Friday, March 28, 2008

Working Both Sides

The other day, I was faced with these headlines from the business section:

~Egg McMuffin inventor Peterson dies
~Housing advocates protest Bear Stearns bailout
~New home sales fall to 13-year low
~Mortgage bankers cleaning up mess they made
~Too soon to look for housing market bottom
~Court: Accounting doomed New Century
~Economy nearly stalled at end of 2007
~Oil tops $107
~Bus tours show off foreclosed homes

Still preferring to live in a state of avoidance, I clicked on the story about the Egg McMuffin. Just in case you were wondering, the creator of the famous McDonald's breakfast sandwich died peacefully in his home in Santa Barbara at the age of 89. I wonder if he ate his invention regularly.

That didn't take very long. Hmmm. As my cursor considers each and every headline, I wonder which story is the least depressing. Well, if the mortgage bankers are cleaning up their own mess, that should be an uplifting tale, if ever I heard one.

The article starts out by telling us about the owner of a mortgage company, which went defunct last summer. Now he runs an auction house for major lenders. Do you think he had that planned all along? I can imagine the meetings in back rooms in the middle of the night, lit only by a bare light bulb that swung slowly from the ceiling:

"OK, the plan is to continue lending money to people who'll default within 2.3 years. When we can't sell the loans off to unsuspecting investor groups anymore, and we're stuck with more devalued property than we can all live in, we'll officially open the auction house according to the business plan that we drew up three years ago. We'll develop a respectable reputation by selling the homes our mortgage company owns and then make a killing doing it for other troubled lenders and investors. It may not be a long-term business, but that's okay. After we ride that wave, we'll start a company that charges hefty fees with a guarantee of erasing foreclosures on credit reports.

As I continue to read the article, I realize that the caption and lead-in are all a front for the real topic--PennyMac (Countrywide ex-prez buys troubled loans from banks). I finish and feel just a bit cheated. It's the same tease concept used on TV news. The title of the link is misleading. It sounds like the mortgage industry has decided to take responsibility and make everything right so that we can all function as normal again. Of course, I knew that it wasn't about that because, if that were the case, it would be splashed in huge print everywhere--and I'd get a notice of breaking news on my e-mail.

But I didn't expect that "Mortgage Bankers Cleaning Up Mess They Made" meant that the heads of lending institutions, who hold great responsibility for the state of our economy, are now making money by providing a service to "help" with the chaos they created. Man, these honchos are shrewd. While I admire the concept of re-forming your business plan to reflect the economic model of the time, this smacks of a set-up. Have borrowers merely been pawns in a game of greed by executives of companies who foresaw the results of their dastardly deeds years before the general public? (I feel like I just wrote the description of a chilling new novel.)

I could learn a few things from these crooks businessmen. Maybe I'll buy some more apartment buildings, run them into the ground (I'm skilled in this area), sell them for a profit (because this is my fantasy),
and then offer the new owner my services of operating the properties more efficiently in order to provide cash flow. And I'll charge him a fortune, but he'll be desperate enough to be satisfied with just an itsy bitsy income.

There's something dirty about mortgage bankers who hand you the foreclosure notice in one hand and a refinance (at a cost, of course) letter in the other. I'm sure that these aren't the only unusual business practices that will be coming out of this loan fiasco.

Some others may be:

~Vandals who draw graffiti on vacant properties and then solicit the note holder to hire their painting company to remove it.

~Repo men who take your belongings to a warehouse, which then offers to sell your possessions back to you for half of replacement value (because you're broke and can't afford full-priced goods).

~A landlord who forces your eviction through the foreclosure of his single family rental, but offers you a unit in his apartment complex down the street. Moving will be costly, though, because you didn't stay in the first house for the full term of the lease.

This proves that, when you have a business mindset, you carry within yourself the ability to create your own income. Some of us exercise honesty and integrity in our endeavors. Others rake in the dough, while proclaiming by their actions, "Ethics? Who needs ethics?"