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

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

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.

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.

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.

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.

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”.