No Rules, Only Guidelines

The unlikely spotting of a large red sport utility vehicle with bold white letters on the side has provided at least a partial explanation for the continuing rise of real estate prices in Ventura County, California.

As you'll recall, yesterday it was revealed that long-time Southern California home price leader Orange County had been dislodged from the top spot by Ventura County, where a median price hovel now fetches $630,000.

Apparently, subprime mortgage brokers with Hummers are somehow involved.


Mortech Financial Group, a full-service mortgage broker specializing in loans for clients with poor credit histories, is headed by President Mike Hobbs and partner/real estate attorney Dan Harris.

Since 1995, they and their staff have provided creative lending solutions to many homebuyers who otherwise may not have been able to gain entry into the sizzling Southern California real estate market.

They have expanded rapidly in the last decade amid a real estate market that has seen prices more than double in the last five years, and more than triple in the last ten.

Along the way, they have found time to sponsor monster trucks, go-karts, and speedboats, while assembling a small fleet of Hummers.

Their credo is, "Work hard and play harder".

Hosts of a local weekend radio talk show, "Mike and Dan's Mortgage Madness", their unconventional approach to mortgage finance includes the debunking of many myths associated with home loan products.



As might be expected, the myths being debunked involve misconceptions about lending standards that, historically, have prevented otherwise responsible citizens from achieving their homeownership dreams.

The most important myths are:

1. Borrowers must follow lenders' rules.
2. Borrowers need a down payment.
3. Perfect credit is required to qualify.
4. Borrowers must have excellent job stability.

It seems that in today's world of global super-liquidity and debt-fueled asset bubbles, low FICO scores, poor credit histories, bankruptcies, foreclosures, and down payments are no longer barriers to entry into what The Economist magazine has dubbed, "the biggest financial bubble in history".

Their approach to the business of subprime lending is presented in a 15 minute video, available as both a promotional DVD and at their website.

The video is sometimes humorous ("This is our address, 300, not just a random number, but the highest possible bowling score") and sometimes mildly disturbing (accountant Steve's ill-fitting pink tutu in the segment on down payments).

Clearly, the intent is to appeal to subprime borrowers who may have had difficulty obtaining more traditional mortgage products from more traditional lenders.

Uptight banker John D. Bankerfeller, the fictional foil to aspiring homeowners who have difficulty managing debt, is harassed at every turn by a sword-wielding Ninja.

It all seems to be in good fun.

A couple of guys who have succeeded in the business of mortgage lending and who fancy big toys with the fruits of their labor.

A gregarious long time mortgage company owner who teamed with a real estate attorney ten years ago to help bring the American dream of home ownership to those who would otherwise go wanting.

What's the harm?

By now, regular readers may have already grown impatient, dissatisfied with the level of wry commentary and deprecating wit provided thus far, given the well established views on both subprime lending and ridiculously large methods of transportation previously offered in these pages.

Alas, having come this far, the melancholy now seems overwhelming and the words no longer come easily.

That is, the words no longer come easily with the realization that the Ronald McDonald and Joe Camel marketing models have been so successfully applied to subprime lending.