fannie mae [FNM] to Joe, the owner of the house, everyone wants to quickly deliver that hot potato called guilt. I want to be different. I’m going to hold on to that potato, and as it burns my hands I’m going to confess that this whole economic crisis is entirely my fault. Then borrowers can stop blaming lenders. Main Street can stop blaming Wall Street. Government politicians can leave the corporate elitists alone and still let them play Monopoly for real money. But, all of you should just take a couple of minutes to listen as I confess and tell you what I did to cause this whole debacle.
I’m Joe the Contractor, Joe the Plumber filled in for me on a couple of jobs. I’m from the crooked little state of Rhode Island, where it’s all about “lobsters and mobsters.” [sic] I started my business in 1992, with zero capital, a pickup truck that was a year older than my wife, and a milk crate full of junk tools. Oh yeah, a couple of other important tools of the trade that I fully possessed in those days were ambition and high hopes. Those things, not even five years after I started, got us a house of our own, a middle-class income, and a well-established small business that makes about $750,000.00 gross a year, with three employees: jobs I created, really, not as a politician says.
Then came the “mobsters”. I started getting screwed left and right by crooked people in power, even if I wasn’t officially part of the mafia. One of these shower bags, “The Prince of Providence” ended up in jail. Another, I sent him away on a stretcher the day he tried to blackmail me for the second time (he succeeded the first time). I fired my crew, sold my tools, closed my business and went fishing…commercial, offshore fishing, guess what? -“lobsters”. It’s hard work, even compared to construction. You’d be surprised how this industry is so over-regulated that a fisherman can barely make a living, while the mortgage industry is so under-regulated that some idiot loan officers can make a living with much less effort.
So I became a jerk loan officer. For once in my life, my timing was on point, and during the refinancing boom that came along with the subprime fiasco, I was making ten to fifteen thousand a month… refinancing, not blowing up the house. people’s lives cheating them on those subprime. -first offers. I also did not make any maximum premium offer. That’s a deal where the loan officer refinances your own or your friends’ house at the highest rate, gets the highest commission, and then uses that commission to pay for fees and escrow, and even a couple of payments. of principal and interest, therefore, you only make one mortgage payment per quarter, and at the same time screwing the banks by refinancing four times a year. Greed and corruption on all levels, you have to love it.
Rates started to go up, so my refinancing business started to slow down, and not to sound like sour grapes, but I was ready to trade my tie for a utility belt anyway. I missed working with the kind of people we know, thanks to Sarah Palin, like Joe Six-Pack, people with more class and less money than Patrick Trust-Puppy. I didn’t want to go back to the hiring scene that I literally fought my way out of. But, I still wanted to build. So here’s what I did, and it was this next move that caused the unprecedented drop in artificially inflated values found in the housing market, which in a domino effect plunged banks and insurance companies, and will soon kill retail, except for immortal zombies, Walmart[WMT]and lead to a depression like in 1929 when people bought inflated stocks at a 10% discount.
I took $100,000.00 of equity in our home, an additional construction loan, and built a home on speculation. No customer with color options, no due date with liquidated damages, no certified payroll, no kickbacks to get paid final, no mobstas, no lobstas. All I had to worry about was a drastic drop in home values. I planned in the worst case of a 20% depreciation. This was the real life scenario: In the 70 weeks it took to build this house with virtually no help, it lost over $140,000.00 in value. So basically I worked hard for a negative $2,000.00 a week.
As my wife begged me not to do this project and put the house we live in at risk, and we worked and prayed so hard to get it done, I heard another voice screaming in my other ear. This voice said, “Joe, you know if you go through with this company, you’re going to bring the housing market down completely.” He also said: “You saw firsthand how the values of these houses got so inflated. Loan officers make appraisers raise the values to get the loan through underwriting. Then when the buyer hears what houses are being appraised on , they think that’s what they’re really worth. Of course, your real estate agent agrees, after all, the higher the price, the higher the commission. So, the buyer figures out why not pay what the house is worth from our dreams, after all, the bank said we can pay and they wouldn’t lend us the money if they thought we couldn’t pay it back.The deal is done at the price based on the inflated appraisal, and then that sale price becomes the compensation for the next inflated appraisal.”.
I argued with my wife, to the point that we broke up and I spent five cold months living on the foundation of this house that I kept building. I also argued with that voice in my head. I explained how I had made loans to people with property abroad, in Australia and Portugal, and they reported the same double-digit appreciation with property in those countries. “It’s happening all over the world,” I reasoned. It must have something to do with there being seven billion people on earth now. Also, if the property values are what they are, then my net worth is around $300,000.00. – not bad for a guy who started just ten years ago with a negative net worth of $10,000.00. This is America. Isn’t this what is expected after ten years of constant, honest and hard work?
So there you have it, I ignored my wife and I ignored the voice…at my own risk and everyone else’s. By the way, this was the same voice that told me a few years earlier “strangle that thief until he turns purple, then throw him away and stomp his head. You’ll only get a couple weeks in jail and a year of probation – he’s the one.” memory will last a lifetime. You’ll even get your final payment without having to grease anyone” That damn voice hit the nail on the head, that’s exactly what happened. If only I had listened this time, too, we wouldn’t all be in this mess that’s going to cost us well over a trillion dollars to bail out of. Aren’t they already asking for more? It’s all my fault… and I’m sorry.
Now the voice tells me that as soon as me, Joe the contractor, along with Joe the plumber, and our friend Joe the Six-pack sell all our houses short, or deliver deeds in lieu, or just get repossessed, then things they will get better… To Patrick Trust-puppy. Because the government handed over all that tax money to the banks, warning them to make sure to lend it and not hoard it. And lend it to Patrick Trust-pup, at a low interest rate, so he can buy these now undervalued properties. Then he’ll rent them to us, if we pass the credit check. He will hire us somewhere between minimum wage and living wage to fix them, since he gets credit along with the politicians for creating jobs with the bailout money. We will work eighty hours a week because we have that American work ethic, the best in the world. And with enough ambition and high hopes, after about five years our credit will be good enough again, and maybe we’ll have some money for a down payment, so we can buy these properties from the jerk for what they should have been worth. . along, calculating an appreciation of 4% per year. Of course, this will give Mr. Trust-puppy a 100% return on his investment from our tax dollars, and around a 1000% return on his out-of-pocket investment, because there’s no investment like real estate when it comes to to buy on margin. …And the whole silly cycle will start again… Unless it causes the Second Great Depression, followed by the Great Tribulation.