Why Bankers and Lenders Are Not Your Friends – Part 1

Copyright © 2006 Ed Bagley

The next time you go borrowing, and your friendly banker smiles as you walk into his office, be aware that you may be snookered by someone not worthy of your trust. If your banker is an attractive woman, then you are even more susceptible.

I have grown over the years to appreciate a certain breed of bankers as one of the lower life forms that inhabit planet Earth. What I am about to share with you is even more true of certain mortgage brokers, secondary lenders and financial predators. They operate as sleazy parasites under the guise of helping the least creditworthy consumers who have virtually no savvy in financial matters.

Rather than pick on the worst of this collection of lenders who will help relieve you of your money without any conscience, I have targeted bankers. Before the banking industry was deregulated there were many people who considered bankers worthy of some trust and admiration. Those days are over.

Bankers still enjoy the best reputation (such as it is) among these lenders, but they have no problem patting you on the shoulder while picking your pocket and telling you how much they have helped you. I do not intend to indict the entire lending industry, just 95% of it. Here is an example:

My 24-year-old son wanted to refinance his first mortgage and was about to go to a leading lender in the market to look at its loan proposal. I decided to tag along because I know how lenders operate, especially when dealing with younger clients and senior citizens who have not handled the finances in their family.

His present loan had a principal balance of $123,773 with 7.458% interest at a 30-year fixed rate. The proposed re-fi was for $134,999 with 9.9% interest (10.28% APR) at a 30-year fixed rate. The re-fi would cover the $123,773 principal balance due and provide a $10,409 home equity loan. The lender was actually smiling when he outlined what a good deal this was for my son.

I had coached my son to simply listen to the proposal, commit to nothing, take the paperwork with him, and tell the lender he would study the proposal and let the lender know if he wanted to proceed.

Once away from this flytrap I took my son to lunch, and we discussed the great deal he was given.

First, I had him look at the 3% discount fee on the Good Faith Estimate of the closing costs. (The discount fee is the amount you are paying for the privilege of getting the loan.) The discount fee was listed at $312.

What the lender was not telling him was that the 3% discount fee was figured on the $10,409 home equity loan and not on the $134,999 for the total loan which was $4,050, a slight difference of $3,748 in their favor.

If you called the lender on this discrepancy, he would probably say, “Oh, you’re right, that’s a mistake. That’s the figure for the home equity loan. Jeez, I’m sorry.”

When the day comes to close the loan, you see the bloated figure and object, and then the lender multiplies the $134,999 loan times 3% and viola, it comes up correct. You are dazed and confused, feel under pressure, want to get this over with and sign on the dotted line. This happens every working day in America when loans are closed.

Long after you are gone, the lender is quietly snickering, counting up the additional funds he will earn, and welcoming the next dumb bunny who comes through the door while you will be stuck with making payments for 360 months on a lousy loan.

For the uninitiated, there are more real surprises at loan closings in America than when opening gifts on Christmas morning. One client of mine went to a loan closing and learned that $10,000 had been added to the loan closing costs without prior notice; he thankfully got up and left.

Always remember that for every liability you have, you are someone else’s asset. For every liability—such as a mortgage, credit card, car loan or school loan—you are an employee of the company lending the money.

If you take out a 30-year mortgage loan, you have become a 30-year employee of the company which lends you the money. This is a very sobering thought when you are paying attention, as you should be. I am not talking about anything important in this article, just your financial health.

Part 2 of this article will take the financial details of the loan apart and show how not taking the loan will save my son $157,495.

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Who Has Had the Greatest Influence on Your Life, and Why?

Copyright © 2007 Ed Bagley

A lot of us remember our mother, and for good reason.

Should someone pose the same question to me that I have asked of you, I would never hesitate to talk about the most important person in my life, my mother.

I had two fathers, one that left when I was only a month old (he was not sure I was his son, and so he divorced my mom), and one that arrived when I was 5 (he had a 40-word vocabulary, 20 of which were cuss words). I did not realize until much later that my step-dad did not know several foreign languages (he actually did know cuss words in at least three languages).

It might be sad to admit that I have no idea who my father is, but in the greater scheme of things, it does not really matter all that much because he was never a part of my life.

My mother was.

Both of my fathers provided examples of what not to do when being a husband, father and role model. Given the circumstances, one becomes what one sees, or one makes it a point to never become what one sees. I chose to ignore the fathers who never were.

Both the father on my birth certificate and my step-father certainly thought that they did the best that they could, it’s just that what they did was not that good. Both of them raised being self-centered to an art form.

My mother apparently had a somewhat rocky start in life, and was probably not the best mother a child could have had, but she became a fighter, for herself and her children.

She suffered through two of her daughters preceding her in death, and often said “It is a great life if you can stand to live it.”

I was raised essentially by my maternal grandparents for the first 5 years of my life, and everything good that I first learned was from them.

After living nearly seven decades I can tell you without qualification that my grandparents were the salt of the earth. They started out as farmers in Illinois before the turn of the century and moved north to Michigan when farming became impossible.

They were Midwest stock, always recognized and honored God, and whatever homespun wisdom I have came from watching them very carefully, and always loving them as they loved me.

That said, my mother was the biggest backer that I ever had.

She loved me when I was not lovable, despite my faults and shortcomings. She stood by me and fought for me when others would not. She encouraged me, financed me, and believed in me.

My mother was a study in self-improvement, she actually worked her entire life trying to become a better person, and spend the last 30 years of her life, in my judgment, becoming close to an angel here on earth.

In the end, she was not self-centered or self-absorbed but naturally served others with love and compassion. She became an incredible woman, and many were saddened on the day of her passing.

She was not a movie star, she was not famous, and she was not rich. She simply had the most important job in the world, she was a mother.

She was the only one who could comfort her son in his most distraught times, like when his first love in high school found another, and he thought his heart would never again be whole.

There must have been 40 flower arrangements at her funeral, and one was a beautiful (although artificial) purple and yellow arrangement. I brought that arrangement back from Michigan with me 12 years ago, and to this day, it sits beside me at my office in Tacoma (WA).

My mother is never more than an arm’s reach away from me.

Shortly after her funeral I was passing through a religious articles store that a Catholic order of nuns was closing down. There I found a medal of Saint Mildred, an obscure Catholic saint from the Middle Ages.

My mother was not Catholic, but her name was Mildred, and that medal has been around my neck, day and night, for 18 years, in honor of her.

As a father and grandfather, my message to all mothers is to love your spouse, love your children, love your family, and however mundane you feel your existence may sometimes be, remember that your most important mission in life is to be a mother.

There will be no greater calling, and there will be no greater reward.

Your legacy is established, and your love will not be forgotten by those you love and serve. They will love you forever as you have loved them.

May God Bless You and Your Family this Wonderful Mother’s Day,

(I love you Mom. If you were alive today, you would be 98 years old.)

The Love of a Mother

(Ed’s Note: This article touched me. I hope it touches you the same way.)

After a forest fire in Yellowstone National Park, forest rangers began their trek up a mountain to assess the inferno’s damage.

One ranger found a bird literally petrified in ashes, perched statuesquely on the ground at the base of a tree. Somewhat sickened by the eerie sight, he knocked over the bird with a stick.

When he gently struck it, three tiny chicks scurried from under their dead mother’s wings. The loving mother, keenly aware of impending disaster, had carried her offspring to the base of the tree and had gathered them under her wings, instinctively knowing
that the toxic smoke would rise.

She could have flown to safety but had refused to abandon her babies. Then the blaze arrived and the heat had scorched her small body; the mother had remained steadfast because she had been willing to die, so those under the cover of her wings would live.

“He will cover you with His feathers, and under His wings you will find refuge.” (The Holy Bible, Psalm 91:4)

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