Morty Gage has a long day ahead of him. It’s the best of times and it’s the worst of times. He needs to be at the Feckless family residence by 9 am, where the sheriff is showing up to kick them out. It’s gonna be awful and he knows it. There will likely be reporters there – the Feckless family has tried to bring in the press wherever they could in hopes of embarrassing BOG into letting them keep their home. But the reality is that the Fecklesses just didn’t do oh so many things right - there was no help or hope for them.
Frank Feckless lost his job as a tennis pro; he had offers to sell real estate. He passed on all of them. He didn’t take any of the more menial jobs like being a long haul driver. He wouldn’t take any of the office jobs that were offered by the many clients who loved him. Other than one easily offended but oft-dated cheerleader, he was the best teacher of crosscourt backhands in town. But alas, he was unemployed for a very long time.
The family missed the first payment 14 months ago. The bank offered various refinancing options. But with no employment income, Frank was in a tough spot. Finally, as a last gasp measure, fostered by a few of Frank’s clients, BOG did a reverse mortgage recap; specifically, they wrote DOWN the mortgage from $875,000 to $675,000 and offered Frank to just pay interest on the lower rate. Frank rejected that move as well because the IRS would treat the $200,000 as ordinary income (i.e. Frank would have to pay taxes on that $200,000 “gain” as if he had earned it – and in California, that meant incremental taxes of something like $100,000).
So after 14 months, it was Time. The sheriff had to be called and Frank and his four children and his wife Fanny would all be moved out of the home and into their minivan. The home had been sold to another buyer who was willing to just assume Frank’s previous loan package. Morty wanted to be sure that the buyer was nowhere around to see this ugliness. But if the new buyer came in, BOG got back most of their money and less enormous time, hassle and bad press, their loan would be ok.
So the sheriff came. There were tears on all sides. The Fecklesses were gone. And the new owners were set to move in the next day. As he drove back to the office, Morty sighed, “Just another day in paradise” as he cranked Eagles tunes from the ‘70s (the late era, when they were all judgmental and sniffy).
But then there was the other, brighter part of his life. Morty got to close on an elderly couple who he had known for just 30 years. They were his first client and they were coming in to make payment #360 to fully pay off their 30-mortgage. It was a happy day. They were retired now and with no mortgage payments to make, they could live on very little money and have a great Sunset.
The rest of Morty’s day was spent looking at ratios of loans his junior loan officers were bringing to him. BOG had basic covenants – they needed 20% down payment and they needed the total loan as a base case to be no more than 4x time the revenues of their clients. As long as loans generally conformed to those parameters, Morty said a lot of “Yes”es and life was good.