My father told people things that were not true. He told them what they wanted to hear, for the most part, because HE WANTED THE DEAL. He did it within the laws of his time, but not with the same sense of consumerism that most of us have today.
When I was about 15 years old and working in my dad’s office on a day off from school, I learned a very important lesson that I share with you now. My father was a mortgage broker at the time. Well, that was just one of the things he did. Actually, he was a real estate broker, mortgage broker, builder and renovation contractor. People would find him because of his connections to other contractors, such as electricians, plumbers, roofers, carpenters, plasterers, heating installers and the like. He did no advertising of any kind. People would approach him because they wanted to own their own home and he had success in that field – success that his friends would talk about and cause them to refer prospective homebuyers to him.
For the referring party, it was a win-win. When they referred someone to my dad, they would get to do the work on the house he would build for the customer. I have always suspected that RESPA was written especially for my father and his friends, but I’m probably exaggerating - maybe. When a prospect would approach him, he would find land for them to build a house on, get them the money to build the house, build the house, and place a permanent mortgage for them. Pretty sweet, huh? And for every step in the procedure he earned a fee, and that was even better, for him.
It was common for me to spend time at his office on days off from school, especially when I was in high school. On the day in question, he had a settlement scheduled in his office.
The layout of the office was the design of a railroad car with one room directly behind the other. You needed to go through an entire room to get into office behind it. The front space was a waiting area that had about four chairs for customers to cool their heels while waiting to see him, his secretary or business partner. The next space back was the general office space separated only by a wrought iron railing from the waiting area. The general office space had two desks hard up against the wall to the right, one for him and one for his secretary. They faced each other to allow for easier communication. The rest of the room was filled with side-chairs, filing cabinets and open cabinets meant for storage of all sorts of papers.
As you exited this room, proceeding toward the back of the building, there was a small bathroom to the left. The next room was the inner sanctum, the boss’s office. It had his very large metal desk, a very large executive chair, a lounge chair to take afternoon naps and three side-chairs. Very color coordinated, in tan and brown. The room behind was the former kitchen of the converted house, a room about 10 by 15 with a small desk and a peg board that listed all the projects being worked on. This was the office for my “uncle” Earl, who had been my father’s business partner for about 30 years. He was the one who oversaw the construction phase of the business while my father did the business end.
The settlement had only two people, my dad and the buyer – that was it! My dad and the buyer sat on the same side of the desk as my dad shuffled various papers that required signature.
“So Mrs. Conwell, here are the papers you’ll need to sign today. Just a few papers, it won’t take long.”
I could hear what was going on because I had taken up residence at his desk in the general space, facing his secretary.
As the settlement was over pretty quickly, requiring signatures on about seven documents, I heard him say, “Now this one last piece of paper says that if you don’t make your payments, you’re going to lose your house. Ok?”
“Sure Mr. Lovallo, I understand,” as she signed the paper.
“Ok, well thanks Mrs. Conwell, here are your keys and I congratulate you for what you’ve done. I hope you enjoy your new home.”
The buyer quickly left the office, passing right by me. She thanked my father’s secretary as she hurried toward and out the front door.
I too was in a hurry, but for another reason entirely, I wanted to know what that last piece of paper was. What could she sign that would cause her to possibly lose her house?
At this point of my life, you need to know that I had been immersed in the subjects of real estate and mortgages for a couple of years already. When my father had studied for his real estate license, more than a year before this incident, it was I who had tested him on his knowledge of the little red book that had been distributed by the New Jersey Real Estate Commission. I therefore needed to know and understand the questions in order to test him, and I did. So my inquisitiveness was not out of line, nor a venture into a jungle of unfamiliar ground.
“Dad, what was that paper you had that lady sign, the last piece, when you told her that if she didn’t make her payments she would lose her house?”
“Here, look at this son.”
As I looked, I was taken a bit off guard. What I was looking at was a Deed; complete in every regard except one thing that I noticed immediately, the date. This buyer, borrower, had signed a Deed to the property giving the ownership to my father. I found out that he did it all the time. That every transaction he performed was a combination of obligation and sleight of hand. It was perfectly legal. He had co-signed the note, putting himself at risk financially and protecting his risk with a simple magic trick.
Could you do what my father did in today’s business world? Absolutely not! More than that, my tendency over my lifetime was to inform my clients even more than was required. I never wanted to overpromise, under-explain, misinform, miss some unimportant fact or ever be accused of doing any of these things, at the risk of losing a deal or making a client uncomfortable. Long before the various legislative bodies across the land instituted all of the overregulation we are all exposed to today, I was over-careful about this very subject.
Never overpromise. Never try to perform magic. Learn from people like my father that truth, facts, complete information and forthrightness are the proper way to treat clients. Don’t do what some of your peers do when they under-quote a rate or shave a few facts or costs from a prospective closing.
When I was associated with the NY Association of Mortgage Brokers, I met a number of unsavory characters. Hopefully most of them are no longer writing business. But recently I heard from one of them who was having a hard time writing forward business so they decided to enter the fray of reverses. Do I think their unacceptable behavior has changed? You know the answer, as well as I do.
Be honest with your referral sources. Be forthright with your clients. To be a member of the society that helps people either purchase or refinance their “home” is a worthy profession. In order to keep it at a high level of integrity we need to do the right thing, all the time, even at the cost of losing a deal.
Ralph LoVuolo, Sr. President, Mortgage Motivator, a consulting firm on the cutting edge of the mortgage business to help people achieve their true potential. LoVuolo Sr is one of the founding fathers of the New York Association of Mortgage Brokers and a two term president. Additionally, he served as Parliamentarian for six years on the Board of Directors of the National Association of Mortgage Brokers. LoVuolo, Sr. can be reached at firstname.lastname@example.org, or visit him at http://www.mortgagemotivator.com