Big, Hungry Beast

Ding Dong (the doorbell)

...And immediately all hell breaks loose in the house. My 125 pound hound starts baying, and woofing, and snorting. toenails clicking and sliding sideways on the hardwood floors while his too short legs lose traction, and he barrels head down, straight ahead--like the slowest guard on the football team-toward the front door to protect us from the FedEx guy.

"Dude," I say, grasping his choker collar with one hand and wiping the slobber from his jowels with the side of my jeans. "Act that way when they don't ring the doorbell." Like when they come through the basement window I want to say, but there is no need to expound. He's just a hound with a three or four track mind.

He's a big guy and needs fed a lot. When I cut back on his portions, eliminate the table scraps, or forbid the bisquits until he drops a pound or two, he's very put off. He's come to expect a lot of food on a regular basis. He expects a lot of attention. He's just like my bank. Just like them...

Them

Maybe they got a little too fat, too quick. Maybe they made some wrong choices off the menu. Maybe they liked the restaurant so much (when they were flush with dough) that they bought and staffed it--the whole chain, perhaps. An entire sector.

They found investors overseas and lured them into the business model. They spent billions on land acquisitions, brick and mortar. They increased their payrolls, cut their rates and flooded the airwaves and web with promotion. They experimented with new, low-fat, low-interest cuisine. They found a way to feed anyone. They thought they could service everyone.

Then the media stuck their snouts into the soup and found that there were just too many cooks in the Kitchen. Hell, there were just too many kitchens. They discovered that a few Chefs (Chiefs?) at the top of the food chain were skimming the cream off the top of the vat. Customers began sending their meals back, skipping out on the bill, cancelling reservations, staying at home...Perhaps the cooks and busboys were here illegally and scattered into the gangways and alleys leaving their houses (and promissary notes) behind. What about E-coli, non-smoking sections, and foie gras? The investors overseas demanded a raincheck. The tougher ones demanded a refund. The banks looked into the mirror, studied the ugly sight, and went on a crash diet. They pledged to starve themselves back into shape.

Us

Now even the best customers have to pay more. There's a shortage of product. "The credit is a little crunchy this month, don't you think?" we say to our Loan Originators as they stand before us, still willing to serve, and a little hungry themselves.

We asked for the check but our credit card was denied. We stopped making even our minimum payments. We stopped even looking for a parking space. The red coat valets and attendants fail to even show up. There are no cars to park. Things are lean. We start eating our young...

Hunger

...But for how long? How long can a big, hungry beast like my dog go without food? Eventually he will find a way to settle his stomach. Same with the banks. They are a huge part of the GDP and it is only a matter of time before the purging stops and the yo-yo begins to sail up into the opposite direction. And just like all failed dieters, they will actually end up a little heavier than before the whole cycle started. You just wait and see. You can say 'I told you so' if, in 5 years, total reported banking profits, and the number of loans originated, aren't significantly higher than they are today.

There are a few weblogs on the subject of Lending I read with great frequency. One is Dan Green's The Mortgage Reports out of Cincinnati. The other is Brian Brady's Mortgage Rates Reports out of San Diego. And of course, I communicate on a weekly basis with the Mortgage Guru here in Chicago, Chris Hahn. And we all have a different take on the subject.

But hey, from a realtor's point of view, this is how I see it. And as I sit here at my desk watching my dog asleep on the floor, snoring and twitching and chasing rabbits off in doggie dream land, I know the peace is not for long. His belly is full now and he is content. But if he goes too long between meals, and no one pats him on the head, and the door bell rings...well, I just wouldn't want to be the FedEx guy. Like I said, 'He's a big, hungry beast and he needs to be fed...'

the image is not my dog

I'm The Guy In The Blue Shirt

There was a time in the not so distant past when almost everyone I knew on a personal level was either already a Realtor, studying to be a Realtor, or thinking of becoming a Realtor--either that or a Mortgage Broker, our Siamese twin back in those white hot Housing days of Post-Y2K. (Remember that whole angst ridden countdown of months, weeks, days, hours, minutes, seconds...) Then poof! Either nothing happened or I'm just like that Bruce Willis character in The Sixth Sense who doesn't know he's a dead man yet.

The country was 'abuzz on both Coasts, the Midwest and most places in between, with land speculation opportunities, negative amortization mortgages, and 'buy to flip' property deals. Many of us, Realtors and MBs alike, entered the industry in droves from other diminishing career paths. And if selling real estate was hot back in the day, originating real estate 'paper' was smoking.

LIBOR, (the volatile index for much of today's rapidly deteriorating ARM paper), was actually a vanity license plate on one Mortgage Broker's Bentley. The black and platinum handmade beast seemed to be perennially parked in front of the same fashionable Chicago Gold Coast neighborhood bistro six evenings a week and twice on Sundays. The lending business was apparently so brisk and forthcoming that it required toasting and celebration every day including the Sabbath. Again, this was not too long ago. Rumor had it the MB was a dot.com guy in a former life who grabbed as many handfuls of zeros as he could before jumping the internet ship and swimming to shore where the word on the street was... landlubber Realtors were 'flipping condos like hotcakes' in Chitown. The news this week of New Century Bank's dilemma has made us all (in real estate related fields) take note and do a moral or at the very least, ethical inventory of sorts.

For half of the 1980's and the better part of the 1990's I tried to do my own thing in Corporate America but the number of zeros in the YTD box of my direct deposit statement could be counted on one hand (if you didn't count the thumb). I'll always remember my first big corporate function when a Regional Sales Vice President took me aside, tugged on the lapel of my double-breasted suit and whispered in my ear, "Nice suit...but you have 3 too many buttons." Strike One...'not conservative enough for an upper management career in financial services.'

Time would inevitably reveal the fact that, while my 'leadership' skills were commendable on a sales management level, my 'followship' skills were weak at best on any level. Case in point was the 1995 Middle Management Regional Group Photo Session where Brooks Brothers gray suits, pinpoint white buttondowns, and red/navy rep neckwear were, by orders of a 3-part memo from the RSVP, the suggested (required) uniforms for the shoot. I wore a periwinkle blue two-tone shirt with a Jerry Garcia Collection tie and had just shaved my head on a whim. Strike Two...'may have a learning disability.'

A couple of 'brush back' pitches later I was still at bat as it were, but looking for a new Region to play out my contract. Strike Three came so hard and fast that all I can say about it is... it sounded low and away. And come to find out, arguing called strikes can only get you ejected. At age 40 my career options were quickly reduced to mortgage banking, real estate sales or a lateral move in the financial services industry. I think I went with real estate for two reasons---first, I had already bought and sold property myself (and always knew I could succeed in this profession) and secondly, the other two fields from what I could tell, generally required some sort of mandated neckwear enhanced dress code with a big fat RSVP hiding somewhere in the corporate bushes.

Truth be known, my non-written mental math skill comfort level falls somewhere between multiplying by tens and simple division so I've always been careful to surround myself with very good counters...i.e. money people. I can't really explain what a LIBOR is but I know one when I see one. And even when it was the loan du jour, I don't think I ever recommended it off the menu. Same thing with property'FLIPS'--just not my area of expertise in the world of Chicago Real Estate. Besides, that would make for a really stupid license plate on my Mini-Cooper.


Geno Petro