Today’s buzz words for figuring out how to “solve” the current mortgage crisis is for every player to have some “skin in the game”. The Financial-Directory describes the phrase ‘skin in the game’ as
“Informal; a situation in which an executive in a publicly-traded company uses his/her own money to buy stock in that company. It is fairly common for an executive to receive stock as compensation or to exercise stock options to buy stock at a discount. It is less common for an executive to risk his/her own money in the company for which he/she works as if he/she were an outside investor. Putting skin in the game is seen as a sign of good faith or a show of confidence in the future of the company. The term was coined by Warren Buffett.
Lets look at why “skin in the game” may not be the end all answer in mortgage lending.
Historically, the mortgage industry players valued production numbers first and took loan quality as a “given” as the loan passed from originator, to wholesaler, correspondent lender and on into the secondary market trades. Each one in turn trusted the quality of the loan as it had always been a “trustable” commodity. As our country’s morals were slowly decaying, mortgage interest rates were quickly declining and easy mortgage loan programs created a wind storm of new activity in lending. These three things converged to blow in the winds of change along with huge commissions for those working in the mortgage industry. Loan officers, both retail and wholesale, were earning six figure incomes as their support staff, formerly earning $30K were now earning $60K+ with their production incentives. And those on Wall Street’s mortgage side were achieving new income heights of their own, again based on volume, not quality.
The word of ‘easy mortgage lending’ spread quickly and those folks who formerly knew nothing about lending were now passing out business cards touting themselves as “mortgage experts”. In states without licensing a consumer could fill out a mortgage loan application with the loan officer/hair dresser while getting a shampoo.
Once, while checking references of an employment applicant, her former employer, a shop keeper in Modesto, told me she worked his kiosk in the mall selling jewelry. If someone wanted a mortgage loan she also gave them the paperwork for that. My question: “Did she quote rates and explain the programs?” Answer: “She quoted rates but we sent the loan papers to my brother-in-law and he got the thing funded”. He verified that he paid her $55K that year. Not bad for a kiosk clerk! Note: We did not hire her due to her minimum knowledge of mortgage lending. A year later I couldn’t help wondering if some of the foreclosures in the Modesto Fresno area were people who bought a necklace and a mortgage loan at a kiosk.
At the end of the day it was all about money. Big money. Ethical loan professionals who had transacted mortgage loans for many years may not have had “skin in the game” in the form of money as the definition above implies. However, any ethical business person knows the ‘skin in the game’ is often good reputation and future referrals; in the loan business that is better than gold.
Not every loan person lied or has lied. Not every loan person cheats or has cheated. Sadly, those who did soured the industry and today onerous regulations are coming out of Washington to “solve” the problem. It is a human condition that good, strong ethical behavior can not be regulated or mandated away by government degree.
What do you think? Does putting money on the table make a person truthful? Ask a poker player.
Sunday, October 11, 2009
Sunday, August 9, 2009
The Only Saint In The Neighborhood
No one is completely infallible. In the astute words of literary critic, Alfred Kazin, there may even be ‘danger’ in being “the only saint in the neighborhood”. The danger in mortgage banking is that many successful mortgage industry professionals from Wall Street to Main Street “believed” they were infallible. Feeling infallible sets one’s moral compass spinning and control is lost. Once control is lost, honesty and ability are right behind it.
In the game of mortgaging, much like the children’s game of “Jacks”, there is a certain amount of luck and a fair amount of ability. But in mortgaging when we don’t trust our ability and feel a need to "insure” that our loans close, our ethical compass goes in circles. Control of that compass ( aka self control) is essential to earning an honest win. Self control has been written about since the beginning of time. It is mentioned numerous times in the Bible. Why is it so important? Because self control is difficult and cheating is easy. Weather it is on your diet, with the IRS, in your marriage or in a loan file; cheating can be fast and easy.
Sorry folks, but cheating is a loss of self control. The 1960s saying “If it feels good, do it!” may very well be the worst slogan in the history of mankind. It encouraged us to be weak by giving into temptation. Sometimes that temptation was to cheat to win or cheat to earn money. The sad thing is, today there is much cheating for power going on, and frankly speaking, cheating holds no power.
A non-cheating, self controlled person has control of their moral compass and can set their own direction. Now THAT is a real power! And power used wisely with thoughts of consequences in mind produces benefits both immediate and future. For comparison, check out business people who are genuinely interested in developing discipline rather than a big piece of market share. Even in this rough economy most are still here.
Cheating for money is a well traveled road. However, keep in mind, many roads lead to money. In our society’s ‘right now’ mentality it is easy to see why some people have a difficult time investing in their future by taking the more difficult, controlled route to fortune.
Recent mortgage market history has taught us that prosperity that lasts in mortgage lending has been found by those who took the more difficult route not the quick, “cheater’s detour”.
Quote of the day:
" Opportunity may knock once, but temptation bangs on the front door of the cheater forever. " Author Unknown
In the game of mortgaging, much like the children’s game of “Jacks”, there is a certain amount of luck and a fair amount of ability. But in mortgaging when we don’t trust our ability and feel a need to "insure” that our loans close, our ethical compass goes in circles. Control of that compass ( aka self control) is essential to earning an honest win. Self control has been written about since the beginning of time. It is mentioned numerous times in the Bible. Why is it so important? Because self control is difficult and cheating is easy. Weather it is on your diet, with the IRS, in your marriage or in a loan file; cheating can be fast and easy.
Sorry folks, but cheating is a loss of self control. The 1960s saying “If it feels good, do it!” may very well be the worst slogan in the history of mankind. It encouraged us to be weak by giving into temptation. Sometimes that temptation was to cheat to win or cheat to earn money. The sad thing is, today there is much cheating for power going on, and frankly speaking, cheating holds no power.
A non-cheating, self controlled person has control of their moral compass and can set their own direction. Now THAT is a real power! And power used wisely with thoughts of consequences in mind produces benefits both immediate and future. For comparison, check out business people who are genuinely interested in developing discipline rather than a big piece of market share. Even in this rough economy most are still here.
Cheating for money is a well traveled road. However, keep in mind, many roads lead to money. In our society’s ‘right now’ mentality it is easy to see why some people have a difficult time investing in their future by taking the more difficult, controlled route to fortune.
Recent mortgage market history has taught us that prosperity that lasts in mortgage lending has been found by those who took the more difficult route not the quick, “cheater’s detour”.
Quote of the day:
" Opportunity may knock once, but temptation bangs on the front door of the cheater forever. " Author Unknown
Tuesday, July 28, 2009
Robbed Of Trust
Kathy Sweeney is on vacation. Howard Weldon stepped up to fill in as our first "guest blogger" handling a very tough subject, the loss of trust when ethics are upside down.
Mr. Weldon is a graduate of the National Commercial Lending Graduate School of Banking at the University of Oklahoma where he received the designation of CCL, Certified Commercial Lender. He completed coursework at Williams College, Wharton School of Business, Duke University, advanced real estate at Harvard University and has been a guest lecturer at Carlson School of Business at the University of Minnesota.
Mr. Weldon served as President of Valley National Bank in Apple Valley, MN and as Vice President and COO of Fidelity Bank and Trust Co. in Burnsville, MN. He was also a Vice President with First Bank Edina in Edina, MN, where he headed various lending departments as well as being charged with Strategic Planning for the bank. He spent four years as a Commissioner on the Planning Commission for the City of Apple Valley, MN. Mr. Weldon served in Branch Administration for Peoples Bank in Rhode Island for over ten years. Locations included Providence Main Office, Wayland Square, Barrington and Johnston.
Howard wrote:
There was an article in the September 2006 issue of Harvard Business Review on trust in the workplace. That got me thinking about how important trust it is in marketing as well, and in fact, in any business relationship. One of the most important ingredients in building a thriving business is establishing a feeling of trust in potential customers. Without a degree of trust at least sufficient for the dealings at hand, customers are unlikely to give us their business.
The HBR article includes some gloomy statistics, starting with the finding that about half of all managers don't trust their company's leaders. In 2002, a University of Chicago survey found that four out of five (80%) Americans have little confidence in the people running major corporations, and a Golin-Harris survey found that almost 70% of Americans “just don't know who to trust anymore.” That paints a pretty grim picture, and I daresay things may be even worse today than in 2002.
The headlines are full of failed-trust issues: Formerly “respected business leaders” being jailed for illegal financial manipulations; companies accidentally revealing or losing sensitive customer data; and let's not even start talking about the political arena!
What is a person to do? What is a marketer to do? In order to win their business, we have to establish trust with our prospective clients and customers. On the one hand, with people feeling so robbed of trust today, we might ask how a company can possibly create the necessary trust with prospects in order to turn them into customers. On the other hand, we can speculate that with so few people and companies to trust, people are hungry for trust connections they can make.
Who Do You Trust?
To paraphrase the old Jim Croce song, You don't tug on Superman's cape, you don't spit into the wind. You don't pull the mask off that old Lone Ranger, and you never trust anyone who says “trust me.” Trust is something that has to be earned, not just asked for.
Apparently the folks at Perot Systems want to be known for being trustworthy, but aren't aware that saying they are isn't enough. The headline in their current advertisement says just “Trust.” The copy then begins, “At Perot Systems, earning our clients' trust is not just a goal – it is what distinguishes us in our industry.”
Does that make you inclined to trust them? I think not. Talking about being trusted or trustworthy is almost an ineffective as saying “trust me.”
So how do we build that necessary trust? There are a number of factors that influence both perceived trustworthiness and an individual's willingness to convey trust. Let's look at the latter first.
If a person is in a precarious situation, one outside his control or his comfort zone, he is likely feeling ill-at-ease to begin with. In this case, the stakes are already high for the prospect, so he is apt to feel at greater risk and less willing to bestow trust. In such a case, it may take the influence of several trust-inducing factors to gain the prospect's trust.
It is also important to realize that there are all sorts of people: some are risk takers, and some are risk-averse. The amount of risk the prospect sees being involved with bestowing trust on the person or company that wants his business is an important factor, and this will vary depending on the customer's risk tolerance.
Another consideration is that the prospect may have previously been let down by a company or advisor in whom he placed trust. This type of prospect is less likely to readily trust a new relationship until trust has been well-earned. “Once burned, twice shy,” is an expression we need to take to heart.
Important questions a prospect (truster) is likely to ask include, how reliable is the trustee? Do I get a sense of integrity from him? How reliable has he demonstrated himself to be? These are significant contributors to conveying trust.
Make a Promise, Keep a Promise
FedEx's "absolutely, positively overnight" promise (an old favorite of ours) communicated that sense of reliability and therefore trust, and it worked incredibly well for the company. If they are promising certain overnight delivery, we thought, they must really come through! In fact, the campaign only worked because FedEx was able to come through and keep that promise virtually every time.
Coming through on promises inspires trust. And if someone does more than just come through, so much the better. That is why the advice to under-promise and over-deliver is so wise. People are impressed when they get more than they expect.
I have purchased a number of computers from Dell over the years, and I found them to under-promise and over-deliver almost to an extreme. Several times the computer we ordered was delivered before the date they quoted as being the “expected shipping date.” Perhaps this is one of the reasons the company became so successful!
The opposite is devastating, though. A company that over-promises and under-delivers exhibits unreliable behavior, and unreliable behavior arouses distrust instead. It doesn't matter how well-intentioned the company – or the person – is, the fact remains that they didn't come through as promised.
Tell Me True
Good communication is another essential element in building trust. This seems obvious when you think about it, but it is something that businesses often ignore. Many businesses tend to use their communication budget – be it time or money – to solicit new customers rather than maintain current ones. They seem to think, well, we're doing what they hired us to do, so that is enough, isn't it? Often it is not.
Poor communication creates distrust, because without communication, we don't know if the trustee is doing anything on our behalf. At one time I had an investment advisor who called me every month or so just to touch bases and update me on the outlook for the securities I was invested in. I appreciated that communication and felt I was being taken care of. When he left the business, I switched to someone else who had come highly recommended. After the honeymoon period, though, I never heard from her unless there was a trade to discuss. Even when I told her I would like to hear from her more often, she basically told me that I'd hear from her when there was something to talk about. As a result, I felt that she was not paying much attention to my account and didn't have my best interests at heart. Needless to say, she lost my trust and my business.
Communication can be especially important in times of crisis. Someone who proactively communicates and is honest and forthright when things are rocky can engender a great deal of trust. Maybe that is because so many others treat us like mushrooms … you know, keep us in the dark and feed us so much manure!
Are You Interested?
How closely someone's interests are aligned with yours can affect your willingness to trust that party. If you both benefit from the same outcome, you naturally have the feeling that the other party will serve your interests, because her interests are being served at the same time.
In the case of a stock broker, there is little alignment of interests. The broker makes her money by buying and selling securities. The client only makes money if the securities go up in price. The broker has an interest in keeping the client from becoming so dissatisfied that he takes his business elsewhere, but only to that extent do her financial interests align with those of her clients. Therefore, this is a situation in which other trust factors (like good communication) come more heavily into play.
Competence is the final trust factor we will cover, although there are certainly other issues involved in engendering trust. Competence can be difficult to judge, especially when the trustee has some specialized or expert knowledge. How is the lay client supposed to judge the expert's competence?
Often it is really the ”perception” of competence rather than the actual that we assess. If the person has the trappings of someone who is successful in his area – reputation, accreditation, apparent success, referrals from other trusted sources, etc. – we believe he must have the necessary competence in order to have achieved those things.
This is why recommendations are so great, both for the prospect and the business. Since it is difficult to judge competence outside our own ken, and it is impossible to know if someone keeps their promises and comes through, a referral from someone we do trust imparts that feeling of trust to the party being recommended. As the business being referred, the referral from a trusted source legitimizes you. Naturally, you have to live up that as you build you own relationship with the client or customer, but you don't have to forge the initial trust from scratch as you would otherwise.
Trusted Brands
The need for trust is another reason why building your brand is so important. Brands that become well known become familiar entities, something like friends in their own right. We tend to trust our friends, so a familiar brand inspires trust as well. It is similar to getting a recommendation. A strong brand image can convey the perception of success, professionalism, competence – those qualities a prospect tries to judge before doing business with a company.
Mr. Weldon is a graduate of the National Commercial Lending Graduate School of Banking at the University of Oklahoma where he received the designation of CCL, Certified Commercial Lender. He completed coursework at Williams College, Wharton School of Business, Duke University, advanced real estate at Harvard University and has been a guest lecturer at Carlson School of Business at the University of Minnesota.
Mr. Weldon served as President of Valley National Bank in Apple Valley, MN and as Vice President and COO of Fidelity Bank and Trust Co. in Burnsville, MN. He was also a Vice President with First Bank Edina in Edina, MN, where he headed various lending departments as well as being charged with Strategic Planning for the bank. He spent four years as a Commissioner on the Planning Commission for the City of Apple Valley, MN. Mr. Weldon served in Branch Administration for Peoples Bank in Rhode Island for over ten years. Locations included Providence Main Office, Wayland Square, Barrington and Johnston.
Howard wrote:
There was an article in the September 2006 issue of Harvard Business Review on trust in the workplace. That got me thinking about how important trust it is in marketing as well, and in fact, in any business relationship. One of the most important ingredients in building a thriving business is establishing a feeling of trust in potential customers. Without a degree of trust at least sufficient for the dealings at hand, customers are unlikely to give us their business.
The HBR article includes some gloomy statistics, starting with the finding that about half of all managers don't trust their company's leaders. In 2002, a University of Chicago survey found that four out of five (80%) Americans have little confidence in the people running major corporations, and a Golin-Harris survey found that almost 70% of Americans “just don't know who to trust anymore.” That paints a pretty grim picture, and I daresay things may be even worse today than in 2002.
The headlines are full of failed-trust issues: Formerly “respected business leaders” being jailed for illegal financial manipulations; companies accidentally revealing or losing sensitive customer data; and let's not even start talking about the political arena!
What is a person to do? What is a marketer to do? In order to win their business, we have to establish trust with our prospective clients and customers. On the one hand, with people feeling so robbed of trust today, we might ask how a company can possibly create the necessary trust with prospects in order to turn them into customers. On the other hand, we can speculate that with so few people and companies to trust, people are hungry for trust connections they can make.
Who Do You Trust?
To paraphrase the old Jim Croce song, You don't tug on Superman's cape, you don't spit into the wind. You don't pull the mask off that old Lone Ranger, and you never trust anyone who says “trust me.” Trust is something that has to be earned, not just asked for.
Apparently the folks at Perot Systems want to be known for being trustworthy, but aren't aware that saying they are isn't enough. The headline in their current advertisement says just “Trust.” The copy then begins, “At Perot Systems, earning our clients' trust is not just a goal – it is what distinguishes us in our industry.”
Does that make you inclined to trust them? I think not. Talking about being trusted or trustworthy is almost an ineffective as saying “trust me.”
So how do we build that necessary trust? There are a number of factors that influence both perceived trustworthiness and an individual's willingness to convey trust. Let's look at the latter first.
If a person is in a precarious situation, one outside his control or his comfort zone, he is likely feeling ill-at-ease to begin with. In this case, the stakes are already high for the prospect, so he is apt to feel at greater risk and less willing to bestow trust. In such a case, it may take the influence of several trust-inducing factors to gain the prospect's trust.
It is also important to realize that there are all sorts of people: some are risk takers, and some are risk-averse. The amount of risk the prospect sees being involved with bestowing trust on the person or company that wants his business is an important factor, and this will vary depending on the customer's risk tolerance.
Another consideration is that the prospect may have previously been let down by a company or advisor in whom he placed trust. This type of prospect is less likely to readily trust a new relationship until trust has been well-earned. “Once burned, twice shy,” is an expression we need to take to heart.
Important questions a prospect (truster) is likely to ask include, how reliable is the trustee? Do I get a sense of integrity from him? How reliable has he demonstrated himself to be? These are significant contributors to conveying trust.
Make a Promise, Keep a Promise
FedEx's "absolutely, positively overnight" promise (an old favorite of ours) communicated that sense of reliability and therefore trust, and it worked incredibly well for the company. If they are promising certain overnight delivery, we thought, they must really come through! In fact, the campaign only worked because FedEx was able to come through and keep that promise virtually every time.
Coming through on promises inspires trust. And if someone does more than just come through, so much the better. That is why the advice to under-promise and over-deliver is so wise. People are impressed when they get more than they expect.
I have purchased a number of computers from Dell over the years, and I found them to under-promise and over-deliver almost to an extreme. Several times the computer we ordered was delivered before the date they quoted as being the “expected shipping date.” Perhaps this is one of the reasons the company became so successful!
The opposite is devastating, though. A company that over-promises and under-delivers exhibits unreliable behavior, and unreliable behavior arouses distrust instead. It doesn't matter how well-intentioned the company – or the person – is, the fact remains that they didn't come through as promised.
Tell Me True
Good communication is another essential element in building trust. This seems obvious when you think about it, but it is something that businesses often ignore. Many businesses tend to use their communication budget – be it time or money – to solicit new customers rather than maintain current ones. They seem to think, well, we're doing what they hired us to do, so that is enough, isn't it? Often it is not.
Poor communication creates distrust, because without communication, we don't know if the trustee is doing anything on our behalf. At one time I had an investment advisor who called me every month or so just to touch bases and update me on the outlook for the securities I was invested in. I appreciated that communication and felt I was being taken care of. When he left the business, I switched to someone else who had come highly recommended. After the honeymoon period, though, I never heard from her unless there was a trade to discuss. Even when I told her I would like to hear from her more often, she basically told me that I'd hear from her when there was something to talk about. As a result, I felt that she was not paying much attention to my account and didn't have my best interests at heart. Needless to say, she lost my trust and my business.
Communication can be especially important in times of crisis. Someone who proactively communicates and is honest and forthright when things are rocky can engender a great deal of trust. Maybe that is because so many others treat us like mushrooms … you know, keep us in the dark and feed us so much manure!
Are You Interested?
How closely someone's interests are aligned with yours can affect your willingness to trust that party. If you both benefit from the same outcome, you naturally have the feeling that the other party will serve your interests, because her interests are being served at the same time.
In the case of a stock broker, there is little alignment of interests. The broker makes her money by buying and selling securities. The client only makes money if the securities go up in price. The broker has an interest in keeping the client from becoming so dissatisfied that he takes his business elsewhere, but only to that extent do her financial interests align with those of her clients. Therefore, this is a situation in which other trust factors (like good communication) come more heavily into play.
Competence is the final trust factor we will cover, although there are certainly other issues involved in engendering trust. Competence can be difficult to judge, especially when the trustee has some specialized or expert knowledge. How is the lay client supposed to judge the expert's competence?
Often it is really the ”perception” of competence rather than the actual that we assess. If the person has the trappings of someone who is successful in his area – reputation, accreditation, apparent success, referrals from other trusted sources, etc. – we believe he must have the necessary competence in order to have achieved those things.
This is why recommendations are so great, both for the prospect and the business. Since it is difficult to judge competence outside our own ken, and it is impossible to know if someone keeps their promises and comes through, a referral from someone we do trust imparts that feeling of trust to the party being recommended. As the business being referred, the referral from a trusted source legitimizes you. Naturally, you have to live up that as you build you own relationship with the client or customer, but you don't have to forge the initial trust from scratch as you would otherwise.
Trusted Brands
The need for trust is another reason why building your brand is so important. Brands that become well known become familiar entities, something like friends in their own right. We tend to trust our friends, so a familiar brand inspires trust as well. It is similar to getting a recommendation. A strong brand image can convey the perception of success, professionalism, competence – those qualities a prospect tries to judge before doing business with a company.
Tuesday, July 14, 2009
Suspension Of Disbelief
Scene 1: Rural town department store circa 1970, before security devices
Male Shopper: He folder the sweater he was thinking of buying and with direct eye contact with me he stuffed it inside his parka, zipped the jacket up to his neck and with one more glance at me walked out of the store.
Store Clerk (me): ( panic thoughts ) Stop him! Wait…he is over 6’ tall, at least 250 pounds and is the star football player in our small college town. Ok then, tell the store manager quick! No, wait…he is this shoplifter’s uncle. My manager is NOT going to like me accusing a family member of theft. My word against his….this guy is going to get away with it.
On that day I vowed to never again compromise my values and to never again be so weak. Wrong is wrong and theft is wrong.
Fast forward 10 years and now I am a seasoned mortgage loan processor with many loan approvals under my belt. Suddenly I was faced with another business moral dilemma. An appraiser that was the favorite of one of our newest builder accounts began bringing appraisals prepared in pencil (remember, this is before computers!). When I mentioned to him I didn’t want penciled work ups he shrugged and said “Oh, I gave you my work up copy…I will get the final to you before closing.” It happened again on the next loan. Again I told him this wouldn’t work for my file. He said, “Look, these take out loans based on the construction loan are a moving target. I will get the final to you when the builder tells me how much value he needs to cover the transaction”.
Wrong! Even though he was our #1 client’s favorite appraiser he was dropped from our approved appraiser list that day.
I share these stories with you because we have all been there. Faced with a moral dilemma and sometimes feeling powerless we fold to acceptance. However, most companies today have a vehicle for us to voice our concerns. We can seek out the best avenue in our companies and ask for complete confidentiality if and when we are aware of wrong doing in our mortgage workplace. Please understand, I am not advocating running a muck and looking for every single thing that YOU think is wrong. Being too quick to judge is as bad as watching a guy steal a sweater. Just keep in mind, sometimes things are not what they seem. Generally accepted business practices and a good corporate ethics policy will guide you in telling right from wrong at work.
Most people do the right thing or are thinking they are doing the right thing. Sometimes it is a gentle word from a co-worker correcting a simple blunder that will change a person’s work habits to the good and improve their skills for the long term. Even workplace discussions about ethics will evoke renewed understanding in people who have before fostered an illusory sense of piety because they have not yet faced themselves and their tricky ways. And as always we should continue to look upon our fellow workers with love and understanding even when we ‘think’ there is something amiss. Sometimes it is *“that willing suspension of disbelief for the moment, which constitutes poetic faith” that we need to apply to allow correction in the workplace. Have faith in your fellow workers that they are an important ingredient in the renewal of ethics in the business world.
*That willing suspension of disbelief for the moment, which constitutes poetic faith.
Samuel Taylor Coleridge
Male Shopper: He folder the sweater he was thinking of buying and with direct eye contact with me he stuffed it inside his parka, zipped the jacket up to his neck and with one more glance at me walked out of the store.
Store Clerk (me): ( panic thoughts ) Stop him! Wait…he is over 6’ tall, at least 250 pounds and is the star football player in our small college town. Ok then, tell the store manager quick! No, wait…he is this shoplifter’s uncle. My manager is NOT going to like me accusing a family member of theft. My word against his….this guy is going to get away with it.
On that day I vowed to never again compromise my values and to never again be so weak. Wrong is wrong and theft is wrong.
Fast forward 10 years and now I am a seasoned mortgage loan processor with many loan approvals under my belt. Suddenly I was faced with another business moral dilemma. An appraiser that was the favorite of one of our newest builder accounts began bringing appraisals prepared in pencil (remember, this is before computers!). When I mentioned to him I didn’t want penciled work ups he shrugged and said “Oh, I gave you my work up copy…I will get the final to you before closing.” It happened again on the next loan. Again I told him this wouldn’t work for my file. He said, “Look, these take out loans based on the construction loan are a moving target. I will get the final to you when the builder tells me how much value he needs to cover the transaction”.
Wrong! Even though he was our #1 client’s favorite appraiser he was dropped from our approved appraiser list that day.
I share these stories with you because we have all been there. Faced with a moral dilemma and sometimes feeling powerless we fold to acceptance. However, most companies today have a vehicle for us to voice our concerns. We can seek out the best avenue in our companies and ask for complete confidentiality if and when we are aware of wrong doing in our mortgage workplace. Please understand, I am not advocating running a muck and looking for every single thing that YOU think is wrong. Being too quick to judge is as bad as watching a guy steal a sweater. Just keep in mind, sometimes things are not what they seem. Generally accepted business practices and a good corporate ethics policy will guide you in telling right from wrong at work.
Most people do the right thing or are thinking they are doing the right thing. Sometimes it is a gentle word from a co-worker correcting a simple blunder that will change a person’s work habits to the good and improve their skills for the long term. Even workplace discussions about ethics will evoke renewed understanding in people who have before fostered an illusory sense of piety because they have not yet faced themselves and their tricky ways. And as always we should continue to look upon our fellow workers with love and understanding even when we ‘think’ there is something amiss. Sometimes it is *“that willing suspension of disbelief for the moment, which constitutes poetic faith” that we need to apply to allow correction in the workplace. Have faith in your fellow workers that they are an important ingredient in the renewal of ethics in the business world.
*That willing suspension of disbelief for the moment, which constitutes poetic faith.
Samuel Taylor Coleridge
Monday, July 6, 2009
Truth’s Competition
Today’s news reports that the Feds filed criminal conspiracy charges against one of our nation’s 10 largest home builders reaching a deal that allows it to clear its record by paying up to $50 million dollars to compensate borrowers who were defrauded by its former mortgage arm, Beazer Homes.
As English essayist, Alexander Pope (1688-1744) so aptly put it “No one should be ashamed to admit they are wrong, which is but saying, in other words, that they are wiser today than they were yesterday.” So it makes sense that Ian McCarthy, Beazer’s CEO would make a statement for the media saying, “We deeply regret these matters and have used what we learned to strengthen our control and compliance culture.” Now, the proof “is in the pudding” as great grandmother used to say. Over and over in mortgage we have seen bad players, having been caught, move shop, change names and re-open with the same unethical practices.
Does paying a drop in the bucket fine really change their modus operandi? Love of money gets Lenders into the mess; having money gets them out; then wanting more money makes the appeal to do what ever it takes to get there faster even more tempting. It is and always will be about money. Check it out in the poem I wrote in 1986:
Money
I am a newly minted coin.
Bright and Shiny.
Sought After.
Treasured.
I am a well worn coin.
Spent.
Tossed for Decisions.
Changing Lives in Passing
I am Truth’s Competition.
So what else can the Feds do but fine the guilty and move on? How about a complete freeze on their ability to lend in the United States? You know, kind of like if you loose your drives license due to reckless behavior. You are not allowed to drive a vehicle – not legally, anyway. Maybe that is the concept here.
If the Feds put a freeze on a company’s executives’ and loan originators’ lending ability but the company and/or its originators begin lending again under another company name or in another state they could possibly go to jail.
Breaking a law like that might just be illegal enough to qualify for jail time; whereas defrauding American homeowners one loan at a time, apparently is not.
No one should be ashamed to admit they are wrong, which is but saying, in other words, that they are wiser today than they were yesterday. Alexander Pope
Monday, June 29, 2009
Reprobation And The CW Bus
Reprobate: A lonely word meaning lost, rejected, troublemaker
Reprobation: A strong condemnation or disapproval of somebody or something (Encarta Dictionary)
When reading news reports of big corporations and financial companies who are reported to have hurt our industry and our society, reprobation comes easily. Take Bernie Madoff as a prime example. His victims’ statements about him are chilling and sad. One woman said this about how much Madoff hurt her family, “I told my father he could not die because I didn’t have enough money to bury him. This is what we are reduced to after Madoff lived so well off of all our money. He ought to be able to look forward to just exactly what he has done to us: No hope, no future and no forgiveness.” If these stories weren’t so real you might think that Charles Dickens himself wrote today’s news as advertisement for his latest book, "Great Expectations Gone Bad". Dickens would surely have used the name Madoff also, as this is what he did with other people’s money! Then there is Shakespeare wanting to pen in on the moment in his clever take on "To Dupe or Be Duped"!
But this is not fiction and certainly no joking matter, although over all, there seems quite a circus of characters in our financial market place today. In another corner of our financial drama are the Countrywide executives, namely Angelo Mozzilo, who is under heavy scrutiny today but certainly was not for many years. Quite the contrary, many people sought out his company (CW) and hopped on the CW Bus for many reasons. To name a few:
People in high places could get loans for expensive homes without the hassle of dealing with the “little people's " guidelines and while capturing preferred rates
CW easy lending policy drew mortgage professionals eager to earn more and more money
Vendors who could capture even a little piece of a seat on the CW Bus saw their revenues increase dramatically
Countrywide parties drew huge crowds from the Who’s Who in Mortgage Banking. Hundreds of mortgage professionals, legislators, vendors, and the press who were wined and dined pledged continuing loyalty to CW and stayed in their seats even when the CW Bus ran too fast or took corners on two wheels careening as if out of control.
As we read in the news reports, volumes at CW were staggering. Where did that volume originate? Where did it end up? The CW Bus carried many and they all know who they are; from legislators paving the way; loan correspondents looking the other way at churning and loan safety; to appraisers who aligned to closely to their clients; to borrowers who made up stuff; and all the happy campers in-between who found themselves on the money road of the CW Bus. Few felt lonely or nervous.
But as the bus headed for the cliff many jumped off and clucked their tongues as it went over the edge saying, “Shame on them! Look what they did!” Let the reprobating begin!!
Could it be dear readers; that this very public condemnation of Angelo Mozzlio is a bright light for the citizens to focus upon while some, who were on the bus, lurk in the shadows of history hoping not to be discovered?
Societal Reality Check: There are some bad players still out there. Some of the worst ones point the biggest fingers. The mortgage industry will find it more difficult to recover its ethics and integrity at the grass roots level until the legislators clean up their ethical acts.
Monday, June 22, 2009
Workplace Ethics Reclamation Project 1
Reclaiming a good set of ethics in the workplace is a process, not a goal easily defined or a line item in a mission statement. It is a bodily progress for the entire company. Like cells that rejuvenate, the employees of good ethical companies find themselves renewed when making the right choice in times of business moral dilemmas. When the corporate compass is stable and direction is clear situations never faced before are more easily handled without compromise.
We have seen what happens to companies with out a moral compass. The appearance of stability may exist on the outside but internally it is a free for all where greed can breed.
Even worse, over time, a stagnate attitude develops where a “this is the way we have always done it so I could care less” mentality develops leaving employees with no guidance for today’s challenging workplace ethical dilemmas. The pace and intensity in today’s economic climate is extreme with no time to ponder “what to do next” when faced with a new workplace moral challenge. Decisions and money must be made fast. Good moral fiber is the only hope.
If a company has mapped out and openly shares its moral philosophy toward consumers, vendors, clients and employees; workers are empowered to speak from the company platform and that becomes a tentative replacement for personal moral fiber. I say tentative as this is the kind of work behavior that may or may not go home or onto the streets. Note to employers: face book and other social media may tell you the full story of your employees.
The reclamation of corporate moral fiber takes ordinary people seeing their jobs in a new light from the top down, bottom up and sideways. Especially from the top down – check Bernie Madoff. Today‘s (6-16-09) Boston Globe reports some of Madoff’s victims statements about him, such as “I told my father he could not die because I didn’t have enough money to bury him. This is what we are reduced to after Madoff lived so well off of all our money. He ought to be able to look forward to just exactly what he has done to us: No hope, no future and no forgiveness.” More about that in my next blog entry.
Right now lets look at how we might begin to reclaim a lost or ‘off track’ corporate ethical code.
Step 1 - Check the Employee Handbook
Most handbooks have the following list for events or actions that are cause for termination
1 Excessive tardiness
2 Failure to notify of an absence
3 Insubordination
4 Rude or abusive language in the workplace
5 Failure to follow “Departmental Rules or Policies”, i.e., not wearing safety equipment, not following correct cash handling procedures
6 Dishonesty
7 Theft
Ok, that is a good start but look at # 6 “Dishonesty”; not everyone has the same sense of what that means. I know, I know you are rolling back on your executive chair thinking I am out of my mind. But trust me, society has changed. If you do not want employees using white out to change the date on a form, signing paperwork in blank, giving away your client base to a competitor, etc, then you must list it out. There are too many things to individually list in most industries so a lumping together of the general workflow is necessary. Using mortgage banking as an example, “Dishonesty” may read like this:
Dishonesty such as misinformation in a loan file, telling the borrower you did something on their file when you did not (like lock the loan); changing previously submitted information, removing documents from file, deleting computer conversation logs, copying computer information with out authorization.
Also, look at how you deliver your handbook to new employees. In mortgaging two of the hot buttons, fraud and abuse, require the new employee’s attention and understanding of non-acceptability in your workplace. Instead of mailing or emailing the handbook, sit down with the employee and go over the reasons for possible termination. Most employees appreciate their jobs more today than they have in a good long while. Knowing the employer is serious about a termination for doing a bad thing in a loan file will make employees consider the consequences and wisely not take that action at all, no matter where the pressure is coming from.
Monday, June 15, 2009
It's Not Wrong - Everyone Is Doing It
My mother used to say “If your friends jumped off a cliff would you want to do that too? Well, you are not allowed to do this….” Whatever the antecedent was for “this” I would not be joining my friends in the adventure. That is how we learn. Parents tell us ‘no’, teach us right from wrong and demonstrate how to think for ourselves.
When we grow up and get to the workplace, things change. There are no parents to keep us in line. People we work with have had various types of discipline; some with no guidance at all about right and wrong. Free thinkers might survive but the pressure to ‘get with the culture’ of a company can be incredibly strong. Company cultures play a huge role in how we sculpt our professional behavior to fit into our work group. Many companies do not have written guidelines of professional behavior and even when they do those guidelines are easily lost in the shuffle of original employment on-boarding documents or simply not adhered to by management.
When work groups or individuals go out side the main stream of the company policy or individual personnel is deemed to display behavioral deficiencies: "Houston, we have a problem."
H.R. types and Lawyers like to use the word behavioral but this is my blog and I write about ethics in the workplace ….so for the remainder of today’s reading I am focusing on the ethical issues of right vs. wrong as “the” behavioral deficiency. But then we must look at how to correct or ‘discipline’. Can we correct errant ethical business practices? Can we discipline a worker for them? Companies must be very, very careful not to wrongly accuse or embarrass an employee. Touchy area, this.
If the employee is involved in misconduct that can be proven and cannot be tolerated, management may use discipline to correct the behavior such as issuing letters of warning, letters of suspensions, or actual termination but not altering work schedules, assigning an employee to do unpleasant work, or denying vacation requests. Mortgage employees, like many other industries, generally work in a close knit environment where deadlines and a continually frantic pace prevails. All origination personnel take a role in producing the end product: getting the loan funded. As a loan passes through the hands of the team members there are quality checks along the way. Even with good checks and balances the pressure to get loans funded so everyone can be paid is an incredible strain on the nerves and sometimes on good judgment.
The pace and intensity can sometimes mask what the underlying problem might be. For example, the management or ownership of the mortgage business may not have the highest professional ethics themselves and expect and require a ‘me too’ cooperation by their employees. You know the old saying “It starts at the top”. In mortgaging that can be the killer in the code of ethics no matter how well written it is on the website and company business cards.
Like good parents to their children, good mortgage employers must convey the seriousness of fraud or misrepresentation in a loan file to their employees. In lending, there is no such thing as a ‘small’ lie just like you can not be ‘sort of’ pregnant. And to allow group think to take over making it okay to fudge here and there or to not send the entire story of the loan to the investor is not good, ethical lending practice. “Corner cutters” exist in mortgage lending because we allow them to. They might be jumping off the cliff but we do not have to hurl ourselves along with them.
Monday, June 8, 2009
Amazing Turnaround
An amazing turnaround is happening in mortgage lending. The wild, maladjusted teen-type thinking of “How much more can I have? And I demand it right now! ” is being refined to a more mature thinking. This new maturity will steady the lending arena.
Before the GSEs when there were only FHA and private investors. We learned to create loans with a concept of “do it right the first time”. No do overs. Period. Furthermore, homes were to live in and mortgages were for people who wanted a home for family, generations even. American homeowners of yesteryear planned parties for the day when they would totally pay off their mortgage and could live in their homes without burden of debt. The home was not an endless cash register to be tapped to 110% of its value; instead, homes were considered almost sacred in their sanctity of human family.
We have been through much together since then. I do not advocate going back in time but to stay constantly in motion, creating new loans for today’s borrowers who now understand the big picture and who will once again “regard the end”. In other words, pay their mortgages with a comprehension that they promised to do so and to do anything other than that would be dishonorable. It seems cold that I should write these words when people have lost their jobs and can not afford their homes through no fault of their own promises. However, I contend that the bigger picture of what happened to America was not done by one industry, or by several lenders, or by a handful of borrowers. A massive number of individuals did their own thing to get ahead in the real estate market; whether it was buying 7 more flippers then their $3000.00 wage could handle; or by frauding a lender into thinking the borrower earned more money then they did; or by an investor who fanned the out-of-control fires of real estate passion on main street. The hard lessons of prudent property purchase and the continuum of mortgage lending effect all - at fault or not.
In a society gone money crazy, and property stupid commitments and promises lost the honor they once had. The thinking that the fast buck will always cover the smell of what ever had to be done to get the buck in the first place must be replaced with principles, respect and honor. Ask someone to describe honor and you will be surprised to find a stuttering answer at best. Ask someone else what their principles are and a quick response is most likely not forthcoming. Desires and wants are much easier to describe.
Restoring honor and respect in mortgage lending is a journey that is at once sensitive and sustainable. Lenders, investors, vendors and borrowers must all keep their acts clean in order for the amazing turnaround to be fulfilled. How wonderful it will be to have honor replace greed and corruption as they go by the wayside with sub prime lending.
Monday, June 1, 2009
An Attraction To Distraction
It is amazing to me how multi tasking has become a way of life. One of our star employees, computer savvy, street smart and good in sales could sit through a sales meeting fully engaged and texting while simultaneously changing meeting content on her laptop for the attendees to view on screen. When asked why she needed to text on her cell ‘during’ the meeting she cheerfully explained it was all about customer Q&A. She rarely made a mistake and clients loved her.
To most of us, multi tasking can be a distraction. Distractions can lead to errors, time loss, or worse - serious accidents such as the Boston Trolley incident. To avoid errors and accidents many leaders and employers have considered banning texting during working hours. That doesn’t eliminate the definite “attraction of distraction”. The real question on the table is what is our personal responsibility as we go through our work day? If we are performing heart surgery we need both hands. If we are riding in a van pool we WANT the driver to use both hands, both eyes and full brainpower.
For several years the mortgage industry flourished in the distraction of low interest rates, easy loans and even easier commissions. Distracted from what, you ask? Most were sidetracked and diverted from scrutinizing the quality of loans they were approving. Many were unfocused on prudent lending policy and practice. For a long period of time some lost track of the real meaning and consequences of ‘churning’.
An ethical personal response to how to spend our time at work is required by each of us. And by the way, texting and low interest rates are not our only distraction. There are phone calls, chat rooms, on line shopping and games. Employers who look the other way in order to avoid confrontation simply promote the problem. I contend that each of us must take pride in our work, strive to do it right the first time and commit to the job at hand rather than potentially stealing time from our employer. Theft of time is still theft. Remember the old saying, “Time is money”.
We exchange each dollar we earn for a certain amount of work. All work requires brain engagement. When we engage our brains full time to our tasks soon we are doing what we were hired to do. Soon, we can gently but with authority tell our friends “While I’m at work, don’t text me Bro”.
To most of us, multi tasking can be a distraction. Distractions can lead to errors, time loss, or worse - serious accidents such as the Boston Trolley incident. To avoid errors and accidents many leaders and employers have considered banning texting during working hours. That doesn’t eliminate the definite “attraction of distraction”. The real question on the table is what is our personal responsibility as we go through our work day? If we are performing heart surgery we need both hands. If we are riding in a van pool we WANT the driver to use both hands, both eyes and full brainpower.
For several years the mortgage industry flourished in the distraction of low interest rates, easy loans and even easier commissions. Distracted from what, you ask? Most were sidetracked and diverted from scrutinizing the quality of loans they were approving. Many were unfocused on prudent lending policy and practice. For a long period of time some lost track of the real meaning and consequences of ‘churning’.
An ethical personal response to how to spend our time at work is required by each of us. And by the way, texting and low interest rates are not our only distraction. There are phone calls, chat rooms, on line shopping and games. Employers who look the other way in order to avoid confrontation simply promote the problem. I contend that each of us must take pride in our work, strive to do it right the first time and commit to the job at hand rather than potentially stealing time from our employer. Theft of time is still theft. Remember the old saying, “Time is money”.
We exchange each dollar we earn for a certain amount of work. All work requires brain engagement. When we engage our brains full time to our tasks soon we are doing what we were hired to do. Soon, we can gently but with authority tell our friends “While I’m at work, don’t text me Bro”.
Saturday, May 16, 2009
Temptation . . . . My Bad or Yours?
Often life finds a way of changing a normal work day into a docu-drama and we find ourselves in a starring role without a script. Such was the day my desk phone rang at 1:30 with a distraught neighbor on the first floor of our building telling me that he just watched one of my employees steal a computer. What? With each floor the elevator descended my anxiety rose.
My good neighbor explained that his first floor window gave him a wide open view of the parking lot. “I have been watching this delivery truck most of the morning. The hard working driver is delivering computers upstairs somewhere and he is leaving his roll up door open as he comes and goes.”
He went on to tell me about how a woman, (who he was fairly certain worked for me) stopped her car next to the open delivery truck door, got out and picked up one of the large boxes right off the truck and popped it into her hatch-back car and drove out of the lot. After he described the woman and the car I felt that sick feeling of knowing just who it was.
How I got her back to the parking lot is a long story so suffice it to say my call to her cell phone gave her very little choice. Convincing the driver to wait for her and not call the police was like putting toothpaste back in the tube, but he also had little choice. After all, what would his company think of him leaving dozens of expensive computers out in the open, unguarded? The exchange of his computer for her freedom happened quietly. She quit her job without thanking me, however; each of us learned a huge lesson that day.
For the driver: Take better care of the merchandise.
For the employee: Don’t steal. You may get caught.
For me the realization that temptation sat there in the parking lot for all to see and yet many people passed it by. But for her, it was just too much of a temptation and she succumbed to greed. This has an interesting correlation to the mortgage industry that also created a temptation that many people could not pass by. The “No Doc” loan, which was initially set up for self employed business owners with complex tax returns, tempted even the most seasoned mortgage professionals when it was allowed for general use. The open door of easy loans lured people into the parking lot of home lending. Loose jargon was thrown around such as, “liar’s loans” and “If they breathe give them a loan”….“If they fog a mirror they are ok”….credit quality went out the window as fellow colleagues would shrug their shoulders and say, “If the investors will buy them on the secondary market I’ll make these loans all day long.” Responsibility took a back seat.
Once the general public realized the concept of no income qualifying loans people quickly figured out how they could now have the house of their dreams. Income numbers were either lied about, fudged, fantasized, rationalized or faked. Whatever the label, many loans went through the system with an ultimate destination of the foreclosure department. Quality Control departments often found the discrepancy in the post close phase but by then it was too late. Worse, servicing departments trying to collect payment would learn from the borrower that they just ‘can’t afford the house’. Really? And you make $22,000.00 a month? “No I don’t.”
That is the thing about temptation
– there are always consequences hiding in its shadow.
The mortgage nightmare that still makes us tremble has many arrows. One of them is the No Income Verification loans……Did Loan Originators press the borrowers for a higher income dollar to justify the loan? Or did the borrowers lie? Or should the creators of these loan products have acted more responsibly? Or perhaps Wall Street should have considered the consequences.
My good neighbor explained that his first floor window gave him a wide open view of the parking lot. “I have been watching this delivery truck most of the morning. The hard working driver is delivering computers upstairs somewhere and he is leaving his roll up door open as he comes and goes.”
He went on to tell me about how a woman, (who he was fairly certain worked for me) stopped her car next to the open delivery truck door, got out and picked up one of the large boxes right off the truck and popped it into her hatch-back car and drove out of the lot. After he described the woman and the car I felt that sick feeling of knowing just who it was.
How I got her back to the parking lot is a long story so suffice it to say my call to her cell phone gave her very little choice. Convincing the driver to wait for her and not call the police was like putting toothpaste back in the tube, but he also had little choice. After all, what would his company think of him leaving dozens of expensive computers out in the open, unguarded? The exchange of his computer for her freedom happened quietly. She quit her job without thanking me, however; each of us learned a huge lesson that day.
For the driver: Take better care of the merchandise.
For the employee: Don’t steal. You may get caught.
For me the realization that temptation sat there in the parking lot for all to see and yet many people passed it by. But for her, it was just too much of a temptation and she succumbed to greed. This has an interesting correlation to the mortgage industry that also created a temptation that many people could not pass by. The “No Doc” loan, which was initially set up for self employed business owners with complex tax returns, tempted even the most seasoned mortgage professionals when it was allowed for general use. The open door of easy loans lured people into the parking lot of home lending. Loose jargon was thrown around such as, “liar’s loans” and “If they breathe give them a loan”….“If they fog a mirror they are ok”….credit quality went out the window as fellow colleagues would shrug their shoulders and say, “If the investors will buy them on the secondary market I’ll make these loans all day long.” Responsibility took a back seat.
Once the general public realized the concept of no income qualifying loans people quickly figured out how they could now have the house of their dreams. Income numbers were either lied about, fudged, fantasized, rationalized or faked. Whatever the label, many loans went through the system with an ultimate destination of the foreclosure department. Quality Control departments often found the discrepancy in the post close phase but by then it was too late. Worse, servicing departments trying to collect payment would learn from the borrower that they just ‘can’t afford the house’. Really? And you make $22,000.00 a month? “No I don’t.”
That is the thing about temptation
– there are always consequences hiding in its shadow.
The mortgage nightmare that still makes us tremble has many arrows. One of them is the No Income Verification loans……Did Loan Originators press the borrowers for a higher income dollar to justify the loan? Or did the borrowers lie? Or should the creators of these loan products have acted more responsibly? Or perhaps Wall Street should have considered the consequences.
Monday, May 11, 2009
Leadership and Ethics
Much can be said about truth. Many people make a huge fuss about ‘seeking truth’ while others profess that if they believe something to be true than it is BUT should someone else believe a differing opinion is true, then that is “their “ truth. Even the explanation of that way of thinking gives me an ice cream headache. However, Bill Clinton tried to clear up the subject when he said, and I paraphrase, It depends on what the meaning of the word ‘is’ is.
If you have ever wrestled with the concept of truth at work you are not alone. Many managers, department heads and executive leaders caucus before employee meetings to determine how best to put a “positive spin” on company announcements. No wonder the business owner who stands before his/her employees and tells them “like it is” retains a loyal following of devotees. Then, if and when things do turn sour, these employees are equipped to help build something good out of what could have been ruins.
Truth gathers a following. A by-gone can be a by-gone when the basis for the workplace is truth. It is easier to clean up a mess when it is clear what the mess really is. Truth flowing freely in the air helps most people sleep better at night.
When hiring employees for my business, the interview process always found me saying to the potential employee “It is very easy to work here. There are three key things you need to do.
1) Be here. Come to work mentally and physically everyday. The reason we are hiring for this position is that we need the help
2) Do your best each day.
3) Tell me the truth. No matter how big the mistake; no matter what the problem is you face, tell me the truth and I can deal with that much better than a lie that I am bound to find out about.“
Then I would ask “ Can you do these three things?” The confirming answer of yes was the buy in for the new hire to understand our company culture and integrate into our workplace ethics.
As company leader these three things applied to me as well. Employees look to their leadership for the key ingredients to the company culture. From dress; to manners; to over flowing with ideas…employees pick up on leadership and gravitate to that direction. Companies with huge ethical problems within their ranks need to consider their leadership style.
If you have ever wrestled with the concept of truth at work you are not alone. Many managers, department heads and executive leaders caucus before employee meetings to determine how best to put a “positive spin” on company announcements. No wonder the business owner who stands before his/her employees and tells them “like it is” retains a loyal following of devotees. Then, if and when things do turn sour, these employees are equipped to help build something good out of what could have been ruins.
Truth gathers a following. A by-gone can be a by-gone when the basis for the workplace is truth. It is easier to clean up a mess when it is clear what the mess really is. Truth flowing freely in the air helps most people sleep better at night.
When hiring employees for my business, the interview process always found me saying to the potential employee “It is very easy to work here. There are three key things you need to do.
1) Be here. Come to work mentally and physically everyday. The reason we are hiring for this position is that we need the help
2) Do your best each day.
3) Tell me the truth. No matter how big the mistake; no matter what the problem is you face, tell me the truth and I can deal with that much better than a lie that I am bound to find out about.“
Then I would ask “ Can you do these three things?” The confirming answer of yes was the buy in for the new hire to understand our company culture and integrate into our workplace ethics.
As company leader these three things applied to me as well. Employees look to their leadership for the key ingredients to the company culture. From dress; to manners; to over flowing with ideas…employees pick up on leadership and gravitate to that direction. Companies with huge ethical problems within their ranks need to consider their leadership style.
Monday, May 4, 2009
Who Stole The Scissors?
Back in the day….
When I was twenty two years old; the world still had fresh air and my new job as office manager came with a few challenges. My seven staff members were all women with children, family, home and work balanced neatly on their small paychecks. We believed in and trusted each other.
The reason for this story is not to bore you with the mundane for we were at best, normal for a group of working women; we were at worst normal for a group of poor working women. I didn’t realize we were poor until I became responsible for the office P&L and saw first hand the seemingly vast revenue stream brought in by the sales men who dropped their new client files on our desks each day by noon and promptly headed for the golf course.
Working through these files meant using offices supplies….LOTS of them....file folders for duplicate copies, reams of paper, boxes of copy toner, and staples. Friday’s supply order became routine until I noticed an item kept popping up on my group’s supply order – scissors. Unlike paper or even paper clips, scissors had a certain ‘shelf life’ that didn’t warrant reordering so often. This was a time when scissors cost considerably more than today, were made here in America and made quite well, I might add.
But still, I asked…”Are they breaking?”
No, came the reply.
“Then why reorder? “
Can’t find my pair, came the meek reply over and over.
The mystery of the missing scissors continued until corporate wrote me up for exceeding the quarterly supply budget. Now it was serious! We are talking about my job here. The problem was eventually eliminated but the question of what happened to a dozen or so scissors remained unanswered. My staff came to the realization that there was someone who cared just as much about ‘how’ the job was done as the results.
In fairness to this story, we were marooned in a poor rural area of America before the internet. These were the 60s. The moral and social sappers were beginning their work. Yet, mid-west Americans valued family and faith. I had to believe that the scissors were taken by aliens from another galaxy. To believe anything else would only lead to disaster for one of us. As Pascal wrote, “the heart has reasons that the mind knows not”. Knowledge follows love; it does not precede it.
It wasn’t about the scissors. It was and is about staying responsible; respecting others property; and remaining truthful. All good office policy.
When I was twenty two years old; the world still had fresh air and my new job as office manager came with a few challenges. My seven staff members were all women with children, family, home and work balanced neatly on their small paychecks. We believed in and trusted each other.
The reason for this story is not to bore you with the mundane for we were at best, normal for a group of working women; we were at worst normal for a group of poor working women. I didn’t realize we were poor until I became responsible for the office P&L and saw first hand the seemingly vast revenue stream brought in by the sales men who dropped their new client files on our desks each day by noon and promptly headed for the golf course.
Working through these files meant using offices supplies….LOTS of them....file folders for duplicate copies, reams of paper, boxes of copy toner, and staples. Friday’s supply order became routine until I noticed an item kept popping up on my group’s supply order – scissors. Unlike paper or even paper clips, scissors had a certain ‘shelf life’ that didn’t warrant reordering so often. This was a time when scissors cost considerably more than today, were made here in America and made quite well, I might add.
But still, I asked…”Are they breaking?”
No, came the reply.
“Then why reorder? “
Can’t find my pair, came the meek reply over and over.
The mystery of the missing scissors continued until corporate wrote me up for exceeding the quarterly supply budget. Now it was serious! We are talking about my job here. The problem was eventually eliminated but the question of what happened to a dozen or so scissors remained unanswered. My staff came to the realization that there was someone who cared just as much about ‘how’ the job was done as the results.
In fairness to this story, we were marooned in a poor rural area of America before the internet. These were the 60s. The moral and social sappers were beginning their work. Yet, mid-west Americans valued family and faith. I had to believe that the scissors were taken by aliens from another galaxy. To believe anything else would only lead to disaster for one of us. As Pascal wrote, “the heart has reasons that the mind knows not”. Knowledge follows love; it does not precede it.
It wasn’t about the scissors. It was and is about staying responsible; respecting others property; and remaining truthful. All good office policy.
Friday, May 1, 2009
Ethics in Mortgage Lending - Then and Now
As a member of the mortgage community I witnessed the comings and goings of many mortgage employees for the last twenty years. In recent years, we witnessed first hand the ultimate human tragedy – people getting what they wanted. On a national scale we watched unashamed homebuyers signing promissory notes for homes they could not afford, MI companies taking on more and more risk, investors making erroneous assumptions based on never ending appreciation and the entire time mortgage personnel around the country worked over time and double time to keep the Humpty Dumpty mortgage world smiling.
Then Humpty Dumpty’s wall began to sag and sag and sag until off he went! Some say he was pushed and the blame game started. I say he wasn’t pushed but just got fat, lazy, greedy and brazen from bottom to top – especially at the top – the part that hit the bottom hardest. Ethical behavior was thrown out the window like ticker tape for the parade of money to be made.
So now put Humpty Dumpty back together again, or as the story goes, we can at least try. We will run into barriers, especially those of us in sales. Polishing the tarnished image held by consumers, rebranding our offerings and finding sales channels that work best are all daunting tasks.
So now put Humpty Dumpty back together again, or as the story goes, we can at least try. We will run into barriers, especially those of us in sales. Polishing the tarnished image held by consumers, rebranding our offerings and finding sales channels that work best are all daunting tasks.
In the last few years most mortgage professionals whether in sales or operations, have had their world rocked, turned upside down and perhaps even ruined. People who were reading others credit reports and approving loans find themselves in foreclosure. To stay in this business over the last two years has taken an act of faith and commitment to ourselves and the mortgage industry. With luck and hard work our efforts will be rewarded and our lives righted again…maybe not as flamboyant but hopefully not struggling to survive and surely with a steady eye on strong ethics.
Before the recent collapse we mortgage professionals lived in unbelievably rich times. Most loan officers, processors, underwriters and even vendors made really good money. Wages grew and commissions abounded. Company parties and trips were free and frequent and sales soared.
When it ended we found ourselves realigning our relationships and re budgeting our families. Then we began the journey back to learning the true purpose of mortgage lending (putting and keeping people in their homes) and re-learning our profession (calculating real income and doing FHA loans!). We also now understand the mine-field that is our industry. We no longer play at our work but put thoughtful effort into each loan so as to deter any unintended consequences. Liars loans, false appraisals, misrepresented income...are they a thing of the past? No, there are still those out there that need lesson in truth but for the majority of the people who once or still work in mortgage lending they have found a new the joy of working with the old saying "Tell it like it is".
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