The Long Haul

My focus has been pulled, or I should say diverted, quite a bit the past couple of weeks.

For a number of years I've gone to the national MBA convention. This has always given me a sense of the industry's pulse, introduction to potential new investors, and some travel time. Cathy has gone with me this year and the past two and we've taken a couple of days off for vacation; for the record we rate Boston and Chicago much higher than this year's trip to San Francisco.

Normally, I'll spend Sunday evening working the Expo (exhibitors) and getting a feal for what reps I'll want to visit with on Monday, Tuesday, and Wendesday between other appointments I have. This initial walk-through usually takes at least a couple of hours.

This year is took maybe twenty minutes. The exhibitors, in number, were 20% of any other year I've ever been. While there are normally large lender exhibits, very few were bigger than your typical 10x10 or 10x20. 30% were REO management and 30% fraud detection or training companies. There were zero mortgage lenders exhibiting.

Obviously, the tone for the convention was very somber and serious.

And serious it was.

The Mortgage Bankers Association is dedicated to cleaning up its problems from within the industry and I applaud them. We've, and that includes all of us, have made a mess of things. We've neglected good sound lending practices by either originating or allowing the origination of loans that should not have been made. We had bad product offered to us that we sold because it was there, people would buy it, and we could make money. We've trusted others to do the right job, yet we've not defined "right" and/or not held held them accountable. Much of the time we've just rode the wave.

Now we "pay the piper," or "now's the time for the rubber to meet the road." Or a host of other cliches.

Cliche or not, it's time to pay attention to what needs attention.

As I reflect back to the national convention, I see an underlying theme of "fraud prevention" and "best practices." One of MBA's executive team was speaking during the opening remarks and talked extensively about these two issues. He claims that while some of the fraud should be picked up on by the loan officer and underwriter, 87% of all fraud can be detected by a good processor.

And thus, we weave that into best practices.

Alethes began an innitiative last winter to improve the knowledge level, professionalism, and accountability of all our employees and vendors. We began defining and practicing Best Practices. Some people have not appreciated what we've been doing, nor why we're doing it, and choose to leave. We'll be continuing that agenda this fall and winter and we'll continue to loose some who are in it for short term gains.

Alethes is committed to the long haul. One of the Speed of Trust behaviors is "Righting Wrongs." While we right some wrongs, it is more than likely to get worse before it gets better. But that's ok.

We're committed to the long haul. That's my focus.


Danny

Business-Not-So-Usual

Like much, if not all, of the mortgage industry, Alethes has not been immune from the downturns this year. To keep aligned with the declining loan volume, we have reduced our corporate and wholesale work-force by 32 people. This includes the reduction of 18 people this week.

I remain committed to our vision, mission, and values and while this week’s lay-offs were one of the hardest tasks I’ve ever had to do, it was necessary to reduce expense and regain profitability for the year. Part of our value statement states that we will be “Healthy in our disciplines of Leadership, Profitability, and Fun.” While the lay-offs were necessary for profitability and there might be argument as to the level of leadership, it was definitely not fun.

This morning we had our 4th or 5th “State of Alethes ” conference call and will continue to have these calls from time-to-time. We also have a check-in every Monday, Wednesday, and Friday at 10:06am (1006 meeting). You are welcome to call in and listen to that meeting; you can obtain the phone number by contacting john.bentham@alethes.biz.

If you have any questions about our viability, direction, or committment, I encourage you to ask John Glenn , Mary Reynolds , Paul Findley , Richard Woodruff , or myself.

Please do not listen to rumors.

Sincerely,

Danny L. Smith
CEO/President
Alethes, LLC