When I left the teaching profession, I considered a wide variety of career opportunities and for a brief period of time found myself working as a head hunter in an office building just north of what was then known as the Lion’s Inn, a motel on Vineyard just north of the Ontario airport. It took me less than two days to determine that executive recruiting wasn’t going to be my cup of tea.
The first day the office manager, David Rosen, instructed me to call into his office from my cubicle to demonstrate what he was soon to discover were my non-existent telemarketing skills. After about two minutes he told me to hang up the phone and to come to his office.
When I entered, he invited me to sit down and shook his head. “That had to be the absolutely worst telemarketing call I’ve ever heard. Are you sure you’re up to this?” he asked.
“Well, I’m willing to give it a try,” I said.
“Okay,” he said with a sigh of resignation. He then told me to get back to my desk and to start dialing the phone.
I returned to my cubicle and dutifully started making calls. In almost every instance the secretary running interference for the hiring officials I was trying to contact, succeeded in stonewalling me. As I recall, I did get through to one fellow who, once he realized who he was talking to, told me that he wasn’t interested in talking with me now nor would he be interested in talking to me any time in the near or distant future. Needless to say, the first day wasn’t very encouraging.
The next morning went pretty much like the preceding day though David made a point several times to come by my cubicle to see if I was making any headway and to give me a little encouragement. Shortly before noon I looked across the aisle and caught the eye of Richard Voth, a broad shouldered, congenial, middle aged fellow I’d talked with briefly the day before. He had started work there just a few days before me and looked even less engaged than I was.
Well, we decided to go to lunch together and it was at that lunch that Richard told me his life story. In his early 20’s he’d been the skipper on the 50 ft. Wrigley yacht moored in Long Beach. (At the time the Wrigley family owned Catalina Island and two or three times a year would fly out to California from Chicago to visit their vacation digs. The rest of the year, Richard lived the high life camping out on the yacht and hosted parties.)
When the Wrigley’s divested themselves of their interest in the island, they sold the schooner and David decided to go to Las Vegas and to work in a casino as a dealer. While there he got a pilot’s license which led to him to return to California to build a fishing business composed of two trawlers and a piper cub. In the mornings he’d fly out over the Pacific to locate the catch and then direct his small fishing fleet to pull it in.
For one reason or another, he gave that enterprise up and started working as a private investor in the residential real estate industry — buying foreclosures on the courthouse steps and then selling or renting them out. He became so successful at this that he was invited to join the Den of Thieves, a group of investors who would meet for breakfast the morning of every auction. There they’d discuss the properties on the day’s agenda and when one of the club’s members wanted to buy a particular property he’d just pay each of the others a hundred bucks to stay out of the bidding.
“As a member of the inner circle, I could easily make upwards of $3,000 a month just sitting on the sidelines,” he said.
Well, the real estate industry went bust and Richard ended up losing everything only to re-enter the industry a few years later to buy scores of distressed FHA properties. As he explained it to me, the process was not only far less complicated than the foreclosure market, but risk free and unbelievably profitable.
Here is the long and short of it.
Richard would approach distressed homeowners who were having difficulty keeping up with their FHA mortgage payments and offer them a thousand dollars in exchange for the title to their property. What the homeowners didn’t understand at the time was that the transfer of title did not absolve them of their original mortgage obligation. Once the transfer of ownership was recorded and the owners had vacated, Richard would rent the houses out and not bother to pay the old mortgage, taxes and insurance because they weren’t his legal liability. In two months he’d recoup his original investment and pocket the rent every month thereafter as shear profit.
A year or two later, FHA would initiate foreclosure proceedings, a process in California that took six months to complete. This venture ended up collapsing in the late 80”s and early 90’s when FHA changed its lending guidelines and the government foreclosed on the last of his properties.
A couple of hours later we started a leisurely stroll back in the direction of the office and it was then that we both decided to just go home. Neither of us returned to work there ever again but we enjoyed one another’s company so much so that we stayed in touch for several years. We parted ways when Richard approached me to join Amway a few years later.
* * *
As a new loan officer at GMAC Mortgage, I was always looking for a way to generate mortgage leads and stumbled on the idea that perhaps some of the real estate agents I knew would be interested in crediting a portion of their real estate commissions to homebuyers to offset closing costs. I wasn’t all that optimistic when I considered the prospect of running the idea past a few of the agents I worked with but the idea ended up being very well received.
Once I had a half dozen agents in the fold, I got to thinking about ways to market the idea to potential homebuyers and the thought occurred to me that it might be a good idea to contact David Rosen to see if his head hunting firm might be interested in passing along the subsidy to clients who were relocating to Southern California. Well, I called David and he personally thought it was a great idea but he had to defer to the home office in Los Angeles to get final approval.
A couple of days later David called to let me know that the big wigs had turned the offer down. That being said, he told me that he was very impressed with my presentation and suggested that perhaps I’d missed my calling.
“You’d make a great recruiter, Ron,” he said. “What will it take to get you to work for me?”
We had a good laugh together when he realized who he was talking to. He said that he had often wondered what happened to Richard and me.
* * *
When John Lorson was promoted to a regional manager and relocated to Phoenix, AZ, I was appointed branch manager. Again looking for new ways to generate business, I jumped at the chance to attend a real estate sales workshop hosted by a fellow from Seattle offering a very professional looking first time home buyer’s workshop. A three part series of overhead slides, I laid out $3,500 to license the program with a mind to offer it through the local community college network.
Making an immediate appeal to three of them — Riverside, San Jacinto, and Crafton Hills — I succeeded in getting a commitment from each to offer the course through their respective community outreach programs. Unfortunately, while each of the presentations was well attended, in the end the program didn’t generate enough business to justify the original investment let alone continuing commitment of time.
It’s worth noting that a week or so after I had gotten commitments from the community colleges to sponsor the program, I was approached by a real estate agent who had bought the same program. She had discovered that I had a lock on the community college network and wanted to know if we could join forces. I told her that I would be more than happy to do that but I’d expect her to reciprocate by referring her home buyer clients to me for prequalification purposes.
“Oh, I couldn’t do that,” she said.
Needless to say, I stayed with my original plan and that was to work with Greg Tomlinson, a ReMax broker. Greg was, incidentally, one of the few realtors I had a relationship with because he refused to accept referral fees from lenders in any form. He was also a terrific jazz pianist who left the real estate industry several years later to pursue his passion for music. The last I heard Greg had secured a full time job working as the Musical Director for four major cruise lines.
* * *
Shortly after my divorce was finalized I decided to leave the security of the position I had as a sales manager for GMAC Mortgage to pursue a nagging interest in real estate consumerism largely because it was becoming increasingly difficult for an honest loan officer to make a living in California.
To survive in the early 90’s, loan officers had to be willing to pay the referring real estate agent a substantial referral fee. By substantial I mean a fee that sometimes ran up to 1% of the home buyer’s loan amount. Back then the average mortgage ran around $200,000 so the loan officer would be expected to hand the referring agent an envelop containing up to $2,000 in cash after the loan closed. Payments were made in cash to not only circumvent the IRS but to make sure there was no evidence to suggest the payment of a illegal referral fees.
Homebuyers, of course, not only weren’t aware of the fact that these referral fees were being paid but that they were the ones who funded them. After I left GMAC, I wrote a guide to educate homebuyers and homeowners about this insidious practice and was subsequently approached at the LA Convention Center by a producer working for an investor group comprised of Hollywood insiders. They were interested in building a television network based on a perceived need for consumer based programming and found the book I’d written a great starting point for a real estate related series. I abandoned that project six months later when the group abandoned its fund raising efforts.
* * *
Years later I had a conversation with Jalma Hunsinger, the owner of First Mortgage, a mortgage banking firm in Tempe, AZ, about the program I had put together. A long time director of the National Association of Realtors, Jalma dismissed my assertion that in California referral fees were more the rule rather than the exception. He just couldn’t bring himself to believe that such a practice could be commonplace. A year or so later he made a telephone call to me to apologize.
On a trip to the Mediterranean with his wife, he happened to get seated next to a young woman, a realtor from San Francisco. An engaging conversationalist, Jalma tried to talk her into augmenting her real estate earnings taking loan applications and forwarding them on to a correspondent lender.
“That way you could be earning half the origination fee which typically runs 1% of the borrower’s loan amount,” he said.
She laughed. “Why would I do that? I can earn 1% just by giving the lender my client’s telephone number and I don’t have to pay taxes on it either,” she responded.
Jalma was dumbfounded and the basis of my education program was, at least in his mind, clearly validated.
* * *
If you’re interested in learning more about the dark side of mortgage lending, you can visit The Mortgage Fraudster, a blog I published back in 2009 as a testament to what I knew then about the corruption in the residential real estate industry. Despite the sub-prime mortgage lending debacle that nearly brought about the collapse of the world’s economy a year later, I doubt if anything has really changed.
* * *
When my dreams of becoming a nationally known consumer advocate disappeared, I decided to take John Lorson up on a long standing invitation to visit him in Scottsdale, Az. That visit generated a job offer so I moved to Phoenix August 1, 2005 to help John and two of his business partners — Chuck Makula and Ken Braun — get Keystone Mortgage and Investment off the ground.
Situated at 44th St. and Thomas on the far east side of Phoenix proper, the office was located on the top floor of a spectacular office building owned in part by Ken. I say spectacular because the top floor conference room was a domed affair with a large, circular table in the center of the room beneath a striking mural that covered the entire ceiling. The walls of the room consisted of a series of mahogany framed glass doors.
Working as a loan officer there for a couple of years, I continued to hold on to the idea that perhaps I might be able to get the consumer thing going again. It was then that I ran into a real estate broker who earned his living getting buyers to pay him by the hour. When he represented a buyer he charged his client only for the time he spent servicing the client’s needs and credited the remainder of his side of the listing fee to his client’s closing costs. This meant that on a typical $200,000 sale accompanied by a standard 6% listing fee, he’d pocket $1,800 or less. What remained of the standard commission (in this instance $6,000) he’d credit to his client’s closing costs– the credit being on a $200,000 sales price a whopping $4,200.
Thinking that consumers would jump at the chance to take advantage of his services, I ventured to put together still another home buyer workshop but I decided this time to present it on a more intimate basis using the aforementioned conference room. Assembling four home buyer prospects on a Saturday morning, I made my pitch and it went over pretty well. All four were thoroughly engaged asking questions throughout the two hour session. Of the four prospects, though, only one was in a position to buy anything right away and he stuck around afterward to ask a few more questions. He indicated that he had two homes he intended to look at over the weekend and that he would get back to me on Monday. I gave him Bob’s card and we parted company.
Early the following Monday morning he called to inform me that he had, indeed, made an offer on one of the homes he had talked about on Saturday and wanted to check into financing. He explained that he needed to get a letter of prequalification in the hands of the listing agent by close of business Wednesday so we started talking about programs and rates. As I completed a good faith estimate and provided him with the bottom line, the thought occurred to me to ask him how Bob was. He told me that he hadn’t spoken with him.
“You couldn’t reach him?” I asked.
“No, I didn’t see the need to call him,” he responded.
“Oh,” pausing a second to process his response. “Did the listing agent offer to credit any portion of his commission toward your closings costs?” I asked thinking that perhaps he had taken it upon himself to negotiate the listing agent’s fee.
“No,” he responded.
Shaking my head I then asked him when he’d like to come to the office to get his application started and that’s when he informed me that he wanted to shop around before he made a commitment to any lender.
That set me back on my heels. “Let me get this straight. Over the weekend you decided to forego the opportunity to save over $7,000 in closing costs (he was buying a $300,000 house) and are now going to turn your attention to saving a few pennies on a mortgage and are nickel dime-ing me about incidental lender fees?” I asked.
“Yes,” speaking in a rather indignant tone of voice. “That’s my right as a consumer,” he declared.
“Yes, and, as such, you are entitled to waste your money but not my time,” I responded.
I abruptly hung up the phone, first gathered and then angrily tossed away the workshop slides that still sat on the corner of my desk, and in doing so finally put to rest any and all interest in real estate consumerism.
* * *
I have on occasion mentally revisited this incident and have resigned myself to accept the fact that statistically half of the world’s population is of lower than average intelligence and there’s nothing anyone, much less I, can do about it.
I don’t know if I belong in the top or bottom half but I have decided that the best way to cope with that reality is simply to lower my expectations. This way I seldom have to deal with disappointment and am often delighted when the people I come in contact with exceed my meager expectations.
In this latter regard I guess it would be fair to say that statistically I fall in that group of people with lower than average expectations. I’ll leave it up to the reader to decide whether that’s a good thing or a bad thing.
* * *
A year or so after I arrived in Phoenix, I was approached by Jalma Hunsinger to work as a sales manager for First Mortgage, the mortgage banking firm I mentioned earlier. There I not only managed the origination pipeline, loan officer training, and underwriting, I learned HTML coding and applied that knowledge to design and promote the company’s website.
First Mortgage disappeared from the scene several years later when its holding company’s officers were found guilty of running a real estate ponzi scheme. Jalma, one of the holding company’s officers, ended up being fined for his involvement but he was not found to be complicit in the organization’s less than above board operations.
* * *
Shortly before First Mortgage closed its doors, I was approached by a group of investors looking for someone to set up a mortgage origination unit in a new bank in Scottsdale. I set that up in a couple of months and then was tasked to help do the same at two of the group’s other banks in Brainerd and Minneapolis, Minnesota. At the time both were taking mortgage applications but didn’t know how to process them so they could be sent directly to wholesale underwriting departments for approval and funding. Once that job was done my work in mortgage banking essentially came to an end.
* * *
Upon my return I revisited Keystone which had moved from 44th St. to a dedicated building in downtown Phoenix. I tried to get back in the game originating mortgages again but I think I was just burned out so I started looking at other ways to make a living and a month or so later stumbled on a couple of brothers who had just opened a company dedicated to the installation of retractable screen door systems. I knew from the outset that it would be just another sales job but I needed a change.
Once I arrived I discovered that the principals of the company really didn’t have any management experience so I volunteered to help them and in a matter of weeks they decided that my time would better be served helping to manage daily operations rather than manning incoming calls from prospective clients.
Well, one thing naturally led to another and I eventually convinced them that they would be better off manufacturing their own product line. I also suggested that to distinguish their retractable screen products from their competitors’ they’d need an edge and that edge to my way of thinking would come in the form of a hydraulic speed reduction unit that would solve an industry wide safety hazard — screen door handles that would slam back into their housing if inadvertently detached from the door frame. To make my point I drew a cylinder on the chalkboard in the hallway and showed how it might work and where it might be installed.
Mind you, I didn’t have a clue how to go about manufacturing such a unit let alone how to go about actually designing it, but in the end the initiative resulted in my name appearing as co-inventor on the company’s two patents. Imagine that – me, an inventor. This video shows the end product.
While Dennis Grubb, the company president, devoted his energies to the design and manufacture of the speed reducer and the company’s unique screen door assembly, and Darryl, his brother, attended to building a network of nationwide distributors, I designed the company’s website and went to work creating a prospectus that we could use to raise funds. To make a long story short, several banks and at least one investor ended up entertaining the idea of loaning us money, but the company’s short history wasn’t enough to convince anyone to commit funds to underwrite the venture. Undercapitalized, Dennis and Darryl sold the company’s assets to one of the company’s distributors and let Clearview, Inc. go to seed.
* * *
It wasn’t long after Clearview went under that I decided to go into business for myself teaching small business owners how to create and promote their businesses on the internet. Most of the work was done online using online conferencing. I enjoyed the promotional aspects of the work so much that I decided to abandon the website development side to immerse myself in building a business as an online publicist. That decision came quite by accident.
I awoke one morning and in the process of gathering information to support a second press release for one of my clients I discovered that the first press release I had written for him appeared in the #3 slot on the first page of Google’s natural search results for the specific keyword phrase I had entered in the search window just seconds before. One thing led to another and I soon discovered that the very same press release had received similar placements on the first page of virtually every major and minor search engine on the planet for the selected keyword phrase.
That eureka moment led me to build an online public relations business that enabled small businesses the means to get almost immediate exposure on the first page of natural search results and, thereby, circumvent the perceived near term need to pay for Pay-Per-Click advertising. And by immediate, I mean just that. While it might take Google several months to spider and index a new company’s website for placement purposes, press releases would be immediately indexed and sometimes appear on the first page of natural search results within two days.
This discovery led to the creation of an online, internet based public relations workshop and a year later to a full time job working as a publicist in the currency exchange market. My last workshop attendee joined me from Singapore.
* * *
When I entered the foreign currency exchange market (forex) as a full time publicist, content provider, and editor for ForexInterbank and, subsequently, FxSpyder, the industry was at best poorly regulated. The National Futures Association (NFA), also known as the fraternal brotherhood of forex dealers, pretty much controlled the actions of the Commodity Futures Trading Commission (CFTC), the agency tasked with the responsibility for regulating the currency exchange market in the U.S.
When I discovered that traders weren’t really trading the foreign exchange market but literally placing bets against privately managed and manipulated artificial markets created by individual dealers, I suggested to John Keister, FxSpyder’s president, we focus on reforming the market and that’s exactly what I ended up devoting my energies to which led to the creation of thenondealingdesktraderr, a blog that I wrote under the pen name Phil Davis. The blog eventually led to the creation of the NDD Forum which at its peak had more than 2,000 registered international members. Both the blog and forum were abandoned in February 2010 when we realized that our goal had succeeded in putting an end to dealing desk trading and the CFTC to finally do its job.
When the concept of non dealing desk trading was first introduced, one could not find a single mention of the concept in Google when the phrase itself was placed in quotation marks which is, by the way, the only way to tell how many actual pages contain a specific phrase in Google’s extensive archive of online content. If you search Google today, you’ll see over 250,000 pages that use that exact terminology. What’s more, even today the original blog appears in the top slot of natural search listings when one enters a variety of variations on the theme. And despite the fact that the blog was abandoned several years ago, it continues to generate about 25 visitors a day.