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February 2000
Index of all
past
Affiliate Corner columns
A deal with the devil
By Tom Gross
Temple-Inland Mortgage Corporation Contributing Writer
We’ve heard those Faustian stories all our lives. The ones where a mortal enters into a contract with the devil to gain fame, fortune or power. You might remember Charlie Daniels’ “The Devil Went Down to Georgia,” but that was more about a competition with the devil. The best example I can think of is the 1950s Broadway show and subsequent movie “Damn Yankees.” If you don’t know the story, the thumbnail sketch is that a young man is so forlorn about the New York Yankees beating his beloved Washington Senators that he wistfully says that he’d “sell his soul to the devil if he could personally lead the Senators to victory over the Yankees and the rest of professional baseball.” The rest of the story is his new life as a flame throwing pitcher who leads the Senators to amazing victory after victory, but at the end the devil demands payment for his services.
A recent radio ad talks about a signature in blood for the final documents on a mortgage with an exceptionally low rate. It is in this realm that I truly believe that modern day deals with the devil are indeed among our industry. Specifically, how many times have you received an unsolicited letter or card saying you’ve been pre-qualified for a mortgage that will allow you to receive equity cash from your residence up to 125% of its value?
A friend recently told me about having everything set up to sell a client’s home with an accepted contract and a full price appraisal. Out of the clear blue, the title work disclosed a 125% second mortgage. When she asked the client if it was correct, the response was that an offer came in the mail and she simply accepted the offer. I had clients last fall with similar results. Because the FHA streamline refi didn’t require an accounting of all other debt and the clients failed to disclose the 125% second, I was in the dark until the title work was delivered. I was asked “Why should that affect my refinance?” I may be wrong, but I firmly believe that most of the market for 125% mortgages are people who are not aware of what a 125% mortgage actually means.
For those in our industry who would argue that if they don’t provide this product, someone else will, I would respond that I’ll stick with the well founded premise that Denise Waitley presents in his tape series “The Psychology of Winning.” Very specifically, I believe true winners in our industry can provide quality service for their clients without appealing to lesser qualities and weaknesses. Such a product might be appropriate for a person who needs the money for a life saving operation or medical procedures, but let’s not fool ourselves. One hundred twenty-five percent mortgages aren’t being used to save lives; they are being used to feed the beast of consumer credit.
You might again counter, What’s the big deal – what’s wrong with consumer debt? You might even remind me of the adage “He who dies with the most toys, wins.” I would counter with the lyrics of the old, old song “16 Tons,” “Another day older and I’m deeper in debt. Saint Peter don’t you call me cause I owe my soul to the company sto’.” According to the U.S. Department of Commerce, 1999 is projected to be the first year in over 60 years that the average American is using either savings or going in debt in order to spend more than they earn. Although I could go into more specifics, the spending habits of a depression economy may be adequate to show the strength of my argument.
Instead of adding more fuel to an obviously difficult situation, why not offer information that might be life changing? If your clients have a Christian background, you could recommend Larry Burkett’s How to Manage Your Money from Christian Financial Concepts, or Ron Blue’s Master Your Money from Promise Keepers. If your clients don’t have a Christian background, John Cummuta’s The Debt-Free & Prosperous Living Basic Course provides comparable information. Each of these sources can provide a shining light into what is often a darkening scenario.
It will sound odd to come from me, as a person who’s income is based on arranging mortgage services for clients, but if my clients want to make this deal with the devil, I’ll attempt to light a candle rather than enhance the curse of the darkness. |
