My Recent Reading List

I like to read and learn, but don't seem to get an
opportunity to finish as many books as I would
like.

Looking around my office, there are probably
20-30 books that I want to read and other things
have jumped in the way.

Here are a couple of titles that I have read recently:


The Trick to Money Is Having Some by Stuart Wilde.

I found this book to be very liberating, despite its
puzzling title.

I think it is almost universally true that most people
would like to have more money. But, despite all the
opportunities that we have in this country to succeed
economically, many of us have fallen in the trap of
thinking that we cannot do it.

Wilde helps outline how to acquire an "abundance
mentality" and to visualize success occurring for
yourself. And to understand that many of the
limitations that you face are self-imposed.

He espouses acquiring more money in a balanced
way - he does not want it to be an all-consuming
desire. He does want you to focus on making
money as a way to measure your contribution
and value to others, and not just accept praise
and meaningless titles instead.

There were a few concepts that I would not
accept without question, but it didn't diminish
my enjoyment of the book or acceptance of
those ideas that I think have validity.

I would certainly recommend this book as a
vehicle to help you get a better idea of how
you can expand your thoughts to bring more
money into your life with integrity.


The Big Short, Inside the Doomsday Machine,
by Michael Lewis.

I wrote about this earlier in the year, but it is
worth mentioning again.

If you want to have a better understanding
of how the mortgage market collapsed several
years ago, Lewis' book helps explain the mechanics
behind it, and some of the major players who
participated.

Even being in the business for over 33 years, I
learned a lot about what happened with the
lenders, the investors, the bond traders, and the
manipulations that occurred.

I learned more how credit default swaps and
collateralized debt obligations worked. How
loans were packaged into tranches and received
ratings that were more optimistic than they
should have been.

It is well-written, and the story is told through
several major characters that allow the details
of complex transactions to flow through the
narrative.

It is a good read if you have an interest in how
we got in this situation.


Blindside, by Michael Lewis.

I like Michael Lewis, and have probably read
about 7 of his books.

There is a good chance that you saw the movie
starring Sandra Bullock. As good as that movie
was, I think the book was better. (I am probably
prejudiced toward books because they supply
such a richness of detail that the movie can't go
into).

In case you don't know the story, it centers
around Michael Oher, deprived of a normal
upbringing, encountering continual challenges,
and who tries to hide from everyone.

The thing is, he is huge, and despite his size,
he is incredibly athletic and agile. He really
can't hide.

He doesn't do well in school, doesn't communicate
well (or at all), sleeps wherever he can, eats what
he can and drifts through his days.

The Twohey family makes a decision to help him.
And beyond that, they demonstrate the depth of
their faith by bringing him into their home and
treating him like a son.

There is no question in my mind that they did this
out of the goodness of their hearts, but there was
an element of their generosity that paid off for their
school and their college alma mater. Michael Oher
was a tremendous left tackle in football and helped
his teams succeed and has become an NFL player
with the Baltimore Ravens.

It is a very uplifting story, and appeals to that part
of all of us who know we could do more to help
others in need.


The E-Myth Revisited by Michael Gerber.

This has been on my list for a long time, and I am
almost finished reading it.

It is a fascinating dissection of how small businesses
work - or don't work!

Most small businesses start because someone is
good at doing something. They understand that
there is an opportunity to make more of that talent
for themselves, instead of working for someone
else.

But just because someone is a good Technician
does not mean that they know how to run a
successful business. Gerber points out that two
other parts of their personality - the Entrepreneur
and the Manager - have to have their say in making
the business work.

It is that blending of the three facets of the person-
ality that has to come together in balance for the
business to succeed.

Gerber elaborates that the small business owner
has to get themselves out of the business. They
cannot continue to have everything revolve
around their efforts. They need to delegate, they
need to hire others, they need to put systems
in place and they need to think of their business
as an asset they are building for future sale.


I think it is important to learn from others, and
reading is one of the best ways to do that. We
cannot experience everything first-hand ourselves,
nor would we want to. I would much rather learn
from someone else's mistake than make the mistake
myself!

Please e-mail me back if you have some books
on your reading list that you have enjoyed or found
meaningful. I'd be interested in expanding my
book list!

Plan Ahead - Avoid Disappointment

There are times when a real estate agent or a
borrower is in the middle of a transaction that
starts to unravel.

When it involves financing, I frequently get a
call to see if I can come up with a solution to
the problem that they are encountering.

Today I heard from a real estate agent who
described the following situation:

Purchase price was $2.0 million. The buyer
was putting $1.4 million as their down payment,
and wanted a new loan of $600,000. The
escrow was scheduled to close tomorrow, and
they just discovered that the lender they were
working with was only going to approve the
new loan at $500,000.

From what the agent was able to relate to me,
it apparently was because the borrower's debt-
to-income ratio was higher than the allowable
guidelines. The debt-to-income ratio is the
percentage of the borrower's monthly income
that is obligated by the new mortgage payment,
property taxes, insurance, and all other monthly
debts for things like car loans, personal loans, and
extended credit card payments.

As silly as it sounds, the lender put very little weight
on the fact that the borrower was putting 70% of
the purchase price as down payment, and only
wanted a loan of 30% of the value. Also, the agent
mentioned that the new house payments were
less than what the borrower was currently paying
in rent.

From a risk assessment standpoint, the lender
was in a very good position. They were asked to
make a very safe loan in relation to the value of
the property, the borrower had a credit history
that showed they could handle even higher
monthly obligations that what was proposed,
and they even had cash reserves beyond the
$1.4 million in down payment.

Many times we find that the underwriters get
paralyzed by the guidelines. There is a tendency
for them to be so absorbed in the details that
they no longer look at the big picture. And
their decisions don't seem to make much sense.

The agent was disappointed that such a solid
transaction was being disrupted at the last
minute.

In our discussion, I offered a couple of ideas
that I thought would allow him to keep his
transaction together with the existing lender.
Even though it was in my best interest to
get the opportunity to work with this client,
it was in the client's best interest to try to
keep the transaction together with the
existing lender and close quickly if possible.

Of course, I also offered to review a copy of
the clients loan package to see if I could place
the loan with one of my sources who could
meet the loan request of $600,000. I will
see if I can help them when I get the oppor-
tunity to look over their financial condition.

There is a lesson here for all prospective
purchasers.

Please get your paperwork into your lender
even before you go into contract on a property.
No matter how solid your loan request may
seem, (and I can't think of one more solid
than this one that the agent was asking me
about), things have changed in the lending
world.

Don't assume that everything will go well, and
give yourself the advantage of having your
loan pre-qualified or pre-approved before
negotiating on the home.

It is such an emotional upheaval to miss the
closing date after having your moving plans
all in place, and after the anticipation of getting
into your new home.

Plan ahead so that your transaction is not
delayed at the last minute.