What is greed? I asked three people that exact question this morning, and each of them included the word money in their response. I used to hear the word greed and immediately think of Gordon Gekko or Leona Helmsley or Scrooge McDuck. We’re trained to call it ambition and perseverance, and under those guises it’s sewn into the fabric of our nation. Some would have us believe that America requires it. We run on it. We wouldn’t exist without it.
By definition, greed is excessive desire, almost in a predatory kind of way. Since we’re capitalists, what we collectively tend to desire most is money. So we’re left with the notion that the only sort of greed is the insatiable appetite for money. But I have found that this isn’t really so. Case in point: what my friend Michelle desires most isn’t money at all. It’s to be loved by any and all men because her father left home when she was four. So she collects men after 3 a.m. like the Arapaho collected scalps at Little Bighorn, which I suppose makes her plight the battle of Little Big Whore. Take Heidi Montag for instance. She was never an ugly girl. But she had enough plastic surgery to open up a god damn spare parts center for IED victims. It’s probably not because she wanted better boobs or thinner eyes. More likely it’s because when she was twelve, some idiot told her she was ugly and she’s spent the rest of her life living like that twelve-year-old girl trying to make other people think she’s pretty. This is what she craves above all else. This is her thing.
Like Michelle and Heidi, we’ve all got our thing that we desire to excess. These things are our greed. For some people, it is multiple things. My friend Rose is a great example. Rose worked at the chop shop with me. She had been there for a year when I arrived, and she was at the top of the heap every month. She made about $35,000 every month. And she was only nineteen years old.
On my first day at the chop shop, a friend who got me the job introduced me to Rose. She was outside the office smoking a cigarette. She looked me up and down. Skinny arms, piercing black eyes, Psychedelic Furs t-shirt, get-the-hell-away-from-me look on her face.
“This business will kill you,” she said. I could tell she dug her tough exterior. She was a young girl in an older man’s business.
“So will that,” I said, pointing to her cigarette.
“This?” she said with a laugh. “This is the last thing that’ll kill me.”
I got to know Rose pretty well over the next eighteen months. We hung out every once in a while on weekends or after work. What I came to learn about her was that she desired everything, though certainly some things more than others. First off, she had a voracious sexual appetite. She slept with at least three guys in our office (not to mention countless others). That accounted for roughly 10% of the staff. She slept with my married office-mate Billy the Vet in her office. It was next to mine, and it went on and on like a high school wrestling match. There were tales of her slut-dom that carried across almost every guy I came to know in the business, ranging from ages eighteen to sixty. She just loved to f-u-c-k. And she’d tell anyone that exact fact.
Rose also loved making money. It was never enough for her. No matter how much she brought in, there was always something she had left on the table, something that drove her into fits for missing this dollar or that. She bought a condo with cash. She drove a brand new BWM 5 series. But it wasn’t about the gadgets and glitter as much as it was about the actual paper money. She bragged about having more than $200,000 in cash stashed away in the condo. It was as if, when growing up with relatively little money, she had seen a movie with a bank robber who threw his plunder into the air and rolled around in a bed of cash, to which she must have screamed out, “That’s it! That’s what I want to be when I grow up!”
And because all good things come in threes (S’mores, BLTs, McDonalds meal deals), she had a third thing: drugs. Getting stoned before work or having a bottle of vodka in her desk or getting hammered at happy hour wasn’t enough for her. She smoked crack. She snorted heroin. She drank GHB. Cocaine was like popping aspirin for her. At any given time, she was on a cocktail of at least two or three drugs. And she’d do anything to stay that way. She ordered her synthetic drugs online. They would come via FedEx to the office. One time, a shipment was delayed by a day. She got a call from security at O’Hare Airport. They were calling as a courtesy. They had her package, they said, and she was welcome to pick it up at any time. She just had to come on down to O’Hare to get it. She was eager to go pick it up. She wanted it, needed it, and nothing was going to get in her way. She reminded me of Veruca Salt from Willy Wonka & the Chocolate Factory screaming, “I want an Oompa Loompa now!” It took three of us nearly two hours to convince her that it was surely a bust and she shouldn’t go.
After I left the chop shop, I didn’t see or hear from her for a good year or so. She had gone too far over the edge in every regard. I’d heard she found a way to combine the three things she desired most. She slept with people for money and drugs. Once she found a way to get money from that, she stopped working at the chop shop. She went on like this for nearly a year. Then, from what a mutual friend told me, she holed herself up in her condo with a supply of drugs for nearly two months. People would come by and sponge off her, and then one day she stopped letting them in. No one heard from her for nearly a week. Finally, a friend got into her condo and found her dead body in the bathtub, shower still running, plastic curtain collapsed atop her head. She overdosed. She had reportedly spent every dollar she had. And from what my friend said about what the drugs had done to her body, she probably wasn’t having much sex before she went.
This girl could’ve had it all. But when you want something so badly, the it, the thing, becomes the only thing that matters. And instead of you having it, it has you.
I might have mentioned before that there was a short phase of my life when I enjoyed parading around my parents’ house in my sister’s Girl Scout uniform. Or maybe it was the Brownies. I never knew the difference between the two when I was five, and I still don’t know thirty years later. But I do know it happened. And why did it happen? Probably because I was a nervous child without many friends, trying desperately to gain the attention of my older, cooler sister. A mild case of crossing dressing? Sure. Over the top? Probably. But it set a precedent in my life at an early age: when I want something bad enough, anything goes.
Life at the chop shop wasn’t much different. If we wanted something, there was always a way to get it. We just had to give up a piece of ourselves in the process. How much we had to give up depended on two things: (1) the richness of the reward and (2) the amount of shame or pride or whatever it was that a person could withstand losing.
There was Wayne, who we’ve already established was a liar, thief, and class act pervert. He’d convinced fellow church-goers that a percentage of his fees went back to his ministry, which of course was a complete lie. And in that process, there was a singular moment, when he’d urge them to give a little more, that his heart must have felt a twinge. Maybe it was excitement. Hopefully it was shame.
Then there was Bradley. What he wanted most wasn’t money. It was booze. It just so happened that he needed money to do it, so he lied, cheated and stole to get it. He’d drink himself to near death for three weeks, then come back to work and search for a desperate borrower (someone losing their home, almost no credit, sick or elderly) and spend the next month doing anything it took (read: committing fraud) to get the loan closed. He’d charge such tremendous fees on that one single deal that it’d be enough to feed his next multi-week binge. He always reminded me of a piece of advice my mother gave me before I headed off to college. “Binging,” she said, “is for losers. Binging and casino boats. Just avoid them both.”
In all of this mess, there was one truly innocent person at the chop shop. Her name was Melissa. She was twenty years old when she started working with us. It was clear from the start that she wasn’t very smart, but as fortune had it, whatever the gods cheated her in brains, they compensated for tenfold in looks. Tall, blonde, and shaped like Jessica Rabbit, she was beautiful in a you-make-me-feel-like-I’m-fourteen kind of way. It was embarrassing for everyone, including her. Making fifty-year-old men drool is only entertaining for so long. But what endeared her to me was that she didn’t have a presumptuous or egotistical or superior bone in her body, even though most men expect women who look like her to be exactly that way.
As the months went by, she struggled greatly getting business. She complained of late bill payments, being behind in rent and so on. I felt terrible for her. The rest of us were closing anywhere from five to twenty-five deals in a month, and she couldn’t even muster one. This, despite the endless stream of help she received from a long line of my co-workers who lent her a hand hoping and praying that she might return their kindness with any kind of sexual favor. It was a completely unreasonable thing to expect, but when it comes to women like this, men allow themselves to forget reason. The reciprocation, however, never came. And why?
“I’m saving myself,” she told me one day. “I’m a Christian.”
As a Jew, I just assumed people who called themselves Christians were everyone else. But it turns out, as you may know, that this isn’t the case at all. I still don’t really know anything about Christians, other than this: they don’t have premarital sex. Or, from what Britney Spears taught me, they at least pretend that this is the case.
When I asked her why, she said: “I know it sounds stupid, but I was raised by my parents to believe that my virginity was the most precious thing I have. I can’t just give it up for nothing.”
That was good enough for me. I was raised by my parents to believe that the only way to tie my shoelaces was the old two-bunny-ears way and that wiping from front to back was an acceptable way to clean after going to the bathroom. So who was I to judge?
Over the next few months, I truly grew to like this girl. We were office friends. So when I walked by her office one afternoon and saw her crying, I stopped to see what was wrong. It should have been a celebratory day. It was the day she finally closed her first deal. It had taken her six months, and this one wasn’t a big fee, but it was something with which to pay her rent.
“He was going to cancel,” she said.
“But he didn’t,” I said. “So who cares?”
She started crying harder again. It became a bit uncomfortable. I mean, the loyalty of an office friend only goes so far. For me, crying was never part of the deal. And I was newly married, so sexual favors seemed to be inappropriate to wish for. I let her go on for a minute, and then walked up to her and put my hand on her shoulder. She looked up at me with those Bambi eyes and said: “I slept with him.”
The guy was going to cancel the deal, so desperation brought her to his house. She hadn’t planned on doing anything untoward, but the guy—a married man with two teenage daughters—made the first move, and she didn’t stop him. He took her right there on his living room couch in a small town soon to be completely demolished by a growing O’Hare airport.
I didn’t know what to say. So, of course, I said the worst possible thing I could. “Well, it was a good time, right?”
“I barely remember it,” she said. “I just remember crying all the way home.”
“Did he hurt you?”
“No,” she said. “Not at all. It was just that all these years, I stopped myself from having sex with guys that I really cared about. And today I realized that it was a total waste of time. I’m not crying because I feel sad or alone or any of that crap. I’m crying because I feel absolutely nothing.”
Part of me pitied her. But part of me envied her. After all, she found a way to give it up, without actually giving up anything at all.
Every team needs a good leader. Leaders inspire courage and strength and bring out the best in us. Without leaders, where would the rest of us be? The Indian independence movement had Gandhi. Women have Oprah. Stupid people have Sarah Palin. And the chop shop had Glen. Being the circus it was, he was perfect as part-ringleader, part-clown. He was five feet long in both height and circumference. His ears stuck out to the side, and his generous cheeks and many chins framed a smile that, when it came, held the joy of a ten-year-old boy. He looked exactly like Shrek.
Glen ran away from home in Ohio when he was 16. He lived on the streets of Chicago for a few years. When he grew tired of being regularly robbed and beaten up while sleeping, he jumped a boxcar train (yes, like a hobo from the 1940s), and saw America, one mail depot at a time. Eventually he returned to Ohio where for a couple decades he sold anything and everything door-to-door. Bibles, vacuums, knives, windows and siding. At our office, he wore a coat and tie every day, even though both were worn and outdated and stretched beyond reason. But at his core, what guided him in life, were the most holy tenets of door-to-door sales:
1. Everyone is a sucker.
2. The word No is only and always a precursor to the word Yes.
3. What you sell doesn’t matter, but only how you sell it.
4. Make your pitch and shut the hell up. Whoever speaks first loses.
5. Don’t leave anyone’s home without the check.
He used these rules that were made for knife salesmen and applied them to the sales of financial instruments. He was relentless and vicious, but he was mostly ineffective. It’s not that we didn’t sell the hell out of the stuff. We did. But it was the force of the market, the lowering rates and the spiking home prices that drove the business. And the rules of his game were no doubt used by most of the people in the chop shop. But in reality, we succeeded despite him. The reason for his general failure, which he would probably never admit, was that behind his gruff exterior and no-bullshit-rhetoric was a soft and sad and endlessly sweet man who would scold you for not ripping someone off and then cry for doing so once you’ve left the room. Our fearless leader was sensitive, and I loved him for that. It reminded me—after seeing someone give two months’ salary to save $63 on their monthly mortgage payment or after hanging up on someone who wouldn’t stop calling me even though I told them a hundred times that there was no hope and they would be losing their home—that I was human, too.
I’d see him on my way out of the office each night sitting at his desk. Usually I’d keep walking, ready to get out of that disgusting place. But sometimes I’d sit with him, knowing he had nowhere to go or no one to go with. One of those nights, he was sitting at his desk, staring at the computer he barely knew how to use. A bottle of Glenlivet looked on with him from its perch on his lap. He saw me looking at it.
“Tastes like crap,” he said. “But they say it’s the best. I was always a Wild Turkey guy.” He then went on to explain to me why bourbon is a real man’s drink, and scotch is for homosexuals. Pretty ignorant stuff, but vintage Glen.
He seemed down, and I asked him why. He told me about a client he had seen that day. The woman was a seventy-three-year-old widow. She lived on a small pension from a lifetime of loyalty to her city job and a meager social security check. She was behind on her mortgage, and the lender was looking to take her home. She had nowhere to go and no one to help her. And then came Glen to the rescue.
He surmised that the last mortgage broker she had had the bad fortune of running into had put her into a loan that allowed her to make payments that were so low it created a negative equity in her home. She signed the papers, and she should have read them. We’re all responsible for ourselves. But nevertheless, she was now in a bad spot. She owned more than her house was worth. She should have just walked away. It would have been her best move. But Glen was there to sell, and that’s what he did. He found a way to save her house, much to her financial detriment. And a woman in her stage of life had more use for money than she did for a 30-year fixed mortgage that would cost her ten times what she probably paid for the dump 30 years earlier.
Glen laid out her only option, which included a fee slightly more than $10,000—paid for by the new lender who would lock her into a long-term commitment at an above-market rate. He said his peace, and then he just sat there. She looked back and him, probably knowing that the deal sucked. But it was the house her husband had bought for her, the one in which she lost pregnancy after pregnancy, the only one she ever knew. She needed him to stand up and say Don’t do this! or Forget about this place! But he didn’t. It would have broken every rule about sales that he lived by.
After ten long minutes of utter silence, she reached for the pen and signed the paperwork. Glen then left her home, came to the office, and found himself sitting with me, recanting this tale. He knew what I thought. It was the same thing you’re probably thinking. Without saying a word, I stood and started to walk out of the office. Before I reached the door, he said, “I couldn’t not do it.”
“Why not?” I asked.
“Because I ask you guys to do the same thing every day. What kind of leader would I be if I didn’t?”
I’ve received several requests for more information on what happened to Wayne, the evangelizing, mortgage-brokering pornographer. For those who are interested, here is your closure: The “what happened to him,” in some ways, is the best part. Our friendship continued for the year-plus that I worked there. I came to learn that he was a former drug addict. He picked up a nasty heroine habit while incarcerated in a federal prison, the result of a series of assault and battery charges of which he had been convicted in what he liked to refer to as his “dark years.” He also claimed to be a recovered homosexual, which I assume was the impetus for his interest in my acting skills. I’m guessing he picked up that habit in prison as well, but I never thought it polite to ask. A few years after I left that company, he ended up going back to prison (parole violation and additional charges). He was doing some legwork for God, who we’ve already established needed boatloads of money to do his thing. It turned out that Wayne had a hard time differentiating between the charity coffers and his own pocket. Thou shall not steal, Wayne. Duh.
Whenever I’ve gone to work somewhere new, I’ve always done so thinking that I was joining a fine establishment. It’s a solid company, thought of well in the community in which they do business, stockpiled with A Team players. That sort of thing. It’s a natural expectation. After all, the company I work for, and hence the company I keep, can be seen as a direct reflection of me, as well as my value to others and my self-worth.
It’s not much to ask that the people I worked for and with be honest, well-intended people. And while I know I do stupid things for the wrong reasons from time to time, there is almost always a point at which I am able to reflect on my actions and be honest about what I did and why I did them. It’s part of what keeps me from knowing I’m not a complete jerk (at least not all of the time).
One of the guys I worked with at my chop shop was by all outward appearances a good man. Let’s call him Wayne. That’s actually his real name, but I’m pretty sure he’s in prison now, so he probably won’t be reading this for the next 5-7 years.
Wayne was not only a fellow mortgage broker, but he was also a husband, father of two little girls, and a minister with the Jehovah’s Witness outfit on the south side of Chicago. For some reason, I had blindly assumed that all Jehovah’s Witnesses were pencil-necked, bike-riding white boys from the suburbs. He was black (can I say that?), nearly six and one-half feet tall, thick and wide, and wore suits purchased on layaway that were made with thread so bright you’d think you were on magic mushrooms when he’d walk into the room.
By my third week at the chop shop, my dreams of working for a class organization had pretty much flown out the window. I was one of eight people (out of maybe 30) that had gone to any sort of university, and I had never been previously employed by either Jiffy Lube or The Dress Barn. I was no doubt playing on the B Team. Or D. But then there was Wayne. He wore pocket squares, and he spoke as eloquently as any man I had ever met. I liked him. We talked a lot, mostly about his ministry. He was a passionate orator. He could go on for hours, and often did, about the coming apocalypse and how establishing the “Lord’s kingdom” on earth was the only way to save us all. It’s the Jehovah’s Witness mantra. A bit far out for me, but he was a man deeply rooted in his beliefs and I respected him immensely for that.
One day in that third week, as we sat in his office with the door closed, in the midst of a conversation about his weekend door-to-door evangelism, he asked me a question that, at first, I didn’t quite get. He said, “You’re Jewish, right?” I confirmed, and he continued: “So…are you a big guy?”
“I’m five feet and seven and a half inches tall,” I said. “I’m obviously not a big guy.”
He shook his head, stretched his neck so that he could see over the desk, and pointed his wide brown eyes at my waist. It became clear that he hadn’t been talking about my height, and it quickly became a weird conversation that eventually led to his next question: “Would you ever consider doing porn?”
He offered me $25,000 to do a “scene” in his movie. I know that may sound unbelievable. The going rate for Jews is probably much less. But to any doubters, I can only offer you my word that this is completely true. When I promptly turned him down, he said, “Is it because you’re married?”
What he didn’t seem to understand was that while being married no doubt played a role in my decision, the bigger issue was that I’m just not the sort of guy who bangs strangers for cash. At least not on film. And I couldn’t believe that the Jehovah man himself—the door-to-door evangelist of 75th Street—was a producer of pornography. The selfish part of me was bitterly disappointed that I took a job that was also available to pornographers. I also felt somewhat betrayed. Porn production was a big thing to leave off your resume when applying for new friends. I felt as though I’d been lied to. But even after I got over all of that, I just couldn’t fathom why this guy would want to do that sort of work, and he sensed my confusion.
He asked, “Why do you come to this office every day and do this job?”
“Because I need the money.”
After a reflective pause, he said, “Everyone needs money. Even God needs money to do his bountiful work. But why do you do it?”
“I guess I don’t really know,” I said. “Why do you make porn?”
I liked where the conversation was going. I was sure he was finally going to tell me he understood where I was coming from; that, yes, he was doing a despicable thing for money, for greed; that he knew it was not the sort of work befitting a man of God; that if his kids knew that it would crush him; that he wished he could find a way to stop. But he just leaned back and swung from one side to the other in the pleather desk chair he had won for bilking more fees out of helpless borrowers in a single month than anyone else in the office. And with his arms comfortably at his side, and his cocksure eyes locked on me, all he said was: “Well, I suppose in some ways I do it for the Lord.”
There was a time in America when we knew the butcher who cut our meat not just as the butcher, but as Jerry from the neighborhood. Sally from around the corner owned the store where we bought our books. Fred delivered our milk. And Tom, the kid that came home from the war and was always sad and wore the same Mike’s Doughnuts shirt seven days a week, was the closest thing we knew to that creepy guy on the corner. “Yes, ma’am,” was the business man’s mantra. “I’d be happy to help you with that.”
But that’s all changed. Jerry has been laid off and is happier at home playing video games and living off the government cheese. Sally is really an Indian man in a large call center in Bangalore. Fred is an ipod app that just processed your grocery delivery order. And Tom is still creepy, but in a I-know-your-daughter-from-Craigslist kind of way.
This is the new norm. And with it comes a lower level of depravity than ever. I remember as a teenager, surely after doing something unseemly that my parents found out about, my father sat me down and gave me the line that we’ve all heard a thousand times: “Character is what you do when no one is looking.” But with all the kiddy-porn-cleaning software and car window tinting and internet anonymity, everything these days seems to be about all the things we can do when no one is looking.
That’s exactly what I found to be true in the mortgage business. And as a borrower, the less you knew, the better off you probably were. Here is the first of a few examples of your friendly neighborhood mortgage brokers. These are actual people I worked with in the chop shop when I first started years ago. Names are changed, not that it matters. Half those guys couldn’t even read.
Billy The Vet
Pros: Billy is in the Marine Reserves. That he got his doctor/father-in-law to get him out of deployment for a BS medical reason one week before his platoon-mates shipped out is almost beside the point. It didn’t stop him from getting a huge Semper Fidelis tattoo across his back. Real loyal guy. Now for the cons: As an Italian, he’s a bit of a characterization of himself. Nothing against Italians. I love their salad dressing. And as a Jew, I’m no one to talk about stereotypes (because, of course, I’m cheap, my nose is four times the size of the rest of my head, and I’m systematically destroying the world with my fiendish love of money). From my experience, most Italians are nothing like this guy. He practically sleeps in a tanning bed, wears only shiny Regis Philbin clothing, wears enough hair gel to save New Orleans from the next “big one”, drives fast sports cars (but only buys 5-year-old models), and cheats on his pregnant wife. That sort of guy.
I had the pleasure of sharing an office with Billy for about a year. We became friends, kind of in the same way you might befriend the guy in your prison cell simply for the companionship over a long period of time even though you’d cross the street to avoid him on the outside. You tell yourself: Yeah, he’s a rapist, but he was always nice to me. Whatever it takes to get by.
Billy kept a rack of neckties, maybe twenty, beside his desk. We were required to wear one every day. He’d come in, sweaty and pimply with muscles nearly busting out of his purple Regis dress shirt. Then he’d grab a tie off the rack and swing it around his neck. It was all a façade. It always was with Billy.
He took steroids. In the office. Our office. He’d close the door, unzip his pants, stick his butt out in my direction, and shove a needle into his cheek. Every so often, the stuff he’d use would come from a different container. “Oh this,” I clearly remember him saying one day, “it’s so my balls grow back to their regular size.”
He’d do this while clients were holding on the phone. He’d be talking to a single mom about the $8,000 it would cost her if she wants him to help her save her home, and he’d put her on hold to shoot himself with steroids. Then he’d zip back up, sit down, and go back to making the world a better place.
But my favorite activity of his was his insatiable appetite for porn. I don’t know where he got so much of it. Keep in mind, this was before internet porn became what it is today. If you wanted the good stuff, you had to buy the DVD. And he did. Hundreds of them. He’d watch them on his laptop with his feet up on his desk and motion to me with his hands as if he was pushing an imaginary girl’s head into his lap. He loved it. He’d be robbing people blind over the phone and watching porn the entire time, barely paying attention to what it was they actually needed. Every so often, he’d start one up and forget to turn down the volume. Sitting a few feet away, trying to focus on my work, I’d hear one of the actors give her line. It would be a naked housewife greeting a plumber at the door. She’d say something like: “Are you here to clean my pipes?” I’d turn around to see Billy turning down the volume. He’d wink at me, go back to his phone call, and repeat his mantra: “Yes ma’am. I’d be happy to help you with that.”
The people of the United States are a crafty bunch. We’re persistent. We’re ambitious. We don’t use the words I Can’t. We found ourselves religiously oppressed, so we sailed across a seemingly endless ocean for freedom. We were taxed to death, so we fought to send the taxman back to Europe. We were undermanned in an agrarian economy, so we withstood the shame of slavery (sixty years after our former English oppressors had the courage to end it). And then, after we tired of stabbing one another with bayonets for four years, we were distracted by the next great cause: applied technology. Between the years of 1860 and 1890, the enduring entrepreneurial spirit drove Americans to apply for more than half a million patents. This was more than ten times the previous 70 years combined. Fast forward a century and change, and we’ve got the new economy, which is kind of like the old economy with one awesome exception: the things worth the most are things we never see, can’t touch, and don’t understand.
In 2008, the FBI investigated 1,644 cases of mortgage fraud. That was more than one hundred times the number of cases from only two years earlier. A crafty bunch indeed. The pilgrims would have been proud had pride not been an unforgivable sin akin to women learning to swim.
So, who were all these sinners driving the Love Boat through the sink drain of America’s real estate market? The Masters of Fraud. Here is an example of the sort of tricks they held up their sleeves:
The Check Is In The Mail
It’s pretty smart at first, but it requires a fairly high level of depravity. Let’s say there is a guy named David. He has spotless credit and he smells terrific. Any bank would love to lend him money. In fact, they’ve lent him money in the past. And when they did, Joe the broker got him the loan. So when Joe got the idea to make some big bucks, he readied an application for a new loan for David. It had David’s name, his social security number, his employer’s name—everything. All the documents he needed were already on file. He didn’t even have to call and bother David. He cut and pasted David’s signature from the last loan and sent the new documents out to the lender. The problem was that the loan was for the purchase of a home which David had neither seen nor heard of and had no intention of every buying.
Joe then goes out and finds himself a mark, who we’ll call…Mark. Mark has crappy credit and he smells like Subway no matter how much he washes. Much like his high school classmates, the banks don’t like him at all. But he still needs a place to live. Luckily for him, Joe makes him an amazing offer: come move into this great $300,000 home, pay an oddly low monthly payment of $1,500 directly to Joe who will make the mortgage payments himself until the time when Mark can get back on track and purchase the place himself at a discounted rate. After all, he’ll have been making the payments in the meantime and earning some equity along the way.
With the help of shady real estate and title company agents, the no-money-down loan gets approved in David’s name. Joe signs the closing documents himself (using David’s name), the previous mortgage belonging to the seller gets paid off, and the proceeds go to the seller. Here’s where it gets fun.
The seller is Joe. He bought the place for $200,000 a few months earlier. He got an appraiser to value it at a 50% increase. After paying off the mortgage Joe had on the property (which was also a no-money-down loan), Joe splits the $100,000 profit with his cohorts. Not bad—and also, not done. So what happens to Mark? He’s living in what is actually a $200,000 home—still not bad for what he’s used to and the price is right at $1,500. But when Joe collects those payments, instead of paying the mortgage, he pockets the cash. When the lender comes knocking on Mark’s door a few months later, Joe is nowhere to be found. Mark gets evicted, and the lender has to sell the place. In a decent market, lenders typically take a 10% hit when they sell a foreclosure. In a bad market, it’s much worse. They’re $300,000 into it, and it’s only worth $200,000 to begin with. Sucks for them. Oh yeah, and let’s not forget about David. He’s the one the lender comes after to foreclose upon. Remember, it’s his mortgage. His credit is going to suck for the next ten years. And if you’re into trends and statistics, the likelihood is that there are five other Marks out there living in five other homes that are secured by five other mortgages—all under David’s name…because Joe is persistent. He is ambitious. And he doesn’t use the words I Can’t.
When I was five years old, I wasn’t too familiar with the difference between right and wrong. That’s probably why I dressed up in my sister’s clothes and microwaved goldfish for kicks. But what I was familiar with at that age was how to do arts and crafts. I spent half my day in kindergarten class with a scissors in one hand, Play-dough in the other, and a crayon in my mouth. To be my kindergarten teacher would have been a breeze. The secret to a successful day was clear, simple, and easily attainable: don’t leave me unattended.
Despite my constant practice, I happened to suck at arts and crafts. Let’s face it: some people just aren’t gifted. So when I went to work at the chop shop, this was a skill that I was going to have to live without. Fortunately for some of my associates (and unfortunately for you), I was in the minority. They were great at it. There were two echelons of these artisans. Today, we’ll talk about the first group.
The Finger Painters
The Finger Painters were exactly what you’d expect any adult who still painted by numbers to be like. They were lazy and stupid. They thought they were the smartest guys in the room because they simply had no sense. Here were a few examples of their shenanigans:
The Xerox Special: Let’s say Joe the mortgage broker sat you down and walked you through roughly forty documents that required your signature. It was a pain in the ass. Then, throughout the loan approval process, certain aspects of your loan would change. Maybe it was the rate or type of loan. Maybe the fees Joe charged went up. Every time something changed, the lender would ask for new forms to be signed. Instead of interrupting your busy schedule, Joe would take the old version of that form, Xerox it, cut out the old signature and affix it to the new one. Roll that bad boy through the Xerox one more time and…voilà! He’s saved you the hassle. Harmless, right? Sure. Until you got to the closing and the title company was too busy to walk you through the documents themselves. They were there to protect you, and they failed to do so time and time again. Instead, they’d ask Joe to do it for them and still charge you the fee as if they did it themselves. Joe would rush you through the document signing while distracting you with personal anecdotes and joint aggravation about having to sign all those documents again. It would all be over quickly—he’d make sure of that. You’d be out the door in no time and on your way home to shove those loan documents in some back closet. It would all be a distant memory until a month later when your mortgage statement came and it was $1,000 higher than you expected it to be. Then you’d look at those documents a bit closer. That’s when you’d see the extra $3,000 Joe pocketed for selling you an above-market rate and a penalty for getting out of the loan within the next five years.
The Pay Stub Two-Step: This one was easy. Step one was when Joe changed the job description on your application to something more amazing than it was in reality. The airport baggage handler became the Cargo Tensile Engineer. That sort of thing. Then, for step two, Joe took a copy of your pay stub and changed the numbers around so it looked like you made three times what you really did. All it took was a pair of scissors and an Elmer’s glue stick. Eventually someone came out with software programs and websites to make it all the more professional. Joe could have approved you for a mortgage payment three times higher than you could’ve ever hoped to afford. Everyone wins, I guess.
The Credit Cut and Paste: Let’s stick with your guy Joe. You seem to really trust him. There are two ways to go with this trick.
Option 1: Joe pulls your credit. The only thing most lenders really cared about in those days was the credit score. Maybe you’re the sort of person who doesn’t honor your commitments. I’m not here to judge. So what? Your score sucks. Easy fix. Joe would cut out numbers from other places on the credit report (there are numbers everywhere on that thing) and paste them into the right place to give you a better credit score. You get approved for a loan you couldn’t have otherwise gotten, and everyone wins, except the lender. The reason the lender loses is because you end up not making your mortgage payments. And of course that’ll happen. That’s why your credit sucked to begin with.
Option 2: Joe pulls your credit. Maybe you’re the sort of person who has never missed a payment. You’ve got a great score. But Joe goes ahead and cuts your score out and replaces it with a new mix of numbers anyway. All of a sudden, your score sucks. Now, why would Joe do that? Easy answer. Have you ever heard of sub prime loans? Of course you have. The rates for them were much higher than the rates for people with good credit. If Joe can slide you into a sub prime mortgage, he’s likely to make a lot more money by adding on special features to your loan like a pre-payment penalty or a rate that adjusts quickly and often. You might ask: Why would anyone not see this for a ruse? It’s the same reason why I went through kindergarten using right-handed scissors when I was left-handed: I was too embarrassed to tell anyone something was wrong. People tend to want others to think they’re in control, even when they know they aren’t. So they take what they’re given. Don’t believe me? Read the newspaper.
Next time: Arts & Crafts, Part 2. Forget these glue-sniffing, window-licking, finger-painting amateurs. It’s the Masters who really knew how to get stuff done. While the Finger Painters were wondering why glue tasted so different than White Out, the Masters were busy making their own concoction.
I once read about a thief who broke into Paris MOMA. You know those guys usually get caught, and when they do, it’s after being holed up for three weeks in a coal cellar littered with Brioche Doree wrappers, a bin filled with their own waste, discarded cans of Carlsberg, and, of course, $120 million worth of Picasso. I remember thinking: What an asshole. And as far as I knew back then, that was the end of the story. But thinking about it now, that guy was probably just a low-level canvas-plucking pawn in a much bigger game. Somewhere in the tall hills of Montenegro was a slovenly art dealer with clients too rich to imagine. He was the real crook.
The mortgage racket is no different. The real crooks in this business are the chairmen and CEOs like Lee Farkas (he of the quote: If I owe you $100, I’ve got a problem. If I owe you $1 million dollars, you’ve got a problem.). But for those who feel victimized by the financial massacre, the bad guy, the moron in the basement left holding nothing but his manhood and a resume that reads Don’t Hire Me, is the lowly mortgage broker. He is the one at the pillory, the Lieutenant William Calley of this particular massacre. No doubt, there are many brokers who are decent people with clean hands. But there are plenty that deserve the reputation that precedes them, and those people always used to be found in the same sort of place: the chop shop. Upton Sinclair would’ve feasted on these places. When I got into the business, I spent eighteen months working in one.
All chop shops have the same basic business plan:
1. Find a steady supply of warm bodies. After the great dot com employee purge of 2000 and 2001, there was an endless stream of people who needed to pay for their Kenneth Cole habits and used BMWs. This was the next boom. Easy work with high reward. It was one of the few financial sales jobs you could get without any sort of government licensing or background check.
2. Secure a company name geared to make people think you are a legitimate financial institution. Borrow a solid brand name and tweak it. Chase Bancorp would have been a solid choice.
3. The bait. Send out direct mail fliers that reference the homeowner’s current lender that make them think they are being contacted regarding some sort of urgent communication.
4. The switch. Give them the bad news (credit history, high rate, etc.; there are countless examples, and we’ll delve into this another time). Berate them until they understand that they are completely screwed and surely to miss out on the plummeting rates. Then the deliver the good news: You’re here to help them get out of their jam.
5. The burn. Sell them the highest rate or the riskiest program or the biggest up-front junk fees you can without them walking away.
6. The churn. This is during a time when the rates went from the low 7s (2001) to the 4s (2009 and beyond). On a loan amount of $250,000, if you lower your rate by a quarter point, it’ll save you roughly $50 each month. For a lot of people, that’s decent money, considering it’s more than $18,000 over the life of the loan. If someone can convince you of this once, chances are they can convince you of this again. And again. And again. They could have refinanced you 10 times. Each time your payment would have gone down. Each time the broker could have made anywhere from $1,000 to $5,000. Maybe this would come out of your equity. Maybe out of your pocket. But the worst of this was for those in the most pitiful shape of all. For those whose credit sucked and were about to lose their home, they would have done anything to save it. Even pay upward of $10,000-15,000 for one refinance. This would come out of the equity in their home—an equity created by the bogus inflation of a bubble market. In time, when the values came down, they’d just owe that money to someone else when the lender came knocking again. And they always did, because some people were just meant to be tenants.
The people who owned these places didn’t need to be smart. Predators seldom are. They just have huge balls. The chop shop that I worked for had two owners. They came to disagree on a number of things, so they split up the company. The newly created company was run by a guy named Todd. On top of committing gross amounts of fraud, Todd also found time for a side business. When the FBI busted through the front door of his business suite to arrest him for a real estate scheme, he grabbed the most valuable possession within reach and fled out the back door. I’m sure it made sense to him at the time. His house was on fire, so to speak. When he ran into the clutches of an FBI agent stationed at the back door, a cloud of white dust billowed into the air and settled on the two men’s faces. In Todd’s arms was a plastic bucket filled with 328 grams of cocaine.
What an asshole.
I’m a salesman. I work in the mortgage business. When I got into the industry a decade ago—before the waves of Jiffy Lube attendants and tae bo instructors joined the herd—it was just another way to make good money. And I did, right from the start. But now, handing someone a business card that says ‘mortgage’ anywhere on it is like being on a first date and slipping a note across the table that reads: “Hey, I have gonorrhea!”
It wasn’t always this way. There was a time when I’d avoid telling strangers what I did so that I wouldn’t have to help them sort through their personal financial nightmares. We, the people who do what I do, were at the cool kids’ table in the lunchroom. We were popular. We had the answers they needed. We had the money they wanted. And so it went, until someone got hold of the idea that we’d been picking their pockets the entire time. I suppose it’s fair in some ways, if you’re comfortable with the idea that everything good that happens to you is the result of you just being awesome, and everything bad that happens to you is the result of someone else’s treachery. No matter the reason, here we are, back at the nerds’ table with the Wizards of Warcraft kids.
As with any sales job, each day is a hustle. It’s invigorating. It’s disgusting. It’s frustrating. It’s absurd. And I have a strange feeling that it’s killing me. So I’ve decided to share my experiences with you. Maybe some of what I have to say will sound familiar. Maybe it’ll be new. Maybe it’ll brighten your day. Maybe you just won’t care. If nothing else, we’ll spend at least one brief moment together. And that’s good. Because, after all, nobody wants to die alone.