Showing posts from 2010

Five Years After the Storm: A Celebration of the Crescent City

This story was written in the Fall of 2005 in response to Hurricane Katrina. Five years on, I'm posting it here as a tribute to the city and the friends I made there.

Darrell Breen was born and raised in the same New Orleans neighborhood where I lived in the spring of 2000. When Darrell grew up there, the neighborhood was known as the Irish Channel. He summed up his life to me with a memory of sitting on his grandfather’s lap as a boy of five. “Half Irish,” his grandfather says looking at him. He bounces Darrell to the other knee. “Half Italian,” he says shaking his head at Darrell. “Lad, yer fucked.”

Italians and Irish have been marrying for generations in America, the Italian women assuming the easy Irish surnames and keeping their Catholic faith. In the neighborhoods of New Orleans in the 1960’s it was not so easy for the offspring of these marriages.

When I met Darrell (spelling deliberately changed) in New Orleans, he was 43 years old. He looked and spoke like he was…

Stoop Sitters

It’s one of those nights in New York when the world is a wind tunnel. It’s the coldest night of the year, again. And January has just begun.

Two people sit huddled on a stoop, parkas covering their body, fannies frozen against the cold cement. With their pointy hoods, they look like druids. They smoke in silence, sitting motionless night after night, hour after hour. They look homeless; all that’s missing is a tin cup.

These are my neighbors. They are not destitute. They live across the street in a brownstone, paying enough rent on their apartment to cover the mortgage on a McMansion in Dallas.

Nine p.m. I’m headed out the door, cursing myself when I’ve forgotten something and turn back up the stairs to retrieve it; taking out the trash; talking through my to-do list. They sit so still; I don’t notice them. For most of the year the view across the street is obstructed by trees.

It’s not until I stand on the sidewalk and close the gate behind me that I notice them. Camouflaged i…

Salesmen without Scruples: My Observations as a Loan Officer -- Part I

**The following is the first part of a story that was updated Sundays in January. Scroll down for the three previous pieces in the series.

Salesmen without scruples selling loans to people without marbles set off the sub-prime housing collapse.

I was one.
I sold mortgages all over America from a building on 32nd street a block from the Empire State Building during the heady days of deal making when a mortgage company sponsored that year’s Super Bowl.
50 blocks downtown and a world away, Wall Street was betting billions on the sanctity of these salesmen without scruples and the sanity of our customers.To be sure, they made their measurements, calculated their risk, but it was all math with no meaning.They failed because they never set foot in a mortgage brokerage.Unfortunately for me, I did every morning.This is my view from the inside.

The sub-prime market operated in a realm far removed from the picture of a young couple walking into a local bank to meet with a manager.Most sub-prime mor…

Salesmen without Scruples: My Observations as a Loan Officer -- Part II

Sales 101

Whatever the product, a salesman has three objectives.

1. Qualify.
2. Build trust.
3. Close.

The mortgage business perfectly illustrated this truth. A credit check required the borrower’s social security number to determine if they qualified for a loan.

Though it’s hard to find faith in someone over the phone, this part of the process was scripted to sound hyper-professional and short circuit common sense. Basically it boils down to this: if you want something, ask for it.

A good, honest salesman deserves respect. It’s an art that can be mastered, but like pure athleticism or artistic ability it requires innate talent.

Example: Loan officer standing with a phone clutched in his fist like he is about to punch himself with it. The buckle on his Gucci belt matches the clasps on his Gucci loafers. He is talking to an apprehensive customer of mine from Sarasota, Florida named Mike Perez.

— This is Christian, I’m a senior loan officer. Yes, that’s right. Like your religion. Mr. P…

Salesmen without Scruples: My Observations as a Loan Officer -- Part III

Science Vs. Shoeleather: The Case Against Quants

Based on the prevailing financial models in 2006, sub-prime loans defaulted at a six standard deviation shock beyond expected calculations.A natural occurrence of once in 216 million years.I wouldn’t buy a one dollar lottery ticket with those odds.The banks bet billions.
The math couldn’t account for every variable.Why didn’t the big investment banks have detectives on the case?Everything was reduced to an excel spreadsheet; billions were bet on blind calculations.A little gumshoe work would have put a question mark next to the math, especially when they discovered that smooth-talking ex-cons were providing the numbers and earning the commissions.
Sometimes it was only a simple stroke of white-out that stood in the way of a loan’s approval and the commission that came with it.
At Global Home Loans, a $10,000 commission of Danny’s appeared in jeopardy.The loan required the borrower to have a bank balance showing sufficient cash reserves.But,…

Salesmen without Scruples: My Observations as a Loan Officer -- Part IV

The Closing

Of the eight people I started with at the second brokerage, First American Financial, none lasted more than two months, myself included.I soon found a stable job that while it didn’t promise $20,000 a month, lasted longer than most of the mortgages closed during my tenure.
Both brokerages I worked for were sued by its employees in class-action suits alleging that loan officers should have been classified as “non-exempt employees” and paid overtime.I opted out of both lawsuits.I dropped out of the case against Global Home Loans when a 10-page questionnaire, an obvious stalling tactic, was issued.It worked.The time expenditure became too great for a suit with little promise of payout.The companies suffered the same fate as most of the loans it closed.They went bust.

I didn’t keep in contact with anyone from the business.I quickly lost touch with Tara, Ed left First American soon after I did; he called a few months later to let me know he had found a job as a bank assistant.I fo…