In America today we have many reasons to experience discontent. Such as that which arises because of a depressed housing market where one year you could sell your house and buy another and the next year you can not. Where gold is the only thing you can bank on but you can’t afford a tank of gas let alone an extra ounce of gold. There is discontent in every dwindling unemployment check.  Or in every pink slip. There is discontent on bill paying day.  Not to mention when looking for a job and finding only brick walls. 

Are we just talking money here or is there also discontent in your life over lack of joy? Lack of excitement or general well being? Let’s examine discontent as if it were a coin with two sides. Heads and tails. Call the bet as the coin sails through the air to fall at random – negatively or positively. If that scenario were exactly your life it would mean that you have no control over whether or not you experience happiness or sadness.  Most people have a certain amount of ‘control freak’ juice in their blood.  Letting life ‘flip your coin’ means loss of control – very discontenting indeed!

Manage discontent and take control of life

The first step in managing discontent is to take ownership of the coin and ‘flip it between your fingers’. There is no one better than you to determine what you need to accomplish everyday and set forth doing it. There is no one better than you to decide that you will have a positive attitude or negative cynicism. Never permit things to just ‘happen’ to you. For example, what would you do in this case?

You have reservations for a three-day industry trade show in a lovely coastal city. The hotel reservationist says you will get an ocean view room, “We have plenty, not to worry!” she says.  But when you open your hotel door and slide back the drapes you see the back of another hotel with a kiddy pool right below your window. You:

a. become very disappointed and unpack knowing you’ll be out of the room in a day or two and you hated the idea of coming to the stupid conference anyway and besides this hotel stinks!

b. Not allow your surroundings to drag you down, and instead, unpack humming a little tune knowing you can see the beach up close anyway on your morning run.

c. Pick up the phone, and taking control, ask for a new room – one with a view – not stopping until you get what you want.

If you chose B or C you are in agreement that there is seldom a reason to allow others or events to dictate how we should act. No one has the right to make another feel inferior, although there are many among us who make it a habit to try and do just that. Many times it may be your best friends who will attempt to keep you from improving yourself. They may try to show you how foolish you are to set lofty goals or move in a new direction.  These friends won’t mind giving you advice ‘in your best interest’ of course.

Only we ourselves, personally, can know the ‘ power within’, to quote Tony Robbins.  The courage to listen to the inner voice of reason may help you discover the abilities and talents you never knew you had and that your potential is far greater than you had dreamed. The courage to be self directed also means not blaming everything that happens to you on someone else – a major step in managing discontent. When you turn discontent into positive power, manage it well and act upon it, you have found the most driving force for personal happiness. Many fortuitous people know personal happiness is the root of their success. In fact, hitting a brick wall can very often mean a new opportunity.

Everyday there are many decisions to be made, even if the decision is to do nothing! You can decide to allow external influences or other people to keep you perpetually discontented or you can decide to become the manager of your discontent aka master of your own life. What a great way to begin each new day!

 Before the GSEs, when there were only FHA and private investors, Lenders created 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 they totally paid 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.

America has been through much since then. I do not advocate going back in time but to stay constantly in motion, with Lenders 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. Many individuals did their own thing to get ahead in the real estate market; whether it was buying more rentals 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 that fanned the out-of-control fires of real estate passion on main street.  Even by government intrusion.  The hard lessons of prudent property transactions shaped destiny for all; those at fault and those who were not.

In a society gone money crazy, property stupid, and ethically derailed, promises have 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, governments, 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 the old sub prime lending.

Cover of Risky Business

Risky Business was a movie about relationships and their manipulation for profit.   Real life risky business repeats art in the financial services industry.   And how very quickly history can repeat itself!  If you are a loan originator, act now to protect yourself from the risky business of mortgage lending.  How?  Treat relationships like a long-term investment.  Take the long view.  A steady business relationship is a lasting asset; a one-time transaction is a poor investment.

In an industry that thrives on business partnering; where loans need several entities for birthing; in a climate of necessary trust – the following mortgage story teaches a severe lesson: 

To protect against loss know with whom you are doing business.

The Voluntary Petition, a public record, of a failed wholesale lender reads like an account of a ‘dog eat dog world’.  The summary of schedules in the Chapter 7 bankruptcy of this company we shall call Lender X  (names changed to protect the not so innocent) reveals a cycle of mutual punishment and abuse where no one wins.  The bankruptcy’s liabilities total $8,600,200.00.  The list of creditors and claimants reads like a ‘who’s who’ of mortgage lending.  Four warehouse banks are left standing empty handed to the tune of $3,400,000.00.  How did these major players miss judge their client relationship?

There are software companies listed on the “will never get paid schedule”, a document company, a paging service, a telephone company, the list goes on. 

How did this happen?  The assets, totaling $3,910,00.00, are mainly listed on the schedule that is headed   “The debtor has un-liquidated claims for offset and/or reimbursement from the following mortgage brokers for loans which were sold to lenders by the debtor, and for which loan repurchase demands were received by the debtor based upon false and fraudulent information contained in the loan portfolio”.

Lender X wholesaler contends that these loans are an asset because they have asked the ten mortgage brokers involved to repurchase.  There was no way repurchase could have happened and the wholesaler knew that.

If these loans were indeed fraudulent what measures did Lender X miss in their broker approval processes? Or in their loan quality control procedures?  Who is ultimately responsible?  Who is injured by the lack of operational excellence?

This story does not end here.  Mortgage originators not involved in the list of bad loans were also hurt.  Lender X was in business for a relatively short time.  Originators choosing to do business with them did so for various reasons.  If it was reasoning on one loan transaction to get a cheaper rate or more fee income the investment from that short-term viewpoint was lost.

Businessmen in Japan have long studied the famous warrior Miyamoto Musashi for tips on survival strategy.  In A Book of Five Rings that he wrote in 1645, he says  “Rat’s head and ox’s neck means just that, when we are fighting with the enemy and both he and we have become occupied with the small points in an entangled spirit, we must always think of the way of strategy as being both a rat’s head and an ox’s neck.  Whenever we have become preoccupied with small details we must suddenly change into a larger spirit, interchanging with small.”  To wit, one transaction with an unknown for the sake of easy profit vs. the right relationship for long term gain.  Mortgage originators must strive to look at the small details like profit on each loan but intermix that into the business plan at hand.  That plan should always include a list of tried and true business partners that give the maximum percentage of survival.  Conversely, the wholesale lender must never loose sight of the value of the client that submits one loan a quarter while keeping in mind the larger picture of solid, honest professionals submitting clean and valid loan files.  The quality control processes that have developed over years have helped augment the risk in both of these business decisions. 

How can we know exactly who we are doing business with early on in the relationship to protect against loss?   Who among the broker community can afford to be stiffed for even one loan fee?  Very few.  The warnings here are clear.  However, people are basically decent and when a new wholesaler comes to town one must not run in the other direction out of fear. 

Instead, cooperate conditionally. 

Ask for a list of who else is submitting loans to this wholesaler.

Call several companies from this list and verify the type of turn around not only on loans but also on broker checks.  When do they pay their brokers?

Get references and check them out yourself. 

When calling references the idea is to find out the financial strength and honesty of the wholesaler. 

Ask who the principals are and ask to see resumes. 

Mortgaging is a tight industry.  Those who have harmed others before are sure to reappear.  An even greater danger is not having the skills to keep the mortgage company viable.  Have they ever been mortgage bankers before or are they new to the industry and perhaps not in touch with its risk.  

Ask about the wholesaler’s loan quality control procedures. 

As in the example above, bad loans that are funded and sold can take a company down.  Ask what steps the wholesaler takes to avoid this from happening.

Ask when they pay their broker fees and how. 

Do not be embarrassed to ask how and when you will be paid.  If they have a stated policy mark your calendar for each loan and follow up to see that your check is delivered as promised.  If they do not have a stated policy ask that they write one for you.

Seek to control the relationship

Using the power of getting others to do useful and honest things for you assists you in risk management. 

Mortgage industry leaders do not neglect their duty to their business partners. Instead they add value to their relationships by tightening performance standards, reengineering work processes and upgrading competencies.  A good business partner is a long-term asset, which holds value and endures.

I recently attended an industry event where the guest speaker was a felon convicted of mortgage fraud. She fully admits to the guilt of creating leases to help qualify the borrower, misstating income, etc. Many of her reasons for committing fraud did not resonate well with me. Reasons like “An underwriter told me they needed more income” and “the loan company rep suggested it” made me realize her total lack of understanding of the true purpose of mortgage banking. There are many things that can happen in the creation of a loan file. We are dealing with people as our main ingredient to the recipe of a sound loan. During the process there are surprises and things change. One day borrowers have a job and the next day they don’t. One month they can write a check for the mortgage payment and the next month they cannot. Knowing that there is a possibility for change makes each job in mortgaging even more important to the over all purpose of the mortgage industry. The originator’s role is key in starting the loan out right and heading it in the direction for its purposeful place in mortgage banking.

 In their book, Built To Last, authors James Collins and Jerry Porras, make clear the concept of purpose in business:

 Purpose: The organization’s fundamental reasons for existence beyond just making money – a perpetual guiding star on the horizon; not to be confused with specific goals or business strategies.

Examples of Corporation Purpose

Wal-Mart To give ordinary folk the chance to buy the same things as rich people

Walt Disney To make people happy

Mary Kay To give unlimited opportunity to women

What is the ‘purpose’ of mortgage banking as it relates to the everyday work of those working in mortgage lending? To originate loans ‘on purpose’ means following these “guiding stars”:

• * To write loans that are good for the borrower. If you need to add something to the file to make them qualify it means there is every possibility that down the road they will not be able to make their loan payment and loose their house to foreclosure. Not to mention, you might get caught and go to jail.
• * To originate in a fair, accurate and honest way. If you have to lie to a borrower or Realtor to get their business you are also lying to yourself. You may not be as good as you think you are if your loans are made from lies rather than the hard work of truth and honesty. Such as being honest when you have to say ‘You don’t qualify for this size of a house with this loan type.’ Starting over to help that borrower get into a house and a loan that works for them is good, old fashioned, honest, hard work.
• * To close loans in a manner that is good for the industry. If the loan documentation from the application through the good-bye letter is accurate and actually in the file (!) the originating lender, the correspondent lender, warehouse lenders, investors, (as well as the borrower) are protected in the event of a serious change that may create foreclosure action later down the road.
• * To apply industry and regulatory guidelines at the highest level of execution. This purpose does not change even though guidelines and regs change frequently.

 Originating loans ‘on purpose’ is different than following a mission statement. Mission statements generally apply to the particular individual company, setting certain ideas and goals for the shareholders and employees to measure up to and follow. Originating loans ‘with purpose’ gives every mortgage worker, every company board member or executive a sense of the larger picture of which they are a part and how each loan makes a difference to others outside the mission statement.

“Purposeful” origination is also different from the core values of a company. The purpose goes beyond the originating company. No matter what the company’s core values are, when just one loan is closed by using fraudulent techniques, many people outside the mortgage origination company may be hurt.

Nor is origination ‘to purpose’ the same as following a plan or a set of goals. For example, an underwriter or underwriting engine has many goals in a day, week and month. However, underwriting for the bigger “purpose” of the industry is to decision each file at the highest level of ability to fit the borrower’s job, income and assets, the collateral, the loan program, and the payment stream into a package that has the least chance of default, protecting the borrower’s future and that of the industry players. The trick is to do it consistently every time and keep the other goals of production, company risk tolerance and basic humanness in line at the same time.

The ‘purpose’ doesn’t stop with the originator or the underwriter. Once the loan is approved, the document drawing engine is under the gun to get the docs out fast. That is usually goal number one to please the borrower, the broker and the company’s lock position. Fast is a goal but ‘on purpose’ documents are accurate to the letter. Each page, word, margin, cap, percentage, legal description, and character are accurate keeping the industry players protected and the purpose of mortgaging in tact.

The funder / closer has the huge responsibility to review the file ‘on purpose’ and ensure that the program, rate, insurance, documents and all closing requests are perfected before wiring funds. It is usually the funders in a mortgage company that can tell the horror stories of catching a mistake that caused the loan to either stop all together or be seriously delayed. Their job is huge and when performed ‘to the greater purpose’ makes a sound loan decision even more valuable.

Many a borrower, with or without a smart attorney, has gotten out of a defaulted loan repayment due to a mistake in the documentation. This information is not always relayed to the originating staff, which in this author’s opinion is a mistake. Every individual in mortgage banking should know the consequences of their poor judgment, lack of care or sloppy mistakes.

For the most part, mortgage executives, human resources personnel and industry specific staffing companies, do the very best job they can to screen, test and identify the skilled mortgage worker. Without a sense of direction (a plan), goals (expectations) and the meaning of their jobs to the big picture (purpose) the chances of even a skilled worker missing the point of the job is extremely high. In a recent interview with a rookie loan officer she revealed, “I haven’t really had any training. I was given a list of prospects to call and some paperwork for each caller. I just read the script and filled in the blanks.” When questioned further it was clear she had no idea of her purpose in the big picture of mortgage banking and that was one of the reasons she was interviewing for a new position. She had the personal passion for mortgage banking but felt that her work was a wasted effort. The company that directs this person, or anyone like her, to work their job ‘on purpose’ will create an industry leader with passion.

Originating ‘on purpose’ makes sense. It follows the path of doing what matters most in the big picture of mortgage banking. From my viewpoint of twenty years as a mortgage lender and then twenty years supporting the lending community at SRS, the purpose of mortgage banking hasn’t changed any, if at all. The purpose is to originate solid, honest loans creating a vehicle for people to own and keep their homes. While doing this we keep the integrity of our industry in tact making our impact on the economic evolution of America a positive one. Mortgage Banking creates jobs both in its industry and the many that support the housing and building industries. It is important that we keep our purpose in mind as we train those who join our companies, as we talk about our industry and whenever the issue of integrity is raised.

People want to know why they are in the picture. Why am I doing this job this particular way? Satisfying that question by imparting the real ‘purpose’ of mortgage lending will keep mortgage quality in tact and fewer mortgage felons on the lecture circuit.

Image via Wikipedia

For mortgage companies, strategic planning in uncertain markets has become a way of life. The tools for strategy are generally market reason, cash flow analyses, value chain analysis and most importantly, a predictable course of events. Mortgage executives live in a market of uncertainty and if paralyzed by it abandon disciplined strategic planning altogether. Underestimating the uncertainty of financial markets in order to formulate a strategic plan makes no sense either. Even in uncertain markets it is possible to set a basis of action and develop the tools needed for implementation. The following guidelines can help you put logic to strategic planning in an uncertain market. 

Market Research – What We know First, identify what you know, such as borrower demographics and corporate mergers. These factors will assist in the beginning stages of market research. Borrowers in certain age groups act a certain way when buying their first home or considering retirement. Often, a large bank merger or being put on the FDIC watch list will drive borrowers away. These two examples are not interest rate driven factors. Analysis of this kind can not identify what will absolutely come to pass, but it does help establish solid probabilities.

The Unknown There are many reasons a company takes strategic position not to play the “big bet” but still reserves a place at the table when facing the unknown. Reserving the right to play is a key strategy to staying in business. An example is performing a pilot program to capture new business before launching headlong in that direction spending mega dollars on advertising or hiring. Another example is entering into a joint venture for new business or breaking into a new market, thus minimizing cash investment. A company who reserves the right for a seat at the table can be an ‘early mover’ when market impulses improve. Actions of reducing costs, building skills and market analysis taken during this time produce the leverage that competitors not using this strategy will not have.

Before embarking upon any strategic plan in an uncertain market consider setting the following goals for the plan itself. Your plan should:

Lower uncertainty and create order out of chaos

Maintain strategic flexibility

Gain competitive advantage

Insure that you code of ethics is adhered to, referred to and relied upon

Designing a strategic plan is not as difficult as it may sound. The resources to do so are often readily available in and around your business itself. The following steps are simple adventures in talking, listening and taking notes.

External Environment Analysis

Borrowers Borrowers divulge information that begins your “external environment” analysis. Develop ten questions that you can ask borrowers. It is important to point out that these do not have to be your borrowers or former clients. Interviewing anyone who has recently purchased a home or have been caught in the loan modification tunnel will reveal needed information and sometimes it delivers more than you expected about the competition.

Good examples of questions you might ask borrowers:

How many mortgage companies (or loan officers) have you worked with to obtain a home loan in the past ten years?

What does high quality service mean to you?

Is service all that matters, if not, what else?

Write up a one page document, a matrix if you prefer, to capture what you heard in your interviews. Make this document factual only with easy to read bullet points.

Competitors

Prepare a list of business analysis questions to ask your competitors. Steer clear of questions that would reveal detailed information about their business. Questions could be asked at industry events, on the phone or over a business lunch. The important thing is to keep consistent and ask each competitor the same questions in the same way for better analysis of their responses.

Example: What is the current biggest threat to your business stream?

What borrower trends are you experiencing?

Write up a one page document, a matrix if you prefer, to capture what you heard in your interviews. Again, make the write up easy to read using bullet points and no emotion.

Internal Environment Analysis

Employees

Begin your internal analysis by interviewing your employees. Again, for consistency, ask the same questions of each one you interview. The best questions are ones that will help you understand what the employees see in the workplace and in the market place surrounding them. Look for trends of anxiety, fear, bill paying problems, etc. The data you obtain will assist you in knowing if your code of ethics needs to emphasized or if you may need to put in greater checks and balances for fighting fraud and misconduct due to economic pressure. The data will also assist you in preparing your follow up for employee morale and support.

Brainstorming

Gather six to eight positive attitude employees for this 2-3 hour session. Lock yourselves in a conference room. No phones! No pagers! No interruptions! Share with the group your one page market research analysis, your competitor sheet, your borrower information sheet and employee interview feedback. Be sure to be discreet in not naming names.

Using an uninvolved meeting facilitator is highly recommended. If you lead the meeting the responses may come back less than honest and more slanted to merely please you. List on a whiteboard, from their point of view, their reasons or critical issues that are stopping your company from being as successful as possible. Discuss what success means to those you interviewed and narrow the discussion down to a sentence that describes the definition of success for the company. Ask the group members to develop a plan of attack to reach this shortly worded success goal while keeping in mind the critical issues, customer statements and competitor feedback. The meeting facilitator records all pertinent data for your historical review.

A couple of hours of group work will produce a ‘working document’ for your business strategy plan. The group must prioritized their suggestions and set dates when they will be addressed. Addressing two suggestions or ideas a week will keep the group’s momentum in the workplace and will in turn beef up continuous improvement.

You

Your next available quite time – perhaps the next Saturday morning or midnight on Sunday – don’t wait too long or the information will become stale….reread everything.  Let it sink in.  Think about your business one year out, then in three and five year segments.  Plan where you want to be by being specific on number of loans, number of offices, what products to add…then roll up your ideas using the market research and your group’s specific concise statement.  Difficult? Yes. However, putting a stake in the ground at the point is the basis for implementation of your strategic plan.  You have at your fingertips very powerful tools, which are:

Current Market Research

Competitors Viewpoints

Borrower Revelations

Employee Guidance

A Workplace Design

Only you can envision three to five years out by using what every business owner has from day one – courage and foresight.  Following through on the details in the subsequent months is essential and builds the company culture that the employees themselves created and be part of.

But then, is it over? No. The plan should be reexamined every six months and the entire process done over year after year.  Not only will you feel serious about obtaining the strategic goals but your entire company has now a stake in the outcome and positive, ethical feedback becomes a standard event in your company.

Related Articles

• City manager starts strategic planning process for Iowa City (thegazette.com)

Image by The Library of Congress via Flickr

Employee Morale or Character Flaw?

He sat staring at his work schedule on his computer screen unable to believe the supervisor had given him another week on ‘follow up doc’ duty.  No one wanted to sit at that desk and anyone they hired to sit there 8 hours a day would end up quitting within a month.  The supervisor recently made it ‘rotational duty’ to perform like ‘taking out the trash’.  You did it when it was your turn and it could be just as nasty.

Get it over with he thought as he walked to the corner desk cubical.  “Where you going Todd?”  Debbie asked laughing knowingly.

“Don’t ask.”

When Todd sat down he looked at the stack of recorded loan documents, deeds of Trust, Mortgages with Docket numbers, final title policies, and array of hazard insurance policies received in the morning mail.  Each one needed to be copied for the individual borrower file and the original sent off to the Investor. 

Then he saw the outbound call list.  Tons of documents had not come in yet and on this shift he was to call the title companies all over the US, wherever the loan had recorded, and get these documents in.  It was an important piece of getting the loan sold on secondary market.  Investors wanted ALL the paperwork and wanted it prepared correctly, in original.

“Lord help me”, Todd said folding his arms behind his head as he leaned back in the chair. His eyes drifted upward to the ceiling where he caught a glimpse of something sticking out of one of the ceiling tiles.  It looked like paper.  He anticipated a love letter hastily shoved away so no one could read it.  So, who was having an office romance?

He climbed on the desk to pull the paper corner that was sticking out of the ceiling. What came out was a portion of a legal document of some kind.  He then pushed the ceiling tile upward to get a firmer grip on the paper and tons of paper fell on his head.

Not just paper. These were recorded loan documents!  And title polices!  And insurance certificates!  Most from the backlog list he was to work on! “Thank you Lord!”  I will look like a hero !  Or, a dog if the supervisor thinks I stuffed them in there…..not good.

He quickly dialed her extension, “Connie, can you come here?  You will not believe what just dropped out of the sky.”

The dialogue that ensued once Connie brought her department together went something like this.

I can’t believe this, who would do this?   ( denial )

Why?  ( Confusion)

What do we do now?  ( not thinking )

Do you know how much money this has cost us in missed deadline fees? ( supervisor viewpoint)

I must have called a dozen title companies who said they sent the title policy and I thought THEY were lying!  ( amazed they weren’t )

It took more effort to shove the papers up there than to file them! (valid point)

Why didn’t someone see him?  ( Someone else’s fault for not watching over the work)

Why do you think it was a ‘him’?  ( gender defense )

It could have been any one of us. ( suspicion )

I don’t think so, I for one, do not have it out for the company. ( insinuating )

Are you saying one of us does? ( defensive)

You can see this chatter went on for some time before Connie, the puzzled leader, came to her senses and decided they would work together to get the final documents filed and those that needed to go to the Investor would be sent by courier in the morning.  Connie demanded, “Mandatory overtime for everyone tonight.”

 Is this an issue of employee morale or an individual character flaw?

What needs to change in this workplace?  You be the judge.  If you were revamping the final doc desk and could only choose THREE actions from the list below….which ones would you choose and why?

A)       Change this workspace from ‘shared’ to a designated individual responsible for its outcome

B)      Give the job an actual title, like, Final Doc Clerk

C)      Make the job more fun

D)      Spring for a scanner

E)       Institute a whistle blower policy

F)       Follow up at the supervisory level on backlogged documents

G)      Reveal to the department, especially the final doc clerk, the value of the work and how it impacts the bottom line, which means potential profit for future  raises, office awards, etc

H)      Implement an on the job ethics training program

I)       Bring the department together by instituting department and individual awards for meeting deadlines, work accuracy and customer service goals

Put your answers and comments in the comments section right below this sentence.  And thank you for sharing your ideas!

If you know someone who might benefit from this exercise, please email it to them using the email button below.  Your email address is not seen or kept by this site.

Image by NASA on The Commons via Flickr

If  you are aware of a mortgage company that lived through the turmoil of the last seven years and is still alive and well today you can congratulate them on reaching “ escape velocity “ and beyond!  NASA scientists will tell you it isn’t easy to reach escape velocity because the gravitational pull is very strong and escape velocity requires an enormous amount of energy as it moves an object away from its former way of life.  Doesn’t that sound just like what the mortgage business has endured in the after burn of sub-prime lending?

It took a tremendous amount of energy and stamina to make those accelerated leaps toward the future when mortgage companies adjusted their workforce to meet lower volume levels, revised their products and their marketing plans.  The hectic pace and intensity to quickly enter prime lending further sapped the energy supply, coupled with the do over of a massive number of loan modification files with all their program parameters.

Those who made the fastest leaps communicated clear visions to public, employees and investors.  They reviewed their statistics for holes in their process flow and loan quality.  They adjusted and re-adjusted policy and procedures, products and projections. They wrote detailed analysis of what would happen if they didn’t fight the ‘gravity pull’ of the “former good life” of mortgage lending.  i.e.…the better things are in the mortgage industry the harder it is to fight the gravity pull of easy money, easy lending.

To be sure, lenders can watch closely for red flags in their loan production.  Timely quality control, well preformed and with detailed reporting is a bell weather of the business pulse.  However, when QC reports are not acted upon employees assess for themselves the corporate lack of awareness and more readily try to trick the system and fraud can creep back in.

Companies who review their QC reports with their employees send a clear message that the company is serious about their lending integrity.  From the QC reports employees can better understand how their mistakes were made, thus, avoiding repeating them in the future. Players who are found cheating are removed or simply leave to work for a lender with lesser standards.

Using an outsourcer also shifts the focus of discovery from the employer to the Q.C. auditors.  QC auditors are often known as “they”.  As in, “They said you can’t do it that way.” Or, “They wrote you up on this disclosure because you were way off the mark.” The vendor company can be the bad guy if the lender needs to phrase it that way, to keep the employee review meetings less explosive. The point is to get better no matter who uncovers the problem and/or who made the mistake.  Employees learn from each other therefore to share the QC reports with the staff is good lending policy.

 We are now in the middle of the first month of 2011. Perhaps now is a good time to take an example from those surviving mortgage companies, as mentioned above.  Employers and employees alike should challenge themselves about their preferred future.  Do you like what you see? What is your ideal?  Do you feel secure?   Remember, real security can only be found in that which can not be taken from you – your integrity.

Image via Wikipedia

     Do you remember your first lie?  It was likely told to someone you love or at least respected and was followed by feelings of guilt or at least fear of being found out.  More than likely your little lie was to cover up something you had done or perhaps to get you something you wanted.  Such is the case with my first lie – which I will NEVER forget!

            My family was of meager means living in a small, rural Montana town.  Mother made most of our clothes and although we didn’t really lack for what we needed, we six siblings knew things that were “not needed” should not be asked for and certainly not begged for!  Dad owned the local garage where he bartered much of his hard work for chickens, sacks of potatoes or whatever else the farmers could use for payment.  Money was tight for everyone in our community.  That is what made getting ‘penny candy’, my favorite treat, so difficult to get. 

            The dry goods store’s candy display was in front of the one register check out area where the owners could keep an eye on it guarding against those with slight of hand.  That thought certainly had never entered my mind but I did cook up a pretty good, fool proof scheme to get some of that long sought after penny candy.  I even talked my older sister into plotting with me for half of the loot.  This was going to be a big score.  Not just one piece of candy but ten!  Penny candy held a powerful hold on my six year old, creative mind.

            Everyday during summer my sis and I would walk up town to fetch the mail at the small post office where Mrs. Cinder would give us a stern look as we turned the dial on our P.O. box.  We always stopped into Dad’s garage to say hello and see if he needed anything.  On this historic day it was Mom who needed something….oh, wait. . . THAT is my first lie.  Mom did not need anything.  But I carefully told Dad that she needed a spool of red thread at the store so she said to ask him for a dime and I was to bring it home to her.  He looked like he believed me as he handed over the coin.  Perhaps he did, but maybe he just happened to see sis and me sitting on the bench in front of the store chowing down!  Who knows?  But at dinner that night he asked my mother, “So, what did you need the red thread for?”  Busted.  Big Time.  Yes, I shall never forget my first lie.  Regrettably it was not to be the last.

            Thus is the failure of our human nature.  Being 100% honest all the time 24/7 is not only difficult but sometimes painful.  If your boss looks terrible with his new haircut and he asks you straight away if he looks ok what do you say? You look terrible! No.  You lie.  The problem with lying is we can’t stop.  We may also choose not to remember those times when we did lie hoping if we forget it, it didn’t happen.

            Our society today is full of lies in government, workplaces, relationships, history books, the list is endless. There are so many lies when the truth is heard it is out of place and is looked upon as an ugly step child.  People do not admit that they lie either.  Instead, the big thing is to say you “misspoke”.  Is that even a word? Yes, it is the past tense of misspeak, which is a transitive verb meaning to pronounce something incorrectly or to express yourself unclearly or to speak incorrectly.  Ok, to speak incorrectly is well, to lie.  Right? 

            Most people get that a lie is a lie.  However, there was televised commentary last year (2010) asking the question about a politician who ‘misspoke’ in a big way saying he served in Vietnam when he had never even been there.  The question was “Well, is he a serial liar or is this a one-off kind of thing?”  Serving in Vietnam is a big deal to most Americans and to “misspeak” and incorrectly say you served there when you didn’t is a big fat lie.  But now, society may let that big lie go with the dues paid that this person is not a “serial liar”.  Sigh.  So, you are asking me why are you writing about politics in your blog for Ethics in The Workplace? 

            Let me first say that members of national government who work for the American people have an awesome workplace that should be respected and treated with the highest ethical behavior.  If American workers can see their leaders ethically misbehaving in their workplace then why is that different from the fast food shop down the street?

I guess Paul Harvey was right when he said, “May you learn humility by being humiliated, and may you learn honesty by being cheated”.  May 2011 be the year we turn cheaters into losers and begin winning the truth as our rightful reward.

Image by AlicePopkorn via Flickr

     Many of the postings on this site describe what can go wrong due to poor ethics in the workplace, especially the financial workplace.  The intent of this blog is for us to learn from mistakes or wrong doings of others.  We can also learn wise choices when faced with moral dilemmas.

     For example, let’s look at what recently happened to Roger, a mortgage loan officer of many years.  Roger never aspired to running a branch or owning his own company.  He simply took delight in helping people directly in obtaining a loan for a home they loved.

     Roger faced a dilemma one freezing winter day when one of his borrower’s who was just a few days from closing on the purchase of a new home called to say, “Roger!  I have just been let go!  What should we do? You told me the lender will call and check on my job before they will fund the loan.  That should be next Friday.  My wife will kill me if we don’t get this house.  She is all packed up and ready to move,” he began to sob.

     “Where are you Stan?  I will be right over.”

     As he sat with his borrower Roger felt so much empathy for him.  Roger was also laid off once a long time ago due to a technicality.  It actually should have been someone else.  From that day on he decided to work independently and switching to loan officer work suited him perfectly.  It was empowering to know he could work hard and make good money and no one could take his career or skill away from him.  He loved the fast pace and intensity and the solid commissions.

     “I know how you feel, Stan.”

     “But that doesn’t help me …..I don’t need your feelings I need help.”

     “Stan, you are an excellent welder maybe you can get a job with one of the competing factories.”

     “There’s not time.  Friday, Roger.  That is the closing.  A friend of mine in H.R. said he would take the call from the lender and say that I am still there.  That is what I am going to do.  There is nothing else to do.”

     “It’s a lie, Stan.  Fraud.”

     “I will get another job but I am not going to find one that fast.  It is just a band aid.  No biggie.”

     “What if you don’t find a job for a few months?  I am your loan officer, remember?  I have seen your financials. This house tapped you out, your savings are meager.  The new payment is twice your current rent.  Your credit is perfect.  That’s what got your loan approved in the first place.  Mess around and not make these house payments and even that will be gone.”

     “I won’t let that happen.  I’ve got to have this house.”

     Roger was bummed.  He drove back to his office deep in thought, “Well, I am NOT going to turn my head, I am not going to let this guy make such a huge mistake. To think, he could get arrested for fraud and my name is all over that loan file!  There has to be another way.”

     As a member of a professional business club, Roger had access to many business owners in town.  He called each one, regardless of the type of business, and pitched the skills and workmanship of his client, a master mechanic.  After a string of ‘nothing here, sorry’ he wondered if he was insane or using the wrong pitch.  Only two business owners left to call when he got this response, “I have a need right now, for a mechanic/welder in our plant over in Alpena.  Lots of folks have applied but I would rather hire someone who is referred. Send him over to me tomorrow.”

     “Can we make it today?”

     “Well, sure, I guess.”

     “And by the way, he needs to earn the same wage he had at the factory.”

     “Hey, look.  I am only paying $25.00 an hour take it or leave it.”

     A $2.00 raise!

     “We’ll be at your office at 4:00pm today.  Thanks, you are a good man.”

     Stan’s joyful family took pleasure in Thanksgiving dinner in their new home.  There were many things to be thankful for including a new job that Stan really enjoyed.

     Meanwhile, Roger celebrated Thanksgiving by giving thanks that he was about to wrap up a very successful year.

________________________________________________________________

 Look for a miracle; watch for an angel

Merry Christmas & Happy New Year

Image via Wikipedia

When I was twenty two years old; the world still had fresh air, I wore a size 8 and my job as office manager was about as high up the ladder as a woman could go in mortgage lending.  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 with much team counseling (by me) and total change in habits (by staff).  But the question of what happened to a dozen or so scissors remained unanswered.  The staff finally understood I cared just as much about ‘how’ the job was done, with integrity, as I did about hitting the monthly goal numbers.

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 zappers were beginning their work.  Yet, mid-west Americans valued family and faith.  I had to believe 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.