month of my pregnancy marketing and closing loans and on a Friday, send out a bunch of cold call letters to realtors touting my awesome abilities to get loans done at the Bank of Hell.

That Sunday, I give birth to my daughter.  But not before my operations manager holds a baby shower for me at the Bank of Hell where everyone hates me, or at least does a shitty job of pretending to be my friend.  A. Hole is not invited or he doesn't show up.  Wait a minute, why didn't you show up Fucker?  I digress....at said baby shower, the Mortgage Devil entertains us with stories of how he has missed almost all of his kid's firsts and great moments due to his commitment to the mortgage industry.  He goes on to tell stories of when he has mortified his kids in public because he is such an asshole.  I was miserable at my baby shower because the Mortgage Devil used it as a platform to talk all about him, as usual.

A.Hole and I became friends because of the Barbie and the extreme foulness of the Mortgage Devil, but when I returned from so called, "Maternity Leave", they put us in the cave together.  Big mistake, morons.  Big Mistake.  That is when the shit hit the fan.  Stay tuned, I may get around to that story tomorrow....or not.

I Hate Banks (But Not All Bankers)

While I wasn't alive during the Great Depression, my grandparents were and my father was born a few months before all hell broke loose in 1929.  My grandparents didn't trust banks much and mostly dealt in cash, rare was the occasion where you would get a check in the mail from them.  The institutional distrust of banking was strong in that generation and they told me things like, "Save your pennies."  My parents, slightly less influenced by the Great Depression, used banks as the times dictated and as their business required.  They didn't necessarily trust banks, they trusted their banker.  My parents would say things like, "Save your quarters."  They had a relationship with the bank through a real person whom they could go to when they needed to borrow money, open a savings account, or get advice on business matters.  A relationship with your banker is a relic like plastic covers on flowered davenports and doilies on all your tables. 

I went to a bank on purpose today, I mean actually INSIDE the bank.  I never do this.  I loathe banks so much that I am a drive through girl all the way and if I don't want to even see the drive through person, I use the ATM for most transactions.  Unfortunately, today I had to open a new account which cannot be done in the drive through.

As I am waiting in the lobby, I am experiencing symptoms of a panic attack.  I feel out of breath and my hands are shaking, meanwhile a wave of nausea passes over me.  So hideous was my time at the Bank of Hell that I cannot even sit in a bank and function like a normal human being.  I imagine that this is what an Ex-Con would feel like if they went back to visit a friend and were on the free side of the glass.  After a small wait, the Branch Manager comes out to help me.   I am going into (deep breath) a banker's office.

She is incredibly pleasant and is only helping me because her business bankers are working with other clients.  She keeps apologizing for the time it is taking her which is making me paranoid that federal agents are lurking outside and she is stalling.  I'm hoping my disdain for banks is not readily apparent and that she won't be alarmed by shiftiness and fidgeting or infer that it means I'm about to try and rob her vault.  When she discovers that I am an economist and former loan officer she wants to chat about all the nuances of the industry.  The worst thing she cites about her time as a loan officer are some adjustable rate mortgages she did and how customers would sometimes call her on the weekend.  I bite my tongue because the stuff I could tell her would shock the shit out of her.  I did tons of ARMS, pay options, liar's loans, and my customers called me virtually 24 hours a day.  While she mentions she didn't like the competitiveness of the mortgage side I refrain from having complete diarrhea of the mouth and unloading stories of the Mortgage Devil on her.

She was so pleasant and nice that I felt it necessary to point out here that I don't hate all bankers, even though I will throw a bank under the boss in virtually every blog.  I now have a neighbor who is a banker who appears normal and a number of friends who work in the banking and mortgage industry that seem like the kind of people to perform a random act of kindness.  What I don't like though are what happens in the collective of a bank and how the industry has evolved to the point where we don't have relationships with our banks and are increasingly dependent on a small number of banks for an ever increasing number of services.  Consolidation of power in that degree scares the crap out of me.

When I worked in the industry my arch rival (outside of my own boss) was Wells Fargo and its loan officers.  I detested Wells Fargo because it was our biggest competition and their refugee loan officers who became my colleagues described unfavorable working conditions.  Ironically, I now live 20 minutes from their headquarters and know a lot of their employees and I still refuse to bank there.

I have never understood Wells Fargo's apparent resiliency to this crisis and therefore, I have never bought it.  In fact, for years now I have been waiting for their controversy and their day in the Horrors of Banking Annals.  My theory is that they are the Enron of the industry now that Countrywide is defunct and by that I mean that I think their accounting practices must be similar to those of Enron.  I read articles where Wells Fargo's lack of exposure in the crisis is because of their conservative nature.  I don't recall this.  In fact, they had 125% equity lines, loan products for people without credit scores, and they underwrote a ton of Alt-A.  They were a major player in a lot of urban markets where predatory lending, fraud, and discrimination were rampant.  They were a major player west of the Mississippi where a ton of homeowners are underwater.  They were one of the biggest players in all of the loan products we have been told destroyed our economy.  How can they come out relatively unscathed?

Last week, a former Wells Fargo loan officer who got me into the business received a letter from the Department of Justice requesting her insight as they investigated the lending practices of Wells Fargo.  The next day, Wells Fargo announced that it was taking the ax to Wells Fargo Financial and cutting 3,800 jobs and closing down those branches.  They cited overlap ensuing from their forced merger with Wachovia.  I'm not buying it.  Wells Fargo Financial did personal loans, 9 months same as cash financing, and subprime loans.  How has his not impacted their larger financial picture before now?

Another "non-risky" lending practice affiliated with Wells Fargo is the lending of money to payday loan firms.  Wells Fargo is one of the largest players in this industry associated with predatory lending, discrimination, and oh yeah, risk. 

I have to wonder if we are going to find out that the Cinderella of the mortgage industry is really the ugly stepsister of Countrywide.  While I hope its not true for friends who work for the company, it is baffling to me that my biggest competitor while I was at two different huge companies has not had its equal share of distress.  TARP money they claimed they didn't need was given to them for a reason...

So, I do hate most Banks, especially the big ones, even though I recognize the purpose they serve and I have to admit, not all bankers are bad.  The runaway growth in bank size and services is dangerous for the economy and for the consumer.  The new regulations do nothing to solve this problem and like any government regulation, will create unintended consequences that make us vulnerable for another crisis.

Perhaps, my Grandparents had it right.  Save your money in a jar and don't buy anything you can't pay cash for.  Only sign up for an account because you really are blown away by the free toaster. 





 

Independence from the Myth of Homeownership

It is Independence Day and I have been contemplating whether it is time for us to collectively say we don't buy the myth of homeownership anymore and declare our independence from the fallacy.  Will we do this?  Of course not.

The government likes homeowners and for good reason.  Homeownership provides stability, a tax base, and makes people far less mobile than they otherwise might be.  All of this allows for easier governance and more far reaching impacts.  This isn't just a goal at the Federal level, municipal governments enjoy these benefits as well and are incredibly reliant upon homeowners as a means of survival.  This is why the government promotes homeownership and creates the propaganda we know as the "American Dream."

In 2001, I was invited to dinner at a small business owner's home.  The evening was pleasant at first, but when I made what I thought was an innocuous and indisputable observation, they turned on me.  The hideousness that came out of my mouth was, "Housing isn't always a good investment, the stock market outperforms housing over time.  People would be better off renting and investing their money in the market."  What had been a pleasant evening with food and wine turned into an absolute shitfest.  The couple, twice my age, looked at me like I had just declared that I was going to eat them with fava beans and chug a nice Chianti.  Actually, it was worse than that.  In heated voices, they provided me anecdotal evidence of how if they didn't own homes they never could have started their business.  I cried Bullshit.  At one point, the wife rolled her eyes at me and called me a naive child.  Then when I provided economic evidence for my argument, they called me Un-American.  Apparently providing statistical data supporting the fact the return on investment of the stock market is greater than that for housing is unpatriotic, who knew?  I lack the ability to back down from an argument and because I was so convinced I was right, I didn't shut my yapper and was never invited back to their home.  Their final argument as they shoved me out the door was that the dot-com bust proved me wrong.  Is there nowhere that I can hide from foreshadowing and irony?

So how did I go from arguing against homeownership to becoming a homeowner and then profiting from shoving other people into the same situation?  The answer is complicated but I think it was the combination of the propaganda post September 11th along with the recognition that the market was about to boom.  I bought my first house with the expectation that I would make a lot of money on the investment plus, I needed somewhere to live.  I never thought I would become a salesperson for the American Dream and there was no way I could have anticipated how good I would be at it.  I guess I'm saying that I sold out.

When you stop and think about what happened after September 11th it is hard to not realize how fragile our economy is.  I don't think we ever recovered from the 2001 recession, certainly not in terms of incomes and real wealth.  We had a fake recovery, fueled by an illusion.  The housing boom made people feel wealthier, and on paper they actually were.  That is why we had the rapid increase in household wealth and the record consumer spending expansion.  The price we paid was the ensuing decline in household wealth, the single greatest decline in modern history and nearly tenfold what we experienced during the OPEC crisis in the 1970's.  Without the government fueled housing boom we would still be in the recession of 2001.  Reread that statement because I don't think it gets enough play in the media.

It seems ironic that people get up in arms about government spending to get out of this recession when they didn't bat an eye while government incentives "got us out" of the last one.  The sad and scary fact is that this recession is really the double dip of the last one and since we aren't recovering, we might get a triple serving of economic smackdown.

Perhaps, I'm wrong, but I don't think so.  Here is a basic fact about our housing boom recovery that supports what I am arguing:  We really didn't have inflation during the recovery according to government measures.  Inflation is not always a bad thing, in fact, in a true period of economic growth we should have inflation due to rising wages which increases demand and puts upward pressure on prices.  We actually had stagnant wages during this time and by some measures, we experienced wage erosion.  That is the opposite of economic growth, that is economic decline.  

The booming economic years of  2003-2007 were a myth, just like homeownership.  The government stimulated us into recovery through less transparent measures than it is using now.  Incentivizing homeownership through legislation, expansion of the GSEs and arbitrarily low interest rates was our stimulus and ultimately has proven more costly than we can even comprehend.

Am I saying the housing crisis is the fault of the government?  Hell yes.  I recognize that greedy bastards on Wall Street and Main Street played a role, but, they were merely responding like rational economic actors to the incentives the government was providing.  I almost feel sorry for the poor bastards on Wall Street who are being demonized by indignant politicians for causing the crisis.  Hi Pot, have you met Kettle?



So, Happy Independence Day.  Enjoy your potato salad and beer, it is as American as dogs in bandannas.  In the spirit of the holiday, I offer this from the Declaration of Independence:

."..that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness."

Notice that homeownership isn't a fundamental right.  Let's remember that the next time we hear about the American Dream.  Don't even get me started on the liberty part....

Saturday Night's All Right for Stealin'

One of the hobbies of the Mortgage Devil was working on Saturday. While most of us might enjoy playing golf, going to the beach, watching a college football game, drinking themselves stupid or a combination of these items on a Saturday… the Mortgage Devil worked….EVERY Saturday. In order to continue to be the Dark Overlord of the Beach Market he needed to work on Saturday…it was kinda’ like his own Holy Day.

His Saturday would start with a stop in the Bank of Hell to check voice mail and write down the name of numbers of the people that he hadn’t called back from that Friday or possibly six Friday’s ago. He always said “if the worst thing that I do is never call people back…then I am doing alright”. Well he did way worse than not calling people back…and I will get into one example of that in a minute.

Now that the voice mails are checked, he grabs a stack of flyer's and his cell phone and start driving like a maniac all over the Beach to stop by all of the Real Estate offices. He picked Saturday’s because he can’t get past the receptionist (gate keeper) during the week. He had free reign on Saturday’s to terrorize the Real Estate Agents with his flyer's…aka propaganda…proclaiming how great he was and how awesome the Bank of Hell was compared to the rest of the world. In between stops he would be on his cell phone calling his customers and patting himself on the back for how dedicated he was to be returning their phone call on a Saturday. He was in his glory. You would think by the time he returned all of their phone calls and passed out all of his propaganda…he would call it a day. Not this asshole. Nope.

He would then head back to the Bank of Hell for the second half of his Saturday hobby. Since none of the Devil’s Minion’s or support staff were in on a Saturday…he would start grabbing and looking at EVERY loan file they had in their filling cabinets that were “in process”. Which basically meant that everyone who had applied for a loan but had not gone to closing was having the Devil look through their mortgage file. But don’t worry, he wasn’t stealing customer’s personal information. He was trying to find an angle to steal the loan application from the other loan officers in the office (such as Turdy and myself). He would look at the name of the Loan Officer on the file then rip into the file like a madman trying to find out the customer’s name, who was the selling real estate agent, who was the listing agent, who was the builder, the title company, the sellers, if the children’s name were on a tax return he might write their names down too. Why did he do this? Because he is fucking crazy? Yes. Greedy? Yes.

He honestly believed that everyone that applied for a mortgage at the Bank of Hell, were there because of him. There was no way any other loan officers could have brought that customer to the Bank of Hell…on their own. Yes, he is that narcissistic and crazy.

Then the Mortgage Devil would put a yellow “sticky” note on the front cover of the file and plop it into the offending loan officer’s chair. There were several Monday mornings I would stumble into the Bank of Hell after a Sunday of tailgating and drinking to find a stack of my files in the seat of my chair. The first time that this occurred it was after a particular rough Monday morning following a long day of tailgating. I see the stack of files, rub my eyes because I thought I was seeing shit at this point, and realize…yeah, files are really in my chair. My first thought was that my processor at the time (who was the Devil’s most loyal Minion) had worked on the file over the weekend and needed me to look at it for a reason. Silly me. She would NEVER work on a Saturday unless large sums of unmarked cash were placed in a non-descript white envelope then pressed into her greedy mitt. I grab the file on top and notice the “sticky” note. It read: “See Me! – Mortgage Devil”. Ok…so I head off in search of the Dark One.

I find him in his usual position…behind a large desk with files stacked up to his eyes, head set on, spouting his scripted bull shit to some unsuspecting customer, while pounding away on a manual calculator. I give him my best “What the Fuck?” look. He gives me his index finger extended…his universal sign of “wait a minute (or an hour as explained previously). I know that he saw me, so I head back to my desk (Gilligan’s Island) to look at the rest of the sticky notes…I then grow disgusted and push them aside for now. Eventually, the Mortgage Devil comes around the corner. His words “Grab those files and meet me in the Break Room”. Though I don’t feel like being obedient, I decide that I am curious to see what he wants from me. I quickly find out what he wants…those files. Literally. The conversation goes something like this:

Mortgage Devil: “I was looking through your files this weekend and noticed that a few of those files should be mine”.

Me: “You did WHAT this weekend to my files?”

Mortgage Devil: “I was looking through your files this weekend”.

Me: “Why do you think it is OK to look through MY files?”

Mortgage Devil: “I noticed that several of your loans are actually my loans. The stack of loans you are holding are my customers.”

Me (trying not to punch him in the face): “I honestly don’t know why you would think they were your customers?!”

Mortgage Devil: “Well take the one on top for example. The builder is a friend of mine. We had lunch before.”

Me: “Oh really? If he is your friend then why did he refer his customer to me?”

Mortgage Devil: “That is what I am trying to figure out. You obviously took that customer from me somehow.”

Me: “I took the customer because he was referred to ME! By your “friend”…which I wonder how close you two are because he has been referring clients to me for the past two years on a regular basis and we had lunch three weeks ago. So, when exactly did you have lunch with your “friend”?

Mortgage Devil: “Look…you need to check with me when you get something from that builder. I am going to let it slide this one time.”

Me: “Why don’t we have a conference call with the Builder and ask him who he was referring the loan to?”

Mortgage Devil: “Look, you just need to run this by me next time.”

Me (walking away): “I don’t see that happening”.

Mortgage Devil: “Hey come back here…we need to talk about the rest of the files!”.

I walked down the back steps with my files out the back door into the parking lot…got into my car and drove straight to the beach to go cool off. Unfortunately, Turdy and I weren’t very close then…or I would have demanded she attend Happy Hour with me immediately…the drinks would have definitely been on me. So, I had to find one of my unemployed drunk friends to vent to…which isn’t very hard to find at the Beach. Sure it was around 11:00 a.m. on a Monday morning but I didn’t see me going back to the office that day.

After I am properly cooled off from many drinks at Happy Hour, I decide I need to start holding onto my files until the last minute. Basically, I would start the file and keep it away from the Processor’s and more importantly the Mortgage Devil’s Saturday Night Stealin’ expeditions until the file was almost ready to close. Sadly, it was necessary to do business that way at the Bank of Hell.

The Mortgage Devil as mentioned before was making $1-2 million a year in commissions and yet was so paranoid and narcissistic he would spend Saturday’s trying to steal files so he can make MORE money and more importantly produce MORE loans so he can remain the #1 Producer for the Bank of Hell. A prize more coveted to him than spending time with his family or even his own sanity.

Return to the Scene of the Crime

I haven't blogged in awhile, not because I am uninspired but rather, I have been busy turning parts of this blog into a book.  Well that and I took a vacation back to the land where all the debauchery described here occurred. 

Returning to the place where I worked as a loan officer for three years and lived for twice that time brought mixed emotions.  My hope was to avoid running into any of my previous costumers or real estate contacts, unless of course by choice.  That mission was accomplished.  I didn't want to see old customers because I was in fear of getting physically or verbally assaulted because of the loans I had done for them. and frankly, I feel sorry for a lot of people who are trapped in the sandbox where I made a ton of money for awhile and then fled.

I was struck immediately by the impacts of the housing crisis on the entire region and while it should have come as no surprise, I still was shocked to see predictions I had made long before coming to pass.  My friend and co-blogger, A.Hole, and I met my friend and real estate agent, Judy Moody, for happy hour.  Of course, we drank a lot and as to be expected, talked about real estate and gossiped about former colleagues we still didn't like.  I heard stories of homes purchased for $800,000 in 2006 selling at short sale for $350,000.  One of these homes was purchased by a gentleman that only earned $50,000 a year.  Obviously, he was the beneficiary of a liar's loan but he was just one of thousands who purchased a home he couldn't afford in a highly speculative market.

Economics 101 as it applies to housing is that housing demand is driven by employment.  In theory, people need income to buy a home.  The housing boom took this fundamental tenet of economics and spit on it.  In the area where I lent money, we had very little employment and most of it was tied to tourism.  A great number of people in the sandbox are reliant upon unemployment in the winter as their jobs are seasonal but, the vast majority of people were self employed or directly employed by industries associated with housing.  This includes a plethora of self employed individuals, real estate agents, and construction contractors.  Our housing boom was driven by people on the other side of the bridge purchasing second homes and investment properties and our local speculators, who behaved like they were players in the gold rush.  People who had no business owning one home found themselves temporarily exercising domain over small, crappy housing empires.  It couldn't last.

A number of things conspired to cause the decimation of the housing market in the sandbox.  Fannie Mae, the Federal Reserve, and government policies were the catalyst but, the local developers and real estate players pushed the market over the edge. 

Much like the Tragedy of the Commons, where everyone acting in their self interest brings about a negative outcome for themselves and the greater good, real estate developers went nuts.  With no consideration to the sustainable supply of certain types of housing in the region, condo developers saturated the market with units that demand could not possibly keep up with.  Planned urban developments went up everywhere, even where they shouldn't.  Development in a protected wetland was possible if you knew the right people; no one thought about whether they should do it, they just doled out favors and protected the fat cats of the region.  The spoils of the boom went to the early developers and investors who amassed wealth at an unprecedented rate.  Seeing the gains to these early entrepreneurs, every Tom, Dick, and Harry wanted in on the splendor.  The last to get in are suffering the most as profits were driven out and then the market collapsed completely, much like the species crash of an unsustainable animal population.  The housing market is very Darwinian, but the fittest in this case were those who got in first and then had the good sense to the get the hell out while the gettin was good and those who had political ties to avoid silly things like zoning laws and environmental regulations that the unconnected were subject to.

At a particularly drunken happy hour at a bar by the Bank of Hell ruled by the Mortgage Devil, I got in an argument with people who had invested in a condo development on what they call a river.  Growing up on the Mississippi, I felt the need to point out that their so called river looked like a polluted ditch and bore no resemblance to a real river.  They argued with me and then realizing I wouldn't change my stance that not all waterfront property is created equal, they changed their tactic to arguing that the new condo development would appeal to young professionals.  I responded, "To attract young professionals you must have jobs and this town doesn't so I think there is a pretty major flaw in your understanding of the demand for these units."  No amount of Ketel One keeps me from making sound economic sense but these people were having none of it.  They told me I didn't understand real estate and they would prove me wrong.  Yeah, right.  I went by the project and one whole building is sitting sheathed without Tyvek, unfinished and blighted.  The other condo building they actually finished has a vacancy rate that appears to be 90%.  As I predicted, young professionals go where the jobs are and are not swayed to deviate from their economic self interest by a creek filled with litter and surrounded by crime. 

The entire region looked sad to me despite the flood of tourists from Pennsyltucky, New Jersey, Washington D.C., Baltimore, and surrounding cities.  The housing market in the sandbox looks to be at least a year away from even the seeds of recovery and with the economy still struggling, financial distress for people underwater in their homes or turning their second homes into rental properties is nowhere near over.  A glance at the rental listings for the area show how the flood of housing units for rent has depressed rental prices.  Great for renters?  Perhaps, if they could find a job. 

Buying at the beach became the American Dream with the help of incentives from the Federal Government yet, our government is accepting no responsibility for its contributions to the crisis.  Even those people in the sandbox who have encountered economic ruin due to their belief that the housing market was a never ending path to wealth blame the "Greedy Bastards on Wall Street."  Ummm, people want to make more money, duh.  That is only a problem when the government provides incentives to do so at the expense of common sense, economic sustainability, and future economic growth.

If the government gives your kids free reign in a candy store for a decade, you will get a bunch of fat kids with cavities.  What happens when you give adults these same incentives but trade the candy store for the housing market, oh yeah, an incredible bust and recession. 

On a positive note, if you are independently wealthy and require no employment, I can guide you to some tremendous values in a resort community.  If however you want to live at the beach but need income to support the habit, I got nothing.