Another Blinding Glimpse of the Obvious!

If an industry calls an Initiative a Liar Loan, shouldn't alarm bells go off all over the place? Can you imagine sitting in on a meeting where a leader in the organization actually says we are going to grow our business with Liar Loans. Was there not anyone anywhere in that room or anywhere in the organization who said, hey wait a minute, that may not be such a good idea?

For those who who don't know what Liar Loans are, according to an article in the Arizona Republic, they are mortgages that were approved without requiring proof of the borrowers income or assets. Per the article, the worst of those loans are called Ninja Loans for no income, no job, and no assets.

Now I don't know about you, but, every time we bought a house, we had to produce documentation out the wazoo, including pay stubs, tax records, proof of assets, and we had a good income and an excellent credit rating. The institutions had the house as collateral but the mortgage companies made me feel guilty that I had the audacity to actually ask for a loan.

Now I am learning that mortgages were approved without income, without assets and even for people without jobs. That is insane. What is even more insane is that a lot of institutions did this. It just wasn't a bank or two. Some of those financial institutions are now out of here...American Home Mortgage, Bear Stearns, and IndyMac Bank. There may be more to come.

Through the years, I have learned that if I don't understand something to follow the money trail. The money trail tells us a lot about how these institutions managed to get into this situation.

Everyone could charge higher fees and higher interest rates for these. Per the Arizona Republic article, a broker who signed up a borrower for a liar loan could reap as much as $15,000 in fees for a $300,000 loan. Traditional lending would get them about $2,000 to $4,000 in fees for a fixed-rate loan.

The trail gets even better. These loans were bundled and sold to larger institutions or hedge funds given the higher interest rates and the amount of money these loans were going to make everyone. So, the local institutions make a boat load of money initially and then sold the loans to someone else.

I can visualize that meeting. Your local bank executives are meeting and one of them says we are going to write a bunch of Liar Loans. Another bank executive, says, wait a minute, those could be risky. Another executive shrugs his shoulders and says, why should we care, we are going to sell the loans anyway so we are not going to have to deal with that.

Mystery solved. Money, Money, Money. Greed came into play up and down the transaction line.
Unfortunately, this whole mortgage mess is going to cost all of us a lot of money. Our tax dollars are being used to bail out the industry and some of the companies that created the mess. Additionally, your home value may have gone down, your stock portfolio may be down and your retirement funds, if you had a lot of financial institution investment, is probably down as well.

All of this has occurred due to a lot of people ignoring some basic values and truths that have been around for years. Many of you have heard me say some of these things for years. None of this is new. It is truly a blinding glimpse of the obvious in my opinion.

1. Hogs get slaughtered. Greed played a large role here. Everyone thought that house values would continue to climb. If these people getting these Liar Loans defaulted, the equity could cover them. Institutions looked at $2000 in fees or $15,000 in fees. People became hoggish and wrote more of these than they should have. They passed them on. Too many people could not make their mortgage payments and all of sudden house values plummeted and these financial institutions were left trying to get some value from these houses. Hogs get slaughtered and indeed the biggest hogs have been slaughtered.

2. Walk away from business if it isn't going to be profitable. You have to have courage to lead and sometimes you have to say no, we are not going to do that even though everyone else is doing it. Honestly, there were institutions that took the stance that if we don't write this business someone else will. We will lose out. In reality, if your initiative can be called Liar anything, you should probably stay away from it. You don't trust liars. You don't let them any where near your family or your business. Let the other guy write the business. They will pay the price in the long run. You will end up solid financially and will end up with one less competitor. There were many times in my insurance career when I had to make a decision my reps didn't like, no we are not going after that piece of business and if the other company is crazy enough to write it, let's send anyone wanting that kind of business to them and hasten the competition's demise. There were execs and financial institutions who stayed out of the Liar Loan business and will survive quite nicely because they had the courage to say no and I am sure many of them were catching some grief from stockholders and directors for not venturing into the Liar Loan business.

3. There are long term implications for your decisions that go beyond the short term gain. If you operate your business with the view of only this quarter's results, you are going to be in trouble. Long term success requires a commitment to making decisions for the long term.

4. There are still no shortcuts or silver bullets to being successful. While the cash flow was nice for a while, many are failing because they relied too much on this type of business. The institutions that stayed away from this business and still required solid risk management in their loan approvals, are going to win long term.

5. Never lie, cheat, mislead, or misrepresent your offering. There are going to be people going to jail for a long time by the time all of this is said and done. There are lawsuits galore claiming that some of the companies who sold their portfolios to other institutions did not disclose that these were Liar Loans. If companies withheld that information, someone should go to jail.

6. Everything you do should pass the Front Page Test. How would this look on the front page of the newspaper? Someone in those meetings should have said wait a minute... if the local newspaper finds out we are charging more fees and higher interest rates to people with no income, no jobs and no assets and we are not worried about it because we are selling those loans to someone else, what would they report? My friends, this would not pass the front page test.

7. If you sleep with big dogs, you will get big fleas. If you were the executive in charge of buying a portfolio of these loans because the interest rates were higher and did not ask the questions about how they approved these loans, you deserve the fleas.

This whole scenario to me is a Blinding Glimpse of the Obvious. Any initiative that can be called Liar anything, should be avoided. Now, in reality, I really don't know if these were actually called Liar Loans prior to the meltdown or if that has been coined after the fact. I am not in that industry. What I do know though, is that a lot of people in the process knew they were not getting any income verification, nor employment verification, and no asset verification. That does not allow for prudent business decisions.

It truly is what you do everyday that counts!

No Holds Barred Dreaming!

When people finally become sick and tired of being sick and tired, they begin to think about ways to make changes in their lives. They realize that they are on a treadmill, engaging in insane behavior where they are continuing to do the same things expecting different outcomes but still getting those same miserable results. They finally realize that if anything is going to change, they have to be the ones to make that happen. No one else makes it happen, you are the only one that can.

If you truly want to change your circumstances and lot in life, the first major step you have to take is to think about what you want your life to be. You have to think about all of the things you want to do, all of the things you want to have, all of the accomplishments you want to happen in your lifetime, and the values you want.

In order to give yourself a road map of where you want to go, you need to let your thoughts run free and to have a no holds barred dream session where you list everything you want without having any doubts about how realistic they are given your circumstances today. You must let go of any limiting thoughts that are going through your head. This is the time when you simply list everything you want to accomplish, to be, to acquire, to become, without having any one tell you that you can’t accomplish that. Most of all, you can’t tell yourself you can’t accomplish that.

Unfortunately, that is not always easy for some people to do. They have had a lifetime of people telling them they could not do things, they have had parents who have subconsciously (or sometimes consciously) destroyed their self-esteems, and others who have consistently and subtly told them to stay in their place.

There are bad parents and bad teachers around. There are also great ones. Unfortunately, the damage that is done by the bad ones, can multiply through the generations unless folks break those chains that are binding them.

We all need to remember that our Spiritual Higher Powers, no matter who yours is, creates no junk. We are all important and valuable and can accomplish what we want to accomplish. Our Higher Powers want us to be happy and content.

My parents once told me that I would never make $30,000 a year. I can safely tell you that I passed that mark fairly early in my career.

I used those comments as a motivator. I would show them. It drove me to a higher level.

To be honest, it took me a while to get beyond the resentment that I felt toward them for trying to keep me in place. I had to realize that it wasn’t their fault. After all, they only had eight grade educations and neither of them ever made more than $12,000 a year.

They did not want me to be disappointed if life handed me the same sentence. They meant well.

Unfortunately, we see it everyday. We see many parents who teach their children to have low expectations. Parents should be telling their children that they can accomplish whatever they want to accomplish and they can be anything they want to be.

Unfortunately, in the majority of those situations no one taught them that. You can break that chain though. You can break that chain any time you want because you can be whatever you want to be. It doesn’t matter if you are in the latter stages of your life or how down you are right now.

You can begin to form new pictures of yourself any time you want. Your brain can not tell the difference between a real picture and what you imagine for yourself. Begin imagining the picture of the person you want to be in your head. Keep repeating that visualization and you will be surprised at how you will find ways to make that picture real.

You also need to do this exercise of listing everything you want on your own. It should be yours and yours alone. Unfortunately, too many family members and friends will tell you that you might be unrealistic. They may be well intentioned, but unfortunately, if you listen to their negativity, you might limit your desires. Right now, you just want to get down on paper what you want to become and to have. There will be time to develop action plans and to decide what it is going to take to accomplish something, but for now, just imagine it and get it down on paper.

You might list an income goal, a net worth goal, a goal of being the very best sales rep in your company, a weight goal, or you might list goals that involve your being more charitable, a better parent, a better friend. It doesn’t matter. They are your goals.

The key is to just let go and have that no holds barred dreaming session of what you want. Don’t let your subconscious talk you out of anything at this point. Just dream, dream big and get it down on paper.

I will share some examples with you when I first started this exercise. I wanted a 280ZX. I got that. I wanted a Mercedez. I got that.

I wanted to earn my CLU designation. I got that. I wanted to be Brokerage Supervisor of the Year in my company. Got that. I wanted my office to be office of the year as the top sales office. Did it.

I wanted to be sober and a non-smoker. It took me longer to get there, but with the help of my higher power, I did.

It all started to happen for me, when I let myself go, imagining all of the things I wanted to accomplish. I ended up with a pretty big list but after all, there was nothing on that list that said I had to accomplish all of them the very next day. I had time on my side. (Except for getting sober, that had to be done quickly)

I went from a strategy of well I hope things work out to one of where I knew where I wanted to go and what I wanted out of life. I had a personal life strategy.

I must tell you that many of my goals have changed as I have matured. They now incorporate more family goals, how to be a better husband, how to be a better father, how to be more charitable, and a heckuva lot less material and ego driven goals. However, I am still dreaming. I still have those NO HOLDS BARRED DREAM SESSIONS!

No one can take your dreams from you. Keep dreaming!