Real Estate Arena – Lessons From the Minnesota Bridge Collapse
The recent catastrophic collapse of a bridge in Minneapolis, Minnesota was a very tragic event. For the people on the bridge at the time of the collapse, there was no warning and no way out. And this collapse was unusual in that it was sudden and came with no obvious warning. In just a few seconds many lives were changed forever.
While the specific triggering mechanism that caused the collapse to be so sudden and complete has yet to be determined, one fact has already been made very clear. Previous reports filed by bridge inspectors had indicated as far back as 1990 that there were serious problems with the stability and safety of this bridge. In short, this bridge had lost it’s integrity and could no longer be counted on to carry the load it was expected to carry. That loss of integrity was not overtly obvious to anyone the day before the collapse, and no one expected the disaster that unfolded, but it happened.
For me, it brought to mind some interesting parallels in the subprime mortgage market. The collapse of the subprime lending market has been caused largely by a widespread lack of integrity in the world of real estate investing. And this problem has been documented for quite some time. Stories of mortgage fraud, borrower fraud, and seller fraud have been rampant for several years now. Combined with loose lending criteria, and poor underwriting, it was a total loss of system integrity, and the result has been the collapse of subprime lending.
Whether you are talking about the integrity of a bridge support system, or the integrity of a mortgage finance system, the same rule applies. When the integrity of the support system is compromised, the entire structure will fail at some point. This is what happened to the subprime market, just as with the Minnesota bridge.
Personal integrity is the same way. If we do not maintain personal integrity in everything we do, sooner or later we are destined to fail. And when that failure comes, it may be sudden and devastating.
And it will affect the lives of those closest to us.
More than 80 subprime lenders have failed and disappeared since the end of 2006. As with the bridge, subprime lending will find a way to rebuild, and start again, but lives have been ruined, and the disaster is affecting millions of investors, homeowners, and real estate industry professionals.
Institutional investors, such as pension funds and banks are losing hundreds of millions of dollars, and have redirected their remaining assets into other safer investments that have more integrity. Small investors, lured into illegal cash back financing schemes find themselves trapped at the bottom of a river of bad debt that is slowly drowning them. For many of them, foreclosure is the only way out.
Some property dealers sell indiscriminately to anyone dumb enough to believe that the properties are actually a good investment. And buyers, hungry for a quick buck, buy without checking the integrity of the deal. Months later, when the buyer has finally realized that they are going to lose big bucks on a bad deal, they want to blame everyone but themselves. There are predatory lenders to be sure, but there are plenty of predatory borrowers too. All have one thing in common, their lack of integrity has caused their grand investing plans to collapse into a pile of ruins. And, just as with a bridge, it will take years to rebuild.
Integrity is important because no system can work well without it. Integrity is the support system that holds up the bridges of our lives, and helps to insure that we never suffer the disastrous effects of bad decisions, greed and dishonesty.If you let it, your integrity can guide you to make decisions that will benefit you for your entire life.
Most of today’s highly successful businesses thrive because of their integrity. Their products can be trusted to work, their people can be trusted to make honest decisions, and their customers are loyal because they instinctively see quality in a business that has integrity. In fact, the single best way to grow your business is by building a reputation for integrity. It is fundamental to a solid business plan.
Think quickly of a business that you personally avoid because you believe that you can’t trust them. Once I was taken advantage of at a certain transmission repair company that was known nationwide. They told me I needed a new clutch, for which I paid them $400. Several months later, I inadvertently discovered through another mechanic that they had lied about my problem and charged me for a repair that I did not need. I never returned to that particular repair chain again. Their lack of integrity is something that I have never forgotten, even more than 20 years later.
I invite you to take a look at your life. Are you living with integrity? If so, you can expect your success to continue to grow throughout your life. If you are not living with integrity and excellence in everything you do, you may open the door for financial or physical disaster to come upon you at some point.
Many investors and lenders who compromised their integrity for a quick buck are paying the price for it now. Live your life with integrity and excellence and you will find that your long term success will be greater and longer lasting. And don’t associate with businesses that you know compromise their integrity; don’t work for them either. If they go down the tubes, they will take you with them, just the way that the subprime collapse has taken down many mortgage companies and the people who worked there.
Integrity can make nations great, because it’s integrity that helps make individuals great. When you have an underlying support system that is built on integrity, you have the basis for a successful, happy life, both personally and financially.***
inew