Called On the Carpet

{This is my fifth submission in a series on the financial crisis here in America. I want this to be an honest account of why we are where we are based on my tiny perspective of the mortgage/housing debacle.}

A few years ago, I was called by the the manager of one of my biggest clients...a lender. I don't remember the exact date that I started working for them, but it's safe to say it was well over 12 years ago.

The manager had started working there as an entry-level loan officer and worked his way up to the top spot by hard work and determination. I had been the company's appraiser of choice before he started working there. So, needless to say, I was basically the only appraiser he knew personally.

Now on the day he called, he didn't say much. He just said he wanted to discuss something with me in his office. At the time, I thought he wanted me to give him a "freebie" appraisal on his house. A few weeks before, he had mentioned that he and his wife wanted to move to another neighborhood. When I arrived, he ushered me into an office and closed the door. This isn't the exact conversation, but I'm going to take a few liberties to make this more readable.

Manager: "Mark, I just wanted you to know that we're probably going to start using another guy for our appraisals."

Me: "Wow... OK... Did I do something wrong or did I miss the turn-around times you requested?"

Manager: "No, we've been going behind you with another appraiser for a few weeks now and the other guy always gets a higher number than you do."

Me: "Huh? You've been paying for two appraisals? Do you mind me asking who is the other guy?"

Manager: "It's *** *******. Actually, your turn-around times are usually two days better, but we'd rather have the number right rather than have it back fast."

Me: "I see. Well, it's certainly been a pleasure. Thanks for being up-front with me. If you ever need me again, you know how to reach me."

I left his office with a lump in my throat. It wasn't the first time I'd lost a client, but it was the first time that a lender had been as honest as the manager was that day. I prayed on the way home...asking God to help me find something to replace the loss of business. A little better than a month went by. Then, one day, out of the blue...the manager called me again. He said he wanted a favor. The conversation basically went like this:

Manager: "I hate to ask you this...but what do think a house in this neighborhood that was this big and was this old would sell for? {I inserted this's to make it as generic as possible.}

Me: "Well, the last time I did one in that neighborhood, I actually had several good comps. Let me pull them up on my computer. Yep, here they are. Looking at these, I'd say you're house would probably fall between $150,000 and $180,000, based on these sales. I realize that's a big range, but I don't know anything specific about the house in question. Why do you ask?" {If you search back in my blogs, I talked about lenders "fishing" for comps. Normally, I wouldn't have gone this far with the guy, but he was an old client. I was willing to make this concession to win him back.}

Manager: Well, *** (his new appraiser) just brought us a report for that property. His value...$228,000. I'm not an appraiser, but I know enough about the market to know that this is bogus. The borrowers told me they thought it was high. They were expecting $185,000."

Me: "Well, that's the guy's reputation. I've actually never heard anyone say anything good about his work. But hey, the guy hits homeruns every time he steps up to the plate. Isn't that what you wanted?"

Manager: "Well, yeah...but no. What if these borrowers go belly-up on me? My branch is going to take a bigger hit than we can afford to take. This guy's done a whole bunch of appraisals for us already...and I'm getting more and more nervous with every one."

Me: "Hmmmm....I guess you've got a decision to make."

About a week later, I started receiving orders from the lender again. Praise God! And they still use me today. Praise God! The point I want to make with this blog is not every lender is bad. Sometimes, they're just like you and me. You know, we all make bad decisions from time to time. Hopefully we're smart enough to correct our mistakes before they become even bigger problems.

I'll probably be called on the carpet again someday by another lender. Hopefully, though, it will be because they want to thank me for being realistic rather than being bogus. I hope so. Only time will tell.