Beyond Our Means

I read with great interest a story that appeared on the Reuters home page this past week, where the authors noted that auto loan delinquencies had reached their highest level in eight years during the last quarter of 2016. Given the number of crises, financial and otherwise, that appear to be rampaging around our nation these days the threat of people not making their car payments on time may seem relatively trivial, but it has a number of disturbing implications, beyond the fact that Americans appear to be spending more than they can afford on motor vehicles yet again…

Regular readers of this blog (assuming I have readers) may recall a story I brought you at the beginning of the 2008 financial crisis about people falling prey to predatory loans, not just on their mortgages or their credit cards, but also on their car loans. It didn’t draw that much attention at the time, and maybe it shouldn’t have – this was a period when people with mortgages they couldn’t afford were choosing to abandon their properties and taking the hit to their credit when the banks foreclosed. But the impact of borrowers using the same tactic to purchase new cars – taking out new loans to purchase new vehicles and leaving the old ones to be repossessed – did not help the ensuing consumer credit situation…

I can’t speculate on the political or legal ramifications of the crisis, but it is possible that too many people failed to grasp the size of the problem. According to the Reuters story, auto debt in America went up by around $93 billion over 2016, which brings the total people in this country owe on their vehicles to just over $1.16 trillion. Yes, I said trillion; we have just caught up to and passed the amount owed on this class of loan at the time the Great Recession started. Of that amount, Reuters is reporting that around $23.27 billion are 30 days delinquent, and another $8.24 billion are 90 days delinquent or more. For comparison, the ruinous student loan debt in this country is at around $1.31 trillion, and total debt is around 12.6 trillion…

Now, you might quite reasonably ask why I am wasting your time with this story, particularly if you are not currently behind on any of your loan payments. Why should you care if the kind of people who spend $80,000 on a car when they make $10 an hour are at it again? I could point out that this type of borrowing behavior is a long-standing predictor of trouble for the auto industry, remind you about the havoc that resulted the last time the Big Three automakers were facing bankruptcy, or even point out that if one or more of these companies does go underwater again, it’s your tax dollars that will be used to bail them out. But what really concerns me about this is the part we’re not seeing – the parts that don’t hit the radar at Ford Credit or its counterparts…

The impact of predatory lending at a local level – the “Buy Here – Pay Here” operations are only one of the more egregious examples – may not have the same impact as GM going into bankruptcy, but the effects on a whole range of people who can’t ask the Federal government to bail them out were hideous. And while our current leadership – financial as well as political – does not like to admit it, if consumer spending drops off because none of our consumers have money to spend on anything except loan payments, none of us are going to like the results…

Foreclosures Revisited

As we’ve watched the real estate crisis spiral out of control, I’ve noticed that a lot of people have been puzzled (and sometimes indignant) that various lenders have not made greater efforts to avoid foreclosure operations. The idea is that if you give people a chance to continue making the payments on their home you will continue to make money on them, whereas if you foreclose you will just gain control of a house you may not be able to sell – or might have to let go at pennies on the dollar. Unfortunately, the flaw in that logic is that it assumes that the borrowers in question can actually continue to make payments, if you adjust the terms of their loan or give them a grace period – which, apparently, is not always the case…

Consider, for example, the case of people who will fall behind on their payments again, even with more favorable terms. The lender has no real motivation to help them; they’ll just fall back into the same crisis eventually, and if you wait to foreclose on them there is always the chance that they’ll decide to vandalize the property (it happens a lot), pull off one of the second-house purchase scams we’ve talked about in this space, or some other form of shenanigans. Then there are the people who can get through the crisis on their own, whether by working three jobs, borrowing money from family members, jeopardizing their health, or whatever. The lender has no real motivation for helping these people, either; they’ll make it through on their own. It’s only the people who will be okay in the future but can’t get back on track that lenders have an interest in keeping out of foreclosure – and therein lies the problem…

According to a report cited by The Washington Post online, when you remove these two groups from the equation, the number of “easily preventable” foreclosures is no longer a particularly large percentage of the ones that occur. We could argue, I suppose, that the consequences to our society of these foreclosures, not to mention the human cost of turning people out of their homes, should give lenders an added motivation to keep from foreclosing whenever possible, but this argument also has issues. Having lending institutions go under will not help the current financial crisis; it will only put even more people out of work. Having lending institutions that have received Federal bail-out money fail will not only contribute to the crisis, but will also prevent those institutions from ever being able to pay off the bail-out money themselves. Which means that the ultimate losers would be anybody in America who pays their taxes…

In the long run, neither the government nor the lenders can really afford to keep people who can’t (or won’t) make their mortgage payments from having to pay them. We can eliminate the more egregious loans made before the bubble burst, rescue the people who can make reasonable payments (and those who meant to do so all along) and keep anybody who has even a distant chance of actually surviving in the long run from being driven from their homes. But the people who took out mortgages on second homes they didn’t need, investment properties that only made sense if the “bigger idiot” principle was in play, or anything they had no intention of paying off in the long run is probably going to lose. In fact, we could probably debate the question of whether or not they deserve to lose – but that’s a post for another day…

Nothing to Add

I’m going to write about this topic because I feel somehow required to; I don’t know how many people this blog is actually reaching, but even if the only people reading it are immediate family and friends, this still needs to be repeated as often as possible. It also picks up and confirms several of the themes I’ve been talking about for the past year or so, which makes it a good addition to this blog. But I really don’t have much to add beyond the facts of the matter…

A story in the New York Times this week details a lawsuit being brought against Wells Fargo by the City of Baltimore, alleging that the bank was systematically steering African-American customers towards sub-prime loans, at a rate 5 to 8 times higher than that experience by white people. As you probably recall, the sub-prime loans were generally much more expensive than regular loan programs would have been; often as much as 3 to 4 percent higher, resulting in huge increases in profit for the institutions making them, which was the primary motivation for doing so. The possibility of foreclosing on the mortgage, seizing the property, and selling it for even greater profits, while certainly attractive during the housing boom, was never more than icing on the cake…

Now, I don’t mean to imply that there was ever anything inherently wrong with sub-prime loans; I had one myself, back when I was single, because at the time I was “employed” as a partner in the consulting firm, and thus could not demonstrate a regular stream of income. There was no real risk involved – the mortgage was for less than half of the purchase price, and probably less than a third of what the property would have been worth at the height of the real estate bubble in California – but since I couldn’t qualify for a regular loan, I was willing to put up with the 1.25% higher interest on the mortgage I could get. What made these “Predatory Loans” was when banks offered them to people who DID qualify for better rates, specifically for the purpose of bilking inexperienced customers out of their money. Which, according to the former Wells Fargo loan officers quoted in the article above, is precisely what they were doing…

Not all of the people who were caught up in this scam were innocents, either; I’m already on record pointing out that a fair number of people who came into the real estate boom during the last few years were themselves motivated by greed and handicapped by inexperience (if not outright stupidity), falling into perhaps the largest “bigger idiot” event in all of history. For that matter, most of the lending institutions involved were not actively trying to cheat anybody, let alone send the national economy down the crapper; selling the most lucrative products available to people who tell you that they want to buy those products isn’t illegal, or even unethical. But all through the boom years there were a small number of advocates claiming that unscrupulous banks were using the situation to screw money out of unsophisticated customers, particularly in the various minority communities, and now we seem to have been presented with the smoking gun…

I don’t have much to add to this; there’s no handy lesson here about business, management or ethics. Just keep in mind that sometimes the advocates are right; sometimes big companies are going to behave like irresponsible, racist idiots; sometimes people will get so wrapped up in their visions of easy money that even those who should have known better will ignore the risks, forget about the future, and march right off the cliff while protesting their innocence…

Let’s all try not to be those people…

Stupid People

When I started writing this blog, I created the “Stupidity” tag because any regular writings about business are going to include examples of failure, and some of those examples are going to be stupid. In my case, one of the areas I study is actually institutional failure, and while stupidity is only one of a long list of things that cause corporations and other institutions to fail, I continue to regard it as both the most preventable cause of failure and the most fun to write (and read) about. So I found the story about a bank issuing a credit card to a tree to be exactly the sort of grist I look for in setting up a new post…

A story related on the urban legend research site Snopes.com details the events following a California man’s efforts to get companies to stop sending him credit card offers by writing “Never waste a tree” on the form and sending it back in. Sure enough, a few weeks later he received a credit card back in the mail for a Mr. Never Waste Tree. Granted that it would have been a crime for him to have made a bunch of purchases on that card and then refused to pay for them on the grounds that the card is the property of Mr. Tree, this would have been cold comfort to anyone victimized by such a crime – or to any of the stockholders of the issuing company, all of whom would have seen their money shoveled out the window because credit cards are so profitable that quite literally ANYONE can receive one…

Now, I could point out that most of these credit card applications are processed automatically, and it is entirely possible that no live person ever saw this one until after the NBC affiliate station in Los Angeles did a story about it in 2005. I could also point out that given the volume of credit card offers being processed at the time, it’s unlikely that a human machine-minder would have noticed this one application even if someone WAS watching the machine that day, or that the company would have done anything about it anyway. After all, it’s always easier to try to force someone to pay for the goods they have (fraudulently) purchased than it is to get them to buy something in the first place. The problem is what happens when this sort of policy is taken to its logical conclusion…

Millions of Americans are drowning in credit card debt, and the sad fact is that most of them should never have been allowed to have a credit card in the first place. Millions of others are defaulting on mortgages they should never have been given in the first place, car loans they had no realistic prospect of making the payments on, and home equity loans used to make upgrades on houses that have now lost 70% of their purchase price. When a couple of kids fill out a “birthday club” card with a fake name in order to get an extra ice cream cone, it’s a (relatively) harmless sitcom moment; when half of the country does something equally silly what you get is a crushing economic downturn, $700 billion in “bail-out” funds, tens of thousands of jobs lost in the automotive industry alone, and a Federal deficit that we may not live to see the end of…

You’ve all heard me ranting before about how if an industry will not regulate itself, eventually the government will be forced to either step in and do so or let the entire national economy slide into the crapper. I just hadn’t figured it would end up being both…

Buy and Bail?

I suppose we could call this an update on the mortgage crisis stories I've been profiling, but in fact I think this one is more of a spin-off (a new story line derived from older episodes). Which is not to say that it isn't the result of a financial services industry apparently run by people who should never be trusted with any business unit more complicated than a lemonade stand, but the outrage here is coming from the general public, or at least that part of it that are so crooked they have to screw on their hat. The amazing part is that no one saw this one coming...

A story being reported this week on the ABC News Online site introduces the concept of "Buy and Bail" -- people who are escaping from their absurd housing market boom mortgages (both ARMs and also sky-high payments from fixed-rate loans they should never have taken out) by purchasing a second house at rock-bottom prices, and then simply defaulting on their original home loan. Their first bank can foreclose on the loan and seize their first house (and a lot of them do), but not the second one, since it's part of a different loan transaction, often with a different lender. Of course, the foreclosure won't do the first bank much good unless they can sell the property to someone else, and even then it won't repay the defaulted loan if the house is currently worth less than the mortgage taken out on it a few years ago...

Of course, the first bank can sue the absconding homeowner, claiming the original mortgage was taken in bad faith, but that can take years, will frequently cost them more than the amount they are trying to recover on the defaulted loan, and may not be successful. It's hard to prove intent in these cases, and if your contractual agreement was "pay this amount or we take away your house" it's difficult to get the court to change it to "pay this amount or we take away your house, and you also have to give us the difference between what we can get for it and the original loan amount." Most people will just figure that if that was the contract you wanted, you should have asked for it in the first place...

Of course, that's what's starting to happen. One of the consequences of the mortgage crisis is that home loans are no longer as easy to get as they used to be, and one of the reasons why not is that lenders are trying to block the "Buy and Bail" tactic. Another is that they're trying to screen out anybody who they think might try such a thing in the first place. And still another is that they're trying to screen out anybody who they think IS trying to do such a thing right now (e.g. if they think you're trying to make THEM the second bank in a "Buy and Bail" scheme)! Which may be a little like closing the barn door after the horses escape, but is still better than nothing...

Now I know some of you are thinking, "these greedy bastards brought the whole mortgage crisis down on themselves in the first place; it's great that someone is finally using their own greed to pay them back!" And in some ways that might be true, but don't forget who is paying the money to bail out all of these stricken mortgage lenders. That's right: you are. Your tax dollars will be used to keep billion-dollar companies from suffering the consequences of being too stupid, greedy and incompetent to avoid losing all of their money in the first place, and protect all of their investors from suffering the consequences of being too heavily invested in an industry with questionable business ethics. None of which is going to be any less expensive just because a few people managed to work themselves out of trouble by screwing the bank back in return...

Well… How Did We Get Here?

The question you keep hearing these days is “How did it come to this?” – no matter what problem is being discussed, in fact. People will ask how in the world the current gasoline crisis could have happened, or how the Enron Scandal could ever have happened, or how the mortgage/housing crisis could possibly have happened, as if there was never any indication that any of these things might happen. The sad part is that most of the time, disasters of this magnitude don’t just appear one day, fully-formed and ready to start wrecking lives and fortunes. In the case of any large and powerful (or at least lucrative) industry that comes to grief because of a lack of government oversight, in particular, it’s usually not that hard to figure out…

The Enron situation is a particularly pungent example of this principle. For years, the SEC and various Congressional factions had been trying to increase the regulations placed on corporate audits, and in particular, to pass requirements that the same accounting firm that certified a corporation’s books could not be providing any other services to the same corporation. Obviously, if one of these firms is receiving millions (or, in some cases, hundreds of millions) of dollars worth of consulting work from a company, they would be unlikely to report anything negative about that company for fear of losing all of those millions in other contracts. Unfortunately, all of the Big Five accounting firms (and many smaller companies) routinely had such contracts with the very firms they were supposedly auditing as “disinterested third parties” as required by Federal law – and they were determined to hang onto those contracts by any means necessary…

So for more than a decade prior to the collapse of Enron, all of these companies fought tooth and nail to prevent the SEC from imposing any regulations on them, to the extent of threatening at least one SEC chairman with personal and professional ruin, and contributing millions to members of Congress to ensure favorable votes. Nothing was ever done about these too-friendly relationships until the news came out that Enron’s senior management had intentionally defrauded both their stockholders and their own employees, and the Big Five accounting firm Arthur Anderson had helped them to do it…

You all know how that story came out, of course: Enron is gone, several of those senior managers have been charged (and in a few cases, convicted) of criminal offenses, and Arthur Anderson itself has been dismantled. What you may not realize is that none of it was really necessary; the SEC was never trying to prevent the auditing companies from having consulting contracts with publicly-held companies. The agency’s intent was to have the big accounting firms retain ALL of their consulting and support contracts, and simply rotate the auditing contracts (which represented a relatively small percentage of their total business anyway) instead. With plenty of audit business to go around, and the contracts rotating among the major companies every year or two anyway, no one would have wound up suffering. But the Big Five firms, in their greed and arrogance, were not about to let any such thing happen…

In the mortgage crisis, the breakdown was even simpler. As noted in my last post, there is no Federal statute regarding predatory lending practices, or even defining the term. So during the last housing boom, unscrupulous lenders took advantage of the greedy, the inexperienced and the stupid, encouraged people to take out mortgages and loans they could not possibly afford, so that the lenders could foreclose on their property, thus effectively seizing all of the payments made and equity acquired by the borrower, and then resell the foreclosed houses and recover all of the loan money as well. This time the results were even worse – and even more predictable. Lending institutions nationwide are stuck with properties that are unsellable, and therefore worth essentially nothing to them, banks are in danger of failing, and the overall effect on the economy has been devastating. And still, there is no prospect of any regulation that might change any of this…

The unfortunate fact is that we are to blame for all of this; every one of us. And unless we start demanding a government that is accountable to the people, or at least more so than it is to the special interests and lobbyist groups, we’re going to be responsible for the next foreseeable crisis, too…

Follow-Up: Mortgages

I noted with great interest the other day that Connecticut had become the fourth state (following Illinois, Florida and California) to take Countrywide Financial to court over predatory lending practices. So far there's no standard definition of what "predatory lending" actually means, and the Federal courts are understandably reluctant to dive into that quagmire, but all of the states involved in these suits have been hit hard by the mortgage/housing crisis, and at least one of them has laws against misleading consumers into purchasing things they can't afford. Under the circumstances, it's somewhat like closing the barn door after the horse has already fled; the mortgage/housing crisis is already a national disaster and Countrywide is already facing bankruptcy (or more likely acquisition) because its part in the disaster has also decimated the company's finances. Still, I can't help feeling a vague glee at these events, and not just because Countrywide used to be my mortgage holder. I thought this might happen...

It's important to note that there can be no laws enacted against making money off of the stupid; if only because so many of our states need the income from lottery purchases. If someone wants to do something that runs contrary to their own interests, but which will generate earnings for you or your company, there are no laws to prevent you from assisting them in this enterprise, nor could there ever be. There are laws that require businesses to warn their customers away from hazardous or dangerous activities, and it's quite possible for someone to sue you if you fail to warn them that what they intend to do is dangerous or hazardous, but if someone decides to purchase a fireplace, fill it with lamp oil, and burn a pile of dollar bills in it, there are no laws preventing you from selling them the fireplace or the oil. And if Countrywide and the other lenders had warned people off of mortgages they could not afford, or even just asked the equivalent of "Are you sure you want to do that?" they would not be in this mess -- and neither would we...

What these suits allege is that the lender -- and many other companies in the same industry -- deliberately encouraged people to take out mortgages and loans they could not possibly afford, so that Countrywide could foreclose on their property, thus effectively seizing all of the payments made and equity acquired by the borrower, and then resell the foreclosed houses and recover all of the loan money as well. It's completely unethical business practice, but it remains to be seen if this is actually illegal in and of itself, if it can be shown to violate laws against fraud or deceptive business practices, or if the States or Federal governments need to pass specific laws forbidding this type of operation. Personally, I suspect that such laws are inevitable, unless the industry's lobbyists can block them from passing. Or just stall until the current crisis is over...

Because you can be sure this isn't the last time it will come up, unless Federal legislation is enacted to prevent future predatory lending. The ongoing slump in the housing industry had stuck dozens of lending institutions with foreclosed houses they can't sell; effectively worthless assets for which they paid cash. The industry is backing away from such loans now (actually, "fleeing pell-mell in any other direction" might be a better description), and a lot of the worst offenders may go under even if they aren't sued out of existence by aggravated states and cities, but unless the practice is actually outlawed, there is nothing to keep these companies from trying again during the next housing boom. In fact, if history teaches us anything, it is that people do not learn from past disasters, and this same cycle will almost certainly repeat...

Which leaves me with a difficult question: Should we hope that Countrywide loses these lawsuits and is punished for its role in creating the current housing crisis and economic slump? Or should we hope that it manages to skate free from any repercussions, and the resulting outrage triggers a groundswell of public opinion, forcing Congress to ignore "campaign contributions" and lobby efforts from the mortgage industry for long enough to pass laws forbidding predatory lending practices in the future? Especially when we consider that if these suits are successful we can almost guarantee that other States and cities will sue Countrywide and similar lenders in a multitude of additional actions, resulting in further lost jobs, bankrupted companies, and squandered or destroyed assets. All things considered, I think I'd rather just have the legislation, but experience tells me that's not the most likely outcome...

Stay tuned, folks. I've got a bad feeling about this one...

Mortgage Crisis Update

I know I’ve been doing a lot of “Update” posts lately, but it’s not my fault; stories break when they break, and I blog about them when I feel there’s something worth sharing with my readers. Or, you know, when I’m outraged, feel the need to express my opinions about the larger field of business to someone, am in the mood for pontificating on about some subject or other, or when I’m really bored. In this case, however, I’d be trying to find ways of telling as many people as possible about this subject even if I didn’t have a blog…

According to a story released today by the Associated Press, Federal authorities have indicted over 400 real estate industry personnel since March in a nation-wide crackdown on mortgage fraud, including dozens of them in the past two days. Leaving aside the political and law enforcement chest-thumping, the story goes that 406 people have been arrested in connection with 144 cases of mortgage fraud across the country. The total dollar amount of property involved in the case was initially put at over $1 billion, but this will probably rise as the investigations continue. It’s a good start, but considering that there were over 53,000 cases of suspected mortgage fraud reported last year (up from 37,000 the previous year), it still sounds like the tip of the iceberg to me…

Mortgage fraud is a category of crime that takes in a lot of ground, from forging a buyer’s credentials to inflating appraisals to misrepresenting the nature of the purchase (e.g. claiming that the buyer intends to live there when actually they’re just trying to flip the property and make a fast buck). In some cases the financial institutions involved have also been culpable, but for the most part these are situations where real estate developers, loan officers, sales people and the like making money by whatever means necessary and putting the screws to their employers as much as to the buyers/sellers and the American people in general. In a few cases, there’s even actual insider trading involved…

Apparently there were two Bear Stearns fund managers who were participating in this sort of fraud, and one of them had gone so far as to move his own investments out of funds and companies that are now threatened by the losses from all of the bad real estate deals, which means that he’s being charged with insider trading as well as wire fraud and securities fraud. No one really knows how many other cases of this exist, but it seems improbable that this was the only example of a fund manager making money off of fraudulent transactions, and then using the damage caused by the fraud to make more money off the stricken companies…

I don’t have a drop of sympathy for any of the idiots being caught up in this sweep; I hope the Feds refuse to send them to any of the nice, white-collar prisons and instead send them somewhere where they can meet some of the people who have been hurt by the mortgage crisis. And I don’t have much sympathy for the wildcat speculators, either; you wanted to make a huge killing in real estate without investing time, effort or money of your own; you deserve whatever financial consequences you suffer, and legal charges for fraud into the bargain. But most of those people will just declare bankruptcy and walk away unscathed, and it’s unlikely that any of the white-collar criminals being arrested in the Federal sweep will be punished (significantly) either…

Meanwhile, all of the innocent people who saw the last real estate boom as a chance to finally own their own home are going to remain completely screwed. The real estate market is going into the tank, loans are going to be much harder to come by, and the damaged caused by the artificially inflated prices (and the people who broke their finances as well as their hearts trying to pay them) will take decades to fix.

It’s days like this one that I sort of wish I had gone into law enforcement after all…

Public Service Announcement

Let me take a moment to depart from the usually light-hearted tone of these discussions in order to call to your attention one of the fastest-growing social problems ever to strike at the United States. It's a scourge that is causing loss of life and limb, permanent impairment even among the survivors; destroying families and causing untold heartache, pain and nausea to innocent custodial staff members nationwide. I refer, of course, to juggling lit chainsaws...

Okay, not really. The simple fact is, no one who lacks the natural ability, the perfect timing, the years of practice, the skill and the specialized knowledge would dream of attempting anything as hyper-spastically dangerous as trying to juggle a bunch of roaring, snarling chainsaws, the smallest of which could kill you in the blink of an eye if you make a single bad catch. Yet, for some reason, this does not keep hundreds of thousands of people – many of them otherwise sane! – from attempting to speculate in a field far more complicated (and in some cases even more difficult) than juggling chainsaws. I refer here to real estate speculation, particularly in the sub-prime mortgage market, and this time I'm not kidding...

Obviously, there are a lot of people who manage to make quite a lot of money speculating in real estate investments on the side; it's one of the most common means of wealth creation in this country. But the people who succeed in this enterprise don't just plunk down money they don't have to purchase property they can't afford on the spur of the moment; they invest considerable amounts of time and energy in learning about various markets, study economic trends and future indicators, calculate risks and returns, and stay away from the sort of all-or-nothing, death-or-glory flings that are so beloved of movies and fiction writers. Long-term success in real estate investing is just like long-term success in any other business activity: it takes time, it requires investment of effort and energy, and it doesn't always work. It's anything but a classic get-rich-quick scheme...

Unfortunately, most people DO just want to get rich, quickly, without any of that tiresome working, learning, studying, or putting up any of their own money. People who want to believe that they are too smart to play the lottery (but want the same huge payout for no effort whatsoever) will sometimes indulge in zero-down mortgages with preposterous payments and adjustable-rate loans that are nothing more than ticking bombs, never suspecting that they'd be better off with a handful of scratchers and a Powerball ticket. There was another story in the Times this week, about a couple who came to California, liked it here, and decided to stay and buy a house. A few years later they sold at a large profit, and used the funds to buy a larger house. That one sold even faster, and they doubled their money, which they then put toward the purchase of an even larger house. With an Adjustable Rate Mortgage (ARM), and then a second mortgage...

You see this coming, don't you? Sure enough, the real estate market slowed down, they defaulted on their second mortgage, and then their ARM "adjusted," almost doubling their mortgage payments. Congress is trying to pass some new legislation to prevent people in this situation from being forced from their homes, but it won't pass in time; the folks in the story are being foreclosed on right now. It’s impressive that they aren’t being bitter or angry about the situation; the couple in question say they weren’t victimized by predatory lending or fooled by bad sales people or screwed over with poor financial advice; they just got greedy and didn’t quit the game in time. They’re young enough to start over, and they fully intend to be smarter about things this time around. But that doesn’t change the fact that they are starting over in their late 40s…

Folks, the simple fact is that if it was easy to make a fortune in real estate, everybody would do it – and during the current fad for real estate investment, just about everybody tried it, with the usual fad results – a handful of people did well, everybody else lost their shirts, and the rich get richer enabling the foolish dreams of people who should know better. Of course, the mortgage companies are indulging in their own stupidity throughout all of these events. But that’s a story for another day…