This article was posted on Sunday, Apr 15, 2012

Building a loan package is both science and art. The science is predictable: certain things must be included in each file and adjusted for the type of property we’re talking about. The science is pretty standard. The art is different. A lot of underwriters left the business after 2008 and the ones still remaining are swamped. She may have 80 files on her desk right now, and the last thing she wants is another one. So each loan package must be presented with the expectation that the underwriter, the one who must sign off on your file, hates the additional work, hates the loan officer, hates the project, hates your client, and hates the client’s pair of breeding Whippets. The art is in making her change her mind. If that happens, your application will need fewer addenda and your loan will close quicker, and possibly at a better rate.

But even before it gets to underwriting, which bank are you going through? Banks cannot offer loan programs or interest rates or terms the bank doesn’t have. That is important. If the bank doesn’t offer it, you can’t get it. You know that, and that’s one of the reasons you come to me. ‘s my job to present your file to several banks that are currently looking for that specific kind of loan and are eager to compete for the very best rates and terms. Then I present more-than-one offers to you and you pick the one you want.  This is not shameless self-promotion. ‘s Truth in Lending.

So when your loan broker (see the clever switch to the third person? But we both know who we’re talking about, don’t we?) is constructing a loan package for you, it’s important she has a really good idea of your needs so she’ll know where to place the mortgage. But it’s not all business. When she’s on the phone with you and you’re discussing a property loan, there are almost always little pauses where you discover things about each other. These moments often lead to friendships. Frequently you learn things you’d not even considered before.  Like charity.
Not everyone has the money early in their career to be terribly altruistic. The giving of useful amounts is something that generally happens later in life, after investments have had a chance to mature. If you’ve been following these articles over the past decade or more you’ve probably developed enough net worth that thoughts of charitable giving have already occurred to you. The purpose of this letter is to discuss something that might be worth considering before actually signing a check, whichever side of the social fence you’re on.

Allison Armstrong wrote a book (Keys to the Kingdom, 2003) discussing the life stages a man goes through. She wrote pretty much exclusively about men because her target audience was wives who needed help understanding their husbands. According to Allison, there are five stages. The first is the preadolescent Page when a boy tests himself by doing the most outrageous things. When my sisters and I were seven years old and quietly reading our individual subscriptions to Vogue in front of the fireplace, boys of the same age were sliding headfirst down banisters and jumping off shed roofs. If our Page won a $1 million lottery he’d buy a video game. Some men never get beyond Page.

The second of Armstrong’s stages is Knight, the period between Page and the late 20’s or early 30’s. The young man is off adventuring. In many ways this is an extension of Page but now he must do his own laundry. He might join the military or the Peace Corps, or perhaps become a PRCA bull rider or maybe a staff member for PETA. Think idealism on an entry-level pay scale. If he won a $1 million lottery he’d fund his own adventures.
Sometime in his early 30’s, he settles down and focuses on his career. He gets married, the consequences of which are always expensive. He begins a career and a budget at the same time. If there’s any money left over, he might invest in a little real estate down the block for his wife to manage. Family time is limited and reserved for weekends; he’s just too busy with his career during the week to give much attention to his wife or kids. This is the Prince period, when he’s establishing his domain and he senses the possibility of doing great and wonderful things. If he won a $1 million lottery he’d invest it until it grew into something really, really worthy of his attention.

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In his late 40’s or early 50’s the Prince matures into a King. The King is comfortable with himself. He’s not done everything he fantasized as a young Knight, not even everything he worked for as a Prince, but it’s enough and he’s satisfied. The King helped out his children when really necessary, but because he raised them to be self-supporting emergency grants weren’t required very often and the King’s investments could be left to quietly compound. Loans were retired. Rents went up. The King was in the sweet spot. He’d learned to live within his emotional and financial means. If he won $1 million he’d live on the rents and dividends.
Sometimes in his 60’s or 70’s he becomes an Elder. He’s accepted that he’s on the backside of the trajectory curve and recognizes inevitability of his own mortality. He’s thinking about leaving some money for his children. Warren Buffett, before he turned loopy about other people’s taxes, said, Leave your children enough that they can do anything they want to, but not enough so they can do nothing, and that’s probably a reasonable idea.
Even after making his children well off and giving something to each grandchild, the Elder will still have a significant sum remaining. As an Elder if he’d won a $1,000,000 lottery he’d plan for charitable transfers. Even though he hasn’t won the lottery, the Elder begins to contemplate his legacy and considers making charitable gifts out of his own assets.

Note for hopeful young women: If you hook a beau, ask him what he would do with $1 million and you will learn the stage he’s going through. If he says Buy a video game throw him back in.
If we were to greatly simplify the history of social philosophies and their consequences, two grand ideas would need to be addressed. I’ve scratched out a little figure to illustrate them.

To use this chart, pick one alternative from above the line and one from below.  Because there are two choices above and two below, we have a universe of four possibilities. This chart applies to individuals, of course, but also to organizations. For example, the National Teachers Association might be under Alternative 1 while the United States Marine Corps might be under Alternative 2 (vide infra).

Alternative 1: Do anything you want to do, but demand equal outcomes is the philosophy of the social left and anyone who thinks cultural equivalency is a supportable position. The Liberal would argue that simply by being alive she has the right to the same standard of living as the person who just drove past her bus stop, the person who made more right decisions than wrong, who stayed in school, got pregnant only after she was in a stable marriage, took care of her husband, continued to accumulate apartment units for their old age, and raised their children to do likewise.
Regardless of all the dreadful decisions a Liberal may have made in her life, she demands that she has access to the same goods and services as anyone else. She would like you to pay for it, because, sadly, she doesn’t have the funds. The Liberal never quite gets around to what happens when she runs out of your money.

Alternative 2: Respect authority, cherish group identity and accept that outcomes will be unequal is associated with the social right and the USMC. The Conservative might take the position that a society’s culture establishes acceptable behavioral norms, that these norms are passed on to us by the previous generation and that these norms function as sort of a social lubricant, but there are variables in life and even if the guidelines are followed people will still wind up with unequal outcomes. There are, however, at least two types of unequal outcomes: the one that happened because you consistently made wrong choices (dropping out of high school; drugs; unwed pregnancy), and the one that just happened (think spinal bifida, etc). If you believe the main stream media, the Conservative lumps those two causes together and never considers that what happens to some people might not be an individual problem. It might be a social problem. But we all know there are some things that are just too big for a family to self-insure and we’d hope that decent treatment of those who through no fault of their own (that’s an important proviso) are unable to compete should be a societal obligation.

Alternative 3: Do anything you want to do, but accept that outcomes will be unequal is pretty much the Libertarian motif. Although polls have shown that few adults will admit to being Libertarians when sober, the you made your bed, you sleep in it philosophy has a lot to recommend it. First, people are not required to monitor the behavior of other adults, and that saves much time. Second, it lets people elevate themselves, as long as they are competent in their current corporate position, to the next level up. They can rise to the level at which they stop being promotable because they have become inadequate in their current position. This would explain a lot of things.
The difficulty with the Libertarian philosophy is that a very minor individual act can have significant complications when everyone else is doing it. Take smog, for example. That blue 1966 Bug trying to burp its way onto the freeway in front of you is just belching clouds of black smoke. If that were the only car doing so, the environment could certainly handle it. But multiply that by the (formerly) millions of pre-smog checked cars in the L.A. basin and you could have a pretty convincing reason to support many of the clean air regulations. No reasonable person could support all the regulations, of course, because they just go on and on and on.  I understand there are now limits on BBQ starting fluid. The problem with government is that it just doesn’t know when to stop.

Alternative 4: Respect authority, cherish group identity, but demand equal outcomes is the cry of the totalitarian state. We’re not going to spend much time here other than to note what Orwell observed:  We are all equal, but some are more equal than others.
Ok, let’s go back to our Elder who is contemplating charitable gifts. He’s just read what you’ve read, and he’s starting to think that if he’s going to give money he should be careful to support charities that further the causes the Elder believes in. But you’ve got to be cautious where your money goes because the great difficulty is that the four social philosophies in our graph are antithetical. They just can’t get along.
If you demand equal outcomes then you’re opposed to people who accept unequal outcomes. To put it another way, if you’re a secular free spirit, you want to bring down the main sources of group identity and respect for authority:  family and religion. And vice versa. So if our Elder wishes to leave a legacy that is likely to further the principles he lived by during most of his adult life, it’s important to consider the philosophical foundation of the organization(s) he or she wishes to support. This applies whichever side of the social fence you’re on. The only way I can think to do that is to determine (a) how much of their donations are used for overhead and (b) if you support where the rest of their charitable income goes. To do otherwise would be to diminish the principles by which our Elder earned the wealth he is now passing on. As one of your possible sources, and you should have several, you might refer to

Klarise Yahya is a Commercial Mortgage Broker. If you are thinking of refinancing or purchasing five units or more, Klarise Yahya can probably help. Find out how much you can borrow. For a complimentary mortgage analysis, please call her at  (818) 414-7830 or email [email protected].

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