On any given morning when I'm not running off to catch a jet to someone else's city to preach the gospel of safe lending and investing the Interthinx way, you can find me tuning in to one of the day's morning “news” shows during a cardio workout; mostly to exercise rolling my eyes at what the world has been up to the day before.
This morning, however, I find myself tipping my hat during one of those shows to Drew Manning, a fitness instructor from Southern California, who over the past several months has purposely gained north of 70 pounds so that he can understand the issues that people he assists go through in their process to become fit. As I look at the “before and after” images of this fitness guru whose goal it is to now lose the weight through exercise and healthy eating, I can't help but admire a person who has such respect for the process he promotes that he would place himself in harm's way in the name of empathy for his flock.
As I head off to the office, Manning has me contemplating his journey known as Fit2Fat2Fit that is somewhat analogous to our industry's situation over the past decade. Do we still respect our processes? I certainly hope so as we aren't all the way through our Fit2Fat2Fit yet.
In the beginning, there was collateral. Kind of like a great natural cereal, it was the fiber that was the backbone of any residential security steadily increasing in value and protecting the process by giving it an out in unwholesome times. Then came market growth with a bit of politic mixed in for good measure. Growth boosted the taste of product like “MSG” and politic like nicotine made the consumption of product addictive which caused the world's appetite to become voracious and unruly pouring on sugar in the form of leverage. The market continued with uncontrolled consumption until it was so obese that it exploded inciting a temporary coma. I guess you could say we're well into an extreme dieting regiment now; working our way back to fit. And why; perhaps is because we did, at least for a time, lose respect for our process.
As we work our way back to fitness, let's remember that staple called collateral and stay away from short-cut substitutes that will add fat and reduce quality.
For instance, in any lending or security situation, it's good to start the day with a healthy dose of data which can be administered automatically in the form of collateral risk tools or manually in the form of professional reviews or appraisals. Which approach is appropriate? It depends. Just look at the risk of failure due to markets coming out of their respective comas or homes that are in distressed situations or are specialized to a degree that will limit the purchaser group and then match the tool with the level of risk. Add in a dose of pragmatism to deal with any other “what ifs” and viola, you're well on the way to fitness in your process. Repeat often, the results will be satisfying well into the future.
Mark Chapin is the chief valuation officer at Interthinx.
