Saturday, April 26, 2008

Miss Busta and the Death of Satire

by Tanta on 4/26/2008 07:57:00 AM

Regulars may remember this little post about Accredited Home Lender's new Chief Advisor of Things Both Relevant and Interesting in the Non-Conforming Loan Market, Miss Busta.

Well, Miss Busta's website is up and running. I confess to complete and utter disappointment; after the build-up in the announcement email, I really expected this to be funnier:

Dear Miss Busta,
Given the crazy events of the last year or so, it seems that the subprime loan market is dead. Please tell me the truth. I can take it.
—Grieving in Grand Rapids

Dear Grand,
Dry your tears and stop that annoying sniveling. The rumors that Subprime is dead are greatly exaggerated. Granted, it was tough going there for a while and some serious intervention was needed, but it’s been brought back from the brink. Seems Subprime was hanging around with a bad crowd and fell victim to some wicked peer pressure. After the deadbeats were run off and a few warts were removed, things have started to get a lot better, thank you very much. In fact, Accredited has closed more than $150 million in subprime loans since January. That’s a lot of clams. And we’re back doing business with some solid friends—nice brokers who predict steady growth over the next year. So enough with the hand-wringing. Let’s get to work. Something you might want to try.
$150MM since January might be a lot of clams, but it isn't very many mortgage loans. In Q1 2006 Accredited originated $3.6 billion.

Accredited may be targeting the "nice broker" demographic, but if this kind of thing either amuses or reassures their broker base, then they're also dealing with the dim broker demographic. There is a long and storied history in the mortgage business of both overpaying the sales force and simultaneously treating them like not very bright fifth graders. Fly them to Hawaii, put them up in an expensive hotel, and then send them to pep rallies with the intellectual content of an episode of The Brady Bunch. That sort of thing. My own view is that people tend to live up to the expectations you have of them, which is why there are so many overpaid fifth graders in the business.

You'd think Accredited might have reflected a bit on that strategy, but apparently not. I am not known as a humorless person, but I'm actually mildly surprised that any subprime lender thinks the time has already come to be merely cute about the whole thing. I would have thought they might still be trying to prove to the world that the grownups are, in fact, in charge now. Perhaps investing some time into actual training of brokers in credit analysis, acceptable loan documentation, and responsible disclosure practices. Putting some honest effort into understanding what went wrong and why. Guess not. It's all about attitude and platitude, any fleeting breakthrough of seriousness instantly stifled with chicken casserole recipes. The warts have been removed, the clams are back, and the same anti-intellectual drivel that papered over the problem in the first place returns to cheer everyone up.

On the other hand, at $150MM a quarter, that "overpaid" thing will no longer be a problem.