Wikinvest Wire

No Rules, Only Guidelines

Friday, January 20, 2006

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.

12 comments:

Anonymous said...

Mike & Dan seem to have Html imparement. I don't think I would get my mortgage from someone who made their own web site from a template that says "Untitled Document" at the top. Come on try a little!

Anonymous said...

I noticed that you have corrected Mike and Dan's Myth 1, which on their website appears as:

"Borrowers must follow Landers rules."

Are you sure they aren't talking about Ann Landers?

Rob Dawg said...

Mike and Caroline are nice people. Their son Nick is in my daughter Lauren's class (7th grade). The Hummer is advertising and gets very favorable tax treatment. I see it every morning at school. You should see the ocean racing cigarette boat!

Of course it must only be a coincidence that Oxnard-Thousand Oaks-Ventura is also the biggest measured OFHEO bubble metro in the nation. It's going to be real interesting because there are so many "undocumented residents" in Oxnard. If they go upside down they are going to literally disappear. These are the people Mike & Dan have been getting into a house.

ajn said...

I read that a major reason Mexicans er "unducmented residents" come to the USA is because of the lack of mortgage industry in Mexico.

I also read most, 70% or so, do not stay in America more than 3 years.

L'Emmerdeur said...

I apologize if this sounds harsh, but people who get mortgages for undocumented immigrants are NOT nice people. When I end up footing the bill for all their irresponsible lending, are they going to be "nice" enough to liquidate their assets and help pay the bill?

Also, if a couple of black guys from the 'hood were pulling this stunt, they'd be branded as "crooks" and "scam artists", but when its shiny, happy middle-class white people, they are "nice people". Meh. The prison system doesn't discriminate (although the inmates might).

dlp said...

Knowing nothing of Mr. Cote, it is unfair to pass judgement on the motives for the two conflicting views offered within the same commentary, however, it does seem to be a very good example of a trait that is becoming more and more common these days.

Americans now seem to be able to casually hold irreconcilable views in their heads without giving it so much as a second thought. In this case, these views are submitted to a public forum, after some care had been taken to ensure proper spelling and grammer.

These are nice people - they may be fomenting a crisis (Mr. Cote)
I'm rich because of my house - I didn't do anything to deserve it (your typical California homeowner)
They say there's no inflation - why does everthing cost so much? (your typical consumer)

There are many more examples of this in recent years, but most of them have to do with politics and/or religion.

albrt said...

>>Americans now seem to be able to casually hold irreconcilable views in their heads without giving it so much as a second thought.<<

In some cases this is caused by a lack logical capacity, in other cases it is deliberate irony. In perhaps the majority of cases the author of the irreconcilable views need not reveal (or even decide) which.

I blame the media, specifically Alanis Morisette.

iron56 said...

>dlp said

>...to ensure proper spelling and grammer.

This is deliberate irony. Right? Right?

Rob Dawg said...

Does anyone know people who sell cigarettes? Evil? Look, I know Moretech Financial are the next to last card in a pyramid scheme that stretches up to the Fed, the White House and China. I wish I could be nowhere near the fallout when we collectively figure out that no doc loans to people who can't afford them in rising markets are going to strain the entire economy in a declining market. What they do isn't illegal and supposedly conforms to their clients requirements. Understand their clients are the secondary paper buyers NOT the retail mortgage consumer. Yeah, I know them and while I think what they do is immoral and dangerous to themselves and others they think they are champions of the downtrodden. For the last decade they've been proven correct by results.

And for the sarcasm deficient, restated here with no sarcasm:
It is NOT a coincidence that Oxnard-Thousand Oaks-Ventura is also the biggest measured OFHEO bubble metro in the nation.

As to the rise in Ventura county real estate prices. In addition to the bubble there are several real reasons for the rise. 1. SOAR is an open space preservation initiative that is so successful that people have come to recognize and place a premium value on its' protections. 2. Amgen is located here and they've kinda sorta growed a little in the last ten years hiring lots of PhDs in the sciences with substantial incomes. 3. The housing stock has moved dramatically upscale. Comparing median housing 1995 to 2005 is night and day. 4. San Fernando Valley refugees have cashed out and escaped down the hill as we call it. There's more but you get the idea.

Sure there's a bubble, sure there's lending practices that a few years from now will not only be illegal but in hindsight appear insane but that's the future. Don't mistake my description of how things are with how i think they should be or how I think they will be.

Anonymous said...

I was personally a victim of the Mortech team's scam. Thanks to them tricking me into a bad subprime predatory interest only neg am ARM loan, my life and my credit are now ruined. Before you blame me for not reading the docs, google the term "hiding paper." I'm a US citizen, I had excellent credit, and I put 20% down... but Mike Hobbs was more concerned with his own profits than my interests. Funny... he always used to talk about being a church going man? To this day... I can't understand why he would bother? What a hypocrite.

Anonymous said...

Mike Hobbs, Dan Harris, Mike Garrett, Helen Harris Tosh, and many others took everyones last dollar and ran. If you were a victim of any of these people call OPD.

Anonymous said...

"Mike Hobbs, Dan Harris, Mike Garrett, Helen Harris Tosh, and many others took everyones last dollar and ran" Why they have not been prosecuted by the FBI is beyond me. I guess only the small pawns will take the fall in this one sided game of chess.

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