Finding Meaning in Triathlon

I raced in a Sprint Triathlon last week. I should make it clear here that the term “raced” is a complete bastardization of the word any English speaking person with a basic education might understand. When I say I “raced”, what I mean is that I showed up to the race; I put on a racing uniform, I completed the course within the prescribed time and then I enjoyed the complimentary food court. To use the word raced as it is commonly understood is to imply that I showed up with the intention of beating someone or placing high on some list. This is generally not my goal as a Clydesdale when I approach any triathlon. It is the furthest thing from my mind when entering a “sprint” triathlon.

Sprint Triathlon, by the way, is another glaring misuse of the English language. I remember the first time I did a triathlon of this distance. It took me in excess of one hour and fifteen minutes. I am not sure how an event that takes more than an hour has come to be called a sprint. Only in relation to the ludicrously long races of the Olympic, Half and full Ironman distances could any rational person call this a sprint. Of course, most triathletes are not rational in the typical sense of that word either. Triathletes spend their time discussing ways to lighten their bike and lower their profile; thereby finding new ways to exceed 50 mph while decreasing the cushion of space between them and the unforgiving earth. They track how many heart rate zones they have trained in and whether they spent the appropriate percentage of time in their LT zone. They discuss whether or not it is healthier to wash cottage cheese before eating it. No, rational is not always the first word one thinks of when one thinks of a triathlete. This is never more obvious then at a sprint triathlon. During the warm-ups at a race of this distance you can hear people discussing how they are going to go for a long run later to round out their training for the day. Or you might hear them discuss their max heart rate and how they are going to ‘red line” it all the way. “Red line” it all the way??? I am trying to count the aide stations and decide whether or not I should wear one of those fluid filled backpacks for my long distance hydration needs!!!

It all turned out just fine. As a matter of fact, I was not even entered in the full race but rather as one leg of a relay team. All I had to do was the bike leg of the triathlon. I remember thinking to myself when the opportunity arose to be on this relay team: how cool would it be to not worry about swimming or running and just get on my bike and red line it all the way? Then I realized how short the bike leg was, so I brought a trainer in order to get a nice long warm-up in before the race and my regular gear so that I could go on a long ride after the race in order to round out my training day. You know how it is: I need to get a large percentage of time in my aerobic heart rate zone or I will bonk during the long races. Besides, I want to test out a new pair of titanium seat post clamp screws to see if I can sense the 8 gram savings in weight. Yes, it turned out to be a very nice day. I am just glad that I am not turning into one of those irrational, obsessed triathletes that can not enjoy the race. Now, if I can figure out a way to shave another 15 grams from my bike I might move up a spot in the rankings…

Filed under: TAO OF SPORT

“Life is Hard”

Each week I have the opportunity to share ideas and inspiration with over one hundred Realtors at the Brokers’ Open Caravan. Last week I shared the poem IF by Rudyard Kipling. It is a poem on life, happiness and what it means to be a truly successful person. I learned it in high school and amazingly, I have yet to encounter a situation that is not covered by this heartfelt letter from a father to his son. It is, in my humble opinion, the greatest piece ever written in the English language. If you have not read it, please do so here. You may find yourself, as I have, burning it into your memory and served by its wisdom on a daily basis.

Every night when I put my boys to bed we read a couple of stories. Occasionally, instead of reading a story, I recite the poem IF for them. As passionately as I feel about this poem you can imagine my desire to impart it to my sons. They are just coming into the age where they can begin to appreciate what it says and remember my telling of it. Two nights ago was just such a night. I turned down the lights and recited the poem with all my heart. When I had finished I had a tear in my eye, which I normally do by the time I have finished. My seven year old looked at me and asked: “Daddy, what do all those words mean?” This is a fair question given the old English nature and style of the poem. I told him not to worry so much about all the words, that we would discuss them individually over time (it was, after all, bedtime). I told them both that the poem was about life and a philosophy of living that led to being an upstanding citizen of the world. I told them that it was about the trials and tribulations that one may face and more importantly: how to face them. My five year old then asked: “Does that mean that all those things are going to happen?” I told them that they may all happen and they may not. This poem is about being prepared. This poem is about having a blueprint for how to handle anything that gets thrown at you. This poem is about life. There was silence for a moment and then my five year old said: “Life sounds hard.”…

How do you explain to a five year old that life is a celebration of daily wonder and effortless joy? How do you explain to a five year old that we experience magic and miracles every day if we live in the present moment? How do you explain to a five year old that life is only as hard as we decide it is going to be and tell ourselves that it is? How do I explain all this to a five year old when, nearing the age of forty-five, I still find myself saying at times “life is hard”?

We talk to ourselves constantly; not only in what we say out loud and what we think inside, but in the very words that we choose. Let’s decide that life is a beautiful, awe inspiring celebration. My thought for each and every one of us today is this: before we go outside we tell ourselves that today is going to be a terrific day overflowing with wonder and happiness. Let’s see if we can’t make it so just by the act of telling ourselves it is so.

Filed under: LIFE THAT POPs, REALTORS , Success

Countrywide is Losing Its Car Keys

The market has been an interesting place lately. Not too long ago New Century, the second largest sub-prime lender in the land, declared bankruptcy. How did this happen and what does that have to do with Countrywide?

My good friend and co-worker Brian Brady came out of the securities field just as I did (he was a bond trader and I was an options trader). We both are fairly well versed in ‘corporate speak’, which is the business version of military double speak. (For instance, when the military says there was “collateral damage”, what they mean is innocent people were killed.) Corporations use ‘double speak’ to address bad news in the business world. About two weeks before New Century “shuffled off this mortal coil” (Shakespearean ‘double speak’ for died) they came out with an announcement that they had lost track of their underperforming assets. This rather innocuous statement sounds a lot like “I seem to have lost my car keys”. Of course, in the world of lender finance the key focus and the one and only thing you never lose track of is your underperforming assets: loans that are going bad and that you will most likely be buying back. So as a corporation you need to have a very good estimate of that number. When New Century said they “lost track” I took that as ‘corporate speak’ for “we are seeing the beginning of a real problem that we had not accounted for and we are delaying the release of our numbers until we can wrap our heads around what is coming”. Sure enough, after two weeks they “found their car keys” and announced some staggering losses. That, in and of itself, was not the problem. The problem was that they had to restate their earnings and Wall Street is VERY unforgiving when you go back and tell them “hey, remember when we told you we made this much money? Well we were wrong. We only made half as much.” Within 48 hours New Century was bankrupt.

Soon after this New Century debacle, Mr. Mozilo – the CEO of Countrywide – came out and announced that while they had no real sub-prime exposure, they expected to see some losses due to the sub-prime problems. To which Brian and I looked at each other quizzically and said “what?” You have no exposure to the problem, but you will incur losses due to the problem? A short time later Mr. Mozilo announced that while they had absolutely no problems with their current sources of funding, they were in fact looking for new funding. To which Brian and I looked at each other quizzically and said “what?” Your funding source is not a problem but you need a new funding source? Countrywide is the largest lender in the land and over 60% (by my last check) of their portfolio is made up of option arms. The option arm problem is still on the horizon but I have often said I cannot imagine being the V.P. in charge of risk management at Countrywide. How do you hedge the majority of your portfolio against a product that has never existed at this volume and for which the future value is so uncertain?

I think that Countrywide is in the process of misplacing their car keys…

Filed under: BUYERS, INVESTORS, LENDERS, POLITICAL & ECONOMIC FOLLY, REALTORS, SELLERS , Countrywide, option arms

Transparent Lender Greed

“FAIRLY WARNED BE THEE, SAYS I” fish restaurant pirate from The Simpsons

I had the privilege of meeting with the nicest couple last night. I consider it a privilege anytime someone invites me into their home and I am twice blessed if they do so for my advice or liability coaching. That being said, it was not a meeting I was overly excited to attend. You see, I had been invited at the request of their Realtor to look over loan docs and share my opinion. Based on my conversation with the Realtor beforehand, I knew this couple would have little to no options and my visit would most probably be a fruitless one. A large part of my business, however, stems from the honest consultations I provide for the Realtors who count on me. Besides which, there are a lot of good people in the lending business and anytime I have the opportunity to repair our general reputation, I consider it a responsibility; which brings us back to last night.

Some quick background: both of these fine, young people serve our nation in the military. They both work in a sensitive area requiring that they be above reproach and this means, among many other things, that their credit must remain strong. They are being transferred soon, need to sell their home and so contacted a Realtor who had impressed them with a listing down the street. During her discussion with them she learned they had recently refinanced their home and were still upset about it. She asked a few more questions, and then I received an anxious call asking if I could please meet with them. Now we are up to date save for one thing: this nice, young, military couple is facing the very real threat of losing their money, their home and their jobs.

In February these homeowners were solicited by a lender to refinance their existing loan. At the time they had a 30 year, fixed rate loan at 6.125%. This may not have been the perfect loan product for them, but it was certainly a safe, reasonable and well priced vehicle for their investment. They told this new lender they did not need any cash out of their home, but if the lender could lower their rate and payment they would be interested (who would not?). A few fast phone calls, some misleading Good Faith Estimates and one very large stack of legal documents later, this fine young couple with great credit scores and a $3000/month payment are the proud owners of a Negative Amortization or Neg-am loan (or Option Arm for those that find the honest nomenclature a little too hard to swallow). Their new interest rate is 8.858% but not to worry as it is subject to change MONTHLY! They have owned this loan for a little over a month and their mortgage has already grown over $2000. Their comparative payment, which is to say the principle and interest payment comparative to what they were paying, is now $4297. Their interest only payment, which is simply the bare minimum required to cover the cost of their money, is now $3993!!! But wait a minute, loans are not free. What did they pay for the pleasure of increasing their payment by over $1000 per month? The closing costs were almost $20,000. This new loan, the sole purpose of which was to lower their rate and payment, added $20,000 to their debt and raised their monthly payment 43%. A loan is a loan though and for good or bad the loan originator deserves to be paid right? The originator pocketed almost $29,000 for his “services”.

This couple had no idea the type of loan they were really getting. They cannot afford the payment. They can make the “option arm” minimum payment, but then their loan grows at least $2500 per month. Since it now looks like they owe more than the home is worth they are faced with a best case scenario of losing their credit and a worse case scenario of losing their home. Either way they lose their jobs because of it.

Usually I write this newsletter with the hope of inspiring others. I know that most of you reading this are probably waiting for the inspirational lesson in all of this. I do not have one. This is simply a warning and a reminder. Whether you are a homeowner, a Realtor or just someone who actually cares about their fellow man, please get a second opinion when acting on the largest investment of your life. Preferably use someone recommended to you and always, always, always get a referred second opinion if you are considering a loan with someone who solicited you. If you need help finding a second lender, contact your Realtor. They should always have at least two lenders that they work with and trust. As in most professions, those of us that are good at what we do; those of us that care about our clients; those of us that actually understand we are coaching people on their very financial future – never have an issue with our client getting a second opinion.

As for last night’s nice young couple with the half million dollar headache, I do not know if there will be any happy ending. I have offered to refinance them out of their loan at no charge, but there will still be some third party fees and besides, they may not have enough equity now to cover the $19,000 pre-pay penalty that came with their loan… did I neglect to mention that before? So did the lender. One final bit of irony: the name of the broker that “helped” them is Veritus. “Veritas” is Latin for “truth”.

Filed under: BUYERS, INVESTORS, LENDERS, REALTORS, SELLERS , responsibility, transparency

Limiting Beliefs and Poorly Kept Secrets

Every Thursday morning I attend a Broker’s Open House pitch session with over 100 real estate agents. I have a lot of fun and my energy level gets a turbo boost. It was not, however, always this way. In the beginning I had a very limiting belief system that kept me from these gifts I now look forward to every Thursday. We all have belief systems, some of which may be keeping us from success, holding us back in our income, our relationships or even our day to day happiness. I want to share one of mine with you, but first I must ask your indulgence in not judging me until I am done.

I started as a real estate agent in the late 1980s and I came to dislike most real estate agents. I thought they were too self interested and money driven. (This is the part where I ask you not to judge me!) When the idea of hosting the Mystery House Tour at Thursday’s caravan was brought up almost two years go, I thought to myself: I should definitely be marketing to real estate agents… even if I do not care too much for them. So I embarked on the Mystery House Tour and you can guess what happened: I came every week, talked about mortgages, did not have much fun and left without furthering anyone else’s business or my own.

Fast forward to six months ago and I begin working with Katie O’Sullivan at Stewart Title. She felt there was quite an opportunity within Mystery House Tour to help agents and to garner some business as well. She offered to join me, but only if I made some changes: I had to stop discussing mortgages and start being more “me”. I said “Sure, sure” and then I told her my big secret: I do not care all that much for agents. She said: “I know!” I said what do you mean you know and she repeated “I KNOW, everyone knows; this is no secret. It shows in everything you do.”

I came to a couple of realizations that afternoon. First, any dreams I had of leading a secret double life: superhero fighting crime at night and mild-mannered mortgage originator during the day – were out the window. Apparently I am no good at hiding my secret life. Second, I had a belief system and it was definitely limiting me. I used a very simple linguistic technique to rid myself of my limiting belief system and replace it with a new one. (I am happy to share this technique with anyone who asks.) Within a few weeks I found myself realizing how difficult a job real estate agents have. Not long after that I found myself looking for ways to help agents in their very difficult job. The change since then has been profound. I have so many friends from the Broker’s Open that it literally hurts to miss a week. I have made friends that I get together with on a regular basis and it has nothing to do with real estate. I am now someone people call when they are in need; more importantly, I have people that I call when I am in need. My number one source of business, after referrals, comes directly from that room of real estate agents… and it turns out that is the least important benefit of them all!

Take a good hard look at your belief systems. Are any of them holding you back? If you are looking for ways to change them call or email me and I will share some very effective techniques. Who knows, you may increase your income or improve your relationship or live each day a little happier. If you are truly blessed, as I have been, you might just find over 100 friends that you never knew you had and an open invitation to a party EVERY THURSDAY morning.

Filed under: LIFE THAT POPs, REALTORS , Success

A Transparent DRE Fumbles the Big Picture

On Friday, April 13th, 2007, CAR sent out a press release entitled: DRE Clarifies Mortgage Broker’s Duty to Explain Loan Terms. The purpose was to let real estate agents know that, thanks in no small part to CAR, the DRE had clarified a previous bulletin that “intimated that buyers’ agents have a fiduciary duty to completely explain payment option ARMs and similar loan products to their clients”. The new bulletin made clear that “it is the fiduciary responsibility of each licensee who represents the borrower in obtaining a loan to completely explain the terms and discuss the relative merits…” thus laying the onus where it belongs: on the originator of the loan (click here for the press release as well as links to the bulletins). What frightened me in this press release was the last paragraph:

…in the previous version of this article, the DRE stated that a buyer’s agent “should be aware of the type of loan being used to finance the purchase,” and for payment option ARMs or similar loans, “the licensee should confirm that all of the terms and possible effects (both positive and negative) have been explained by the mortgage broker or lender.” These statements have now been deleted from the article by the DRE. (emphasis mine)

Through the DRE, CAR has protected its members from liability regarding a service they are not providing and this, of course, is a benefit. But to summarily dismiss the idea that the agent should even be aware is downright irresponsible. Worse yet, in cases where the client is being put into a loan product that may cost them their home and their financial future, the agent need not even confirm that their client understands what is happening.

This sounds like a prime example of a labor organization doing a great job protecting themselves and their members, but missing the entire point of their existence. If the agent is not looking out for their client, who is? You may think that the loan originator is looking after the clients’ best interest when it comes to the financing aspect of a transaction, but are they? Let’s take a closer look. A loan originator has NO fiduciary relationship to the client. You may find that hard to believe – I know I did – but it is true never the less. A real estate agent has a fiduciary relationship, meaning at its most basic level that the real estate agent will put the clients’ needs before their own. There are monetary and legal ramifications to a fiduciary relationship. Loan originators, on the other hand, are not bound by fiduciary obligations and rarely exhibit them. Most often, in fact, loan originators are giving clients a “less than the best” deal in order to increase their own profits – quite the opposite of a fiduciary relationship. Is this the normal, even encouraged practice within the industry? Yes, it is. Is this understood outside the industry? No, outside the industry this is generally smoke and mirrors. One example should suffice: can anyone guess why so many people are currently in Neg-am or Option ARM loans when it is so clearly the wrong investment vehicle for them? Here’s a hint: those particular programs were paying loan originators up to 3 and sometimes 4 times more than other loan programs.

So… the DRE has clarified a position and transferred the liability from the real estate agent to the loan originator, which is where it belonged in the first place. The successful real estate agents I have talked to, however, know that they put their commission, and more importantly their future business (read: referrals), in the hands of the loan originator on every transaction. If a client ends up with the wrong loan program down the road (or worse), do they go back to the loan originator that was referred to them, or do they go back to the agent that gave them the referral. Worse yet, do they just not come back at all? Shouldn’t the agent demand – doesn’t the client deserve – a loan originator that exhibits a fiduciary responsibility whether required to or not? The DRE can change the wording all they want, but in the end it is the agent with a financial (and one hopes moral) obligation to make sure their clients’ loan is appropriate. If any part of this is confusing or disconcerting, you are not alone. Speak to a lender that practices transparent lending for a full explanation. In the case of mortgages “ignorance may be bliss”, but it costs tens of thousands of dollars. Choose your originators wisely.

Filed under: LENDERS, REALTORS , CAR, DRE, responsibility, transparency

Introduction

I am preparing for Ironman Wisconsin in September and have decided to keep a journal along the way. You might be surprised at how many funny things happen while training for an event that takes as long as an Ironman. At least, a lot of funny things happen to me.

01 May 2007 – INTRODUCTION
When you tell someone that you completed an Ironman, you often get a blank stare. I find that a little familiarity helps and I will say something like, “you know, an Ironman triathlon, like you see on TV”. The other person’s face lights up with recognition and they ask how I liked Hawaii. After explaining that Ironman is a distance, not a destination I get asked what the distances are. An Ironman, I tell them in my proudest voice, is a 2.4 mile swim followed by a 112 mile bike ride and capped off with a 26.2 mile marathon. At this point, I usually find myself looking back at the blank stare again. While the Ironman distance is awe inspiring, I think the blank stare has more to do with me. You see, I am roughly one and half regulation sized triathletes. My name is Sean… and I am a Clydesdale.

Growing up there was never a hint that something was wrong with me. I played all the major sports and excelled at most. I was a bit big for baseball, but found a home behind the plate (baseball, not dinner). As I got older, however, and found my true home behind the plate (dinner, not baseball) it became obvious that baseball was not my sport. In basketball I was the prototypical Power Forward. By that I mean that I could clear the boards like nobody’s business, but I pretty much had to pass the ball right away because the clock would run out on me if I tried to bring the ball up court on my own. In football I began to really find myself. I was a lineman and a very fast one by “big man standards”. I thought that football might be my athletic calling… until I discovered shot-put. Shot-put is that funny sport in Track where very large men see who can toss a cannonball the farthest. You have probably never witnessed this event in person, as they usually tucked us out behind the bleachers somewhere so that our yelling would not scare women and children. In this sport I excelled and saw some real success. At my peak I was 280lbs and a very accomplished shot-putter. My peak was fun but I eventually retired. By “retired” I mean that I graduated from college and the gravy-train stopped. Faced with the reality of working to pay my bills and put food on the table (quite a lot of food as a matter of fact), my training suffered and eventually I “retired”. I did keep some of my old habits though, not least among them the eating habit required to maintain the muscle mass and size of a shot putter on a very active training regimen. Unfortunately, I neglected to maintain the actual training regimen. Fast forward a decade and you have a 320lb man woefully out of shape taking a long look in the mirror… actually it was more of a wide look. It was there and then that I decided to get myself back into shape. Having been a large athlete all my life I made the only sane choice available to me: I decided to join the wonderful world of endurance athletes! It certainly seemed like a good idea at the time.

I told my friends that I was going to lose weight and do a triathlon. I always got back this look. It is hard to describe. There is a one-liner by Henny Youngman, an old stand-up comic, that goes like this: “I just flew in from Pittsburgh, and boy are my arms tired.” Only marginally funny 50 years ago. Now imagine telling that joke to a child. They know you can not fly and even if you could, why wouldn’t you take a plane? The look you get from that child, the eyes that seem to say “man, are you stupid”; that is the look I got from friends and family when I announced my triathlon plans.

But here I am, 100lbs and one Ironman later. Do I feel better? Am I in tremendous shape? Have I added years to my life? Yes, yes, and yes. Do I still get that look from friends and family… more so now than when I started. That is OK though because I know they still support me. In much the same way that a parent might indulge a child digging a hole in the back yard that will reach all the way to China, or a spouse might “understand” the red sports car in the driveway of a man running head long into middle age; my friends and family smile and tell me to keep trying.

Over time, my goal is to share with you more about the journey from world class shot-putter to fat man to triathlete to Ironman. I will share what it is like to be a Clydesdale and how we are viewed by the other triathletes (over their shoulder as they pass us normally). I will touch on the trials and tribulations of making an insane decision to join a sport so clearly not designed for me (when will they make Goo packs in the large, economy size?). Mostly, however, I will share the journey of triathlon, and life, from a little bit different perspective. Who knows, with a little luck and a lot of digging, I may reach China yet.

Filed under: TAO OF SPORT

Big Tears for a Big Man

On Saturday, April 21, 2007 Parry O’Brien died and the loss, especially to me, is a big one. Most people have no idea who Parry O’Brien was and what he accomplished, which is all the sadder. While attending USC in the early 1950s, Parry looked at how he put the shot and decided there was a better way. He changed the technique and revolutionized the sport. He went on to set countless world records, including being the first human to ever put the shot over 60’. He won gold medals in the ’52 and ’56 Olympics, silver in the ’60 Olympics and placed fourth in ’64 – his fourth trip to the world’s greatest athletic stage. He was an ambassador of shot put and never let on that he was aware how profoundly and permanently he had rewritten the record books or the sport.

A lover of competition, Parry eventually retired from shot put when it became too difficult on his body to throw. By the age of 50 he looked for new challenges and found Master’s swimming. He once told my coach that he loved swimming, not because he excelled at it, but because he didn’t. He saw a lifetime of learning ahead of him and that thrilled Parry O’Brien to the core.

As a young man beginning his athletic career as a shot putter, I knew who Parry O’Brien was and considered him an icon. Imagine my thrill a couple of years ago when I learned I would have the opportunity to meet him at a local swim meet in which I was participating. I had a long list of questions I wanted to ask: everything from how he came to change shot put so drastically to how it felt being in four Olympics. I wanted to know how he trained back then and what he thought of the sport now. I was positively brimming with questions and excitement. The big day arrived; I met the big man and guess what? We spent the entire time discussing swimming. Parry O’Brien aged gracefully and never gave up his love for learning or competing. He lived in the moment, he was always ready to share and he was kind to a fault. The world lost a big man last weekend, and it has nothing to do with size.

Filed under: TAO OF SPORT