Escape From Pottersville: A New Beginning in the Mortgage Industry

Contributing to MND the past 4 years, I have been content to represent my image as a bewildered George Bayley, wondering what happened to his beloved Bedford Falls when he stumbles across the "Pottersville" sign after wishing he'd never been born. I have lived a modern day version of George Bayley's alternate reality in Pottersville going on 5 years now.

I have had many moments when I wished I'd never gotten into this business, and have come very close to jumping off that bridge to join the river of people who decide it isn't worth it.  But there are voices crying out already drowning in the water, and they distract me from my self pity.  The voices are those of home owners swimming in a sea of debt compared to the value of their homes. And these are not the speculative investors who took out stated income zero down loans for a quick flip profit. These are borrowers that put 20% down, paid extra principal, and their only mistake was buying during the most speculative housing boom in the history of housing. None of the hundreds of clients I've talked to over the past 5 years had hopes of double digit appreciation or quick cash out/flip plans.  They just wanted a house that would appreciate at the 3% clip that history said was reasonable.  But that client base keeps growing as I meet people from 2009, 2010, 2011 who bought homes and are now upside down.  Something has to change.

I've had enough of Pottersville. "No man is a failure who has friends", was the letter George got from his simple minded angel friend Clarence when he finally decided to escape Pottersville. George returned knowing that monumental difficulties faced him.  Yet the years of people he had helped came to his rescue.  Aren't our customers our friends? Don't we have the opportunity to create lasting relationships that will allow them to be ones who defend us in hard times? This Pottersvillean world can only exist if we give up on doing what is right for our customers. Or worse, just give up the fight, and hope that things will work themselves out.

The housing industry can fix this problem from within. I've had the opportunity to interact with many inspired minds in the Mortgage News Daily community. We don't need a regulatory agency tasked with making sure we do what is right for our consumers. We have failed to appeal to the regulatory and political powers that be because we haven't built a platform of reform that is based on what we know is best for the people that are the lifeblood of what we do: the housing consumers.

I have always wondered what a sequel to It's A Wonderfeul Life would have been like.  What battles would George have been able to fight with the support of all the people he had helped?

I recently came across a you tube video with another Jimmy Stewart character in another idealistic Frank Capra film production: Mr. Smith Goes To Washington. Senator Jefferson Smith shows up in Washington DC with naïve, idealistic hopes of making changes that would benefit the youth of America, but ends up in the thick of political dirty tricks, false accusations, and character assassination.  In one final impassioned plea, he reminds the chamber of one rule that should dictate the interactions we have with customers, constituents, friends and family: Love Thy Neighbor. I wonder if those three idealistic words could be used as the foundation for a return to that basic golden rule when it comes to housing finance to benefit the homeowners of America.

As I ponder a trip to Washington, DC, I wonder what message I would bring.  I read the industry blogs, news reports and chats, and I see a civil war going on.   How can I bring a message of unity in the name of the housing consumer when all the respective players seem so hell bent on blaming each other for this mess without any respect for the risks and challenges inherent in each of our roles in the housing system? The truth is simple.  I can't.  I can only speak for the customers I sit across from every day of every week, stressed because their house values are continuing a fifth year of declines with so many false calls on the bottom that they really question whether there is any investment value left in home ownership.

Starting in the summer of 2010, I attended every single closing and kept a journal of the questions and concerns I heard from clients in all walks of life, with differing levels of financial sophistication.  I watched them shake their heads as appraised values dropped.  I clarified the meaning of the mysterious lump sum 3 page GFE calculations that seemed to cloak the meaning of "rates and fees" in cryptic terms that still don't get to the heart of the financial benefit of the loan.  I helped connect the dots from that to the closing HUD-1. I explained why a $500 undocumented cash deposit in a checking account would have to explained even though the average balance was over $10,000.  I had fascinating exchanges about what these consumers were told about the price trends of their house when they bought, and heart breaking sessions where I felt like a grief counselor consoling couples who were upside down by ten, twenty or more percent despite having put down the recommended 20% when they bought.  With hundreds of closing conversations compiled, I have a War and Peace sized volume to present clearly showing what is working, but more than often, what is not working.

I hope that anyone reading this post will share their stories as told from the viewpoint of the population that keeps us all in the business: the current and aspiring homeowners of this country.  I look forward to sharing these true stories in the words of the American home owning consumer with the political, regulatory and legislative decision makers when I visit Washington DC in 2013.   I hope I'll see a few of you there for this new beginning.