Mortgage Refinancing Shysters I

Yaacov Apelbaum-The Shysters

It may be true that David Hannum was the first to observe that “There’s a sucker born every minute” (ironically, he himself turned out to be a colossal sucker), but it took the marketing genius of P.T. Barnum, the man behind such novelties as the bearded lady to turn gullibility into fortune. The world has changed significantly since the days of Barnum’s traveling freak shows where access to a new audience required lengthy cross country trips. Today, the Internet provides a virtual big top circus ripe with new ways to reel in and deceive, complete with unlimited seating for millions of new victims.

Eberhart and Kennedy in their excellent treatise “Swarm Intelligence” suggest that deception is quite common in social populations and they point out that all of us regularly practice it to one degree or another.  In support of their argument, they discuss the well documented El Farol algorithm frequently used by individuals to effectively compete in social communities in order to gain material or social advantage.

I recently I had occasion to consider this maxim and even try it on for size.  A practical and logical individual, I am by no means naive, so I was surprised—even blindsighted!—to discover that a certain financial advisor that I know personally is in fact a grade A shyster.  This got me to thinking about the varying shades of dishonesty and gullibility and the gray area that exists between telling “the truth and nothing but the truth” and outright lying especially as it pertains to financial solicitations.

You may have noticed that over the last year as the economy has spiraled out of control, the number of mail offers for mortgage refinancing has increased significantly.  The banks—which in the past were the traditional providers of such services—are still hemorrhaging profusely from the blunt trauma inflicted on them by the collapse of subprime mortgages. (I certainly don’t get any more solicitations for HELOC.) In what is further proof of the principal of horror vacui, it seems that the legitimate banking mortgage industry has now given way to a new breed of entrepreneurial ventures.  These con-corporations have smelled the blood in the water and are aggressively following Mr. Bigweld’s motto: “See a need, fill a need”.

Yaacov Apelbaum-ICG Envelope

Realizing that many of these solicitations were probably rip-offs, I decided to test the waters to see if I could find out who was behind one of them. As it happens, I didn’t have to wait long before receiving another mortgage refinancing solicitation letter. This one was from the Intercontinental Capital Group (ICG) and instead of sending it directly to my circular bin, I opened and read.

On the surface, the language and content of the letters was drastically different from the one I’m accustomed to receiving from my bank.  Whereas previous solicitations were factual and down to business, these were laced with crafty and deceptive language.

Yaacov Apelbaum-Intercontinental Capital Group Letter 1
Intercontinental Capital Group Solicitation Letter 1

Yaacov Apelbaum-Intercontinental Capital Group Letter 2  
Intercontinental Capital Group Solicitation Letter 2

After examining the details I found the following noteworthy features:

  • Disingenuous Claims of Previous Communication—In order to lower suspicions and fake familiarity, the letter claims to be a follow up on an already established relationship and ongoing communication.
  • Design to Deceive—The letter contains what on the surface appears to be a legitimate application number, a “second notice” tag, a recognizable equal housing lender logo and acronyms of well known public and federal organizations.  In fact none of these details has any significance and are there simply to create the semblance of legitimacy.
  • Vague and Deliberately Confusing Language—The letter states that ICG is “unconditionally endorsed by the U.S Department of Housing and Urban Development”.  When I called the toll free number I heard: “Thank you for calling the FHA application processing center”. ICG is certainly not a Federal Housing Administration (FHA) application processing center as the FHA neither issues loans directly nor has an application processing center.
  • Skin Deep Corporate Internet Presence—On the surface the company web site appeared to be fully functional, but when I tried to use some of its key functionality (login, change password, etc.) I quickly discovered that none of it worked.

Being deceitful in marketing is not news (see Mortgage Refinancing Shysters II for more details), so I take it for granted that any marketing campaign will always be laced with a certain amount of dishonesty, Seth Godin event thinks that All Marketers are Lairs. But “ICG” takes this to a whole new level.  This shadowy organization not only stretched their marketing collateral, they actually had some serious run-ins with several state banking regulatory agencies.

It appears that the vacuum created by the retreating lending banks is being filled in by old style confidence and run of the mill Internet scam companies. Be mindful of this and remember that “there’s no such thing as free lunch”.  If the mortgage refinancing offer you received looks too good to be true, it probably is.

Caveat Emptor.

© Copyright 2009 Yaacov Apelbaum All Rights Reserved.

Social Networks vs. the Enterprise

Yaacov Apelbaum-My Mama

Cicero decreed “fame is the thirst of youth”. Nowhere is this mantra more pronounced than in Hollywood’s superlebrity industry.  It may come as a surprise but this same thirst is also the main force behind social network’s rapid rise to stardom.

In a similar fashion to the celebrity business, many of the leading social platforms have developed a following totaling hundred of millions of users (more than all the traditional commercial on-line services combined!).  But contrary to the entertainment industry that only parades the rich and famous in static fashion, the social networks provide an effective array of tools to help users realize and enhance their on-line digital personas.  Some of the current sampling includes effective mechanisms for self promotion (such as LinkedIn and Facebook) and platforms that foster collaborative efforts on an unprecedented scale (such as Wikipedia).  To all but a few New-Luddites, these applications are ushering in the age of technological utopia.

But alas, every garden has its resident snake, and such is the grade A serpent found in Social Network’s Garden of Eden.  What many of us don’t realize is that the same characteristics that make the social networks so attractive are also their greatest limitations.  As the size and proliferation of these applications continue to increase, so will the pressures on traditional technology organizations to incorporate similar functionality into their line of business enterprise products. So where is the problem you say? Well, incorporating this technology into the old enterprise will most likely be done via acquisition of existing products (like the News Corp purchase of MySpace) which ultimately results in the conversion of free and cool applications to full fledged (and dull!) commercial advertising platforms.  Either way it will have certain predictable side effects on the user population not dissimilar to mixing alcohol with sleeping pills. Flanders and Swann have captured the essence of this conflict in their famous song “Have Some Madeira, M’Dear“:

She was young,

she was pure, she was new, she was nice,
She was fair, she was sweet seventeen.
He was old, he was vile and no stranger to vice,
He was base, he was bad, he was mean.
He had slyly inveigled her up to his flat,
To view his collection of stamps.
And he said as he hastened to put out the cat,
The wine, his cigar and the lamps,

Have some Madeira, M’Dear!”

If you are wondering what this witty Edwardian ditty has to do with the subject of social networks vs. the enterprise, wonder no more.

Over the last decade we have become accustomed to the sweet tasting fruits of strict SLAs, strong security and customer service.  Most users now instinctively expect a high degree of 24x7x365 enterprise software availability (which includes corporate email systems). Unfortunately, this is exactly what the social networks cannot deliver (recall Gmail outages). Very much like red carpet celebrities, they look great but when it comes to actual long term commitment and performance they’ll break your heart.

A quick glance at the most common error messages found on any social network (1-6 below) reveals that availability and up-time are their Achilles heel.  This in itself is a clear indication that these platforms are not enterprise ready. Their business models are based on casual and non-contractual usage and their applications should not be relied upon to provide any sort of SLA.  The error messages we get from our favorite social networks may be adorable, but the causes for these messages are hardly cute and cuddly.

Yaacov Apelbaum-Errors
Social Errors

Any enterprise architect worth his weight in salt would immediately identify such error messages as show stoppers for the enterprise product. Big commercial software—suffering from no shortage of good software architects—is fully aware of such system limitations.  The real paradox is that even though big soft and media companies would love to exploit the cool and trendy social networks (for commercial purposes of course), they can’t because for the last 20 years they have been preaching the message that any product that cannot be governed by a strict SLA has no place in an enterprise data center.

Such is the sting of irony.

© Copyright 2009 Yaacov Apelbaum All Rights Reserved.

Bells and Whistles

Bells and Whistles

Several weeks ago, my car’s dashboard informed me that I would need to “check the engine”. Naturally, I promptly brought the car to the dealership. After a quick examination (and $170 in troubleshooting fees), the dealer told me that there was nothing physically wrong with the car and that the message was due to a software bug that was easily fixable with a software patch that he would be happy to apply for as little as an additional $120.

Now, I don’t know much about the latest trends of engine design, but I am quite familiar with software bugs. Over the years I have produced several of them myself and like many other software engineers, I spend a certain amount of my waking and sleeping hours chasing them around. But contrary to my trusted dealer, I fix my bugs—to delight of my customers—at no extra charge.

Being the pedagogue that I am, I seized the opportunity to educate Randy, the senior service adviser (the title on his tag), and proceeded to deliver a short and upbeat oration on the subject of the software industry’s best practices regarding free bug fixes. My friend behind the counter seemed unimpressed and reminded me that his dealership is not in the business of selling software. He then inquired about my preferred form of payment for the pending repair.

On the way home I got to thinking about the cutthroat business model that the car industry is following. Clearly, it must be the competitive nature of the industry that forces them to squeeze profit at the margins to included even basic service like fixing their own bugs. I then dismissed any further thought on the subject. Then a few weeks ago, the news broke out that the car industry had officially joined the federal hand-out program. It was now standing on-line with a tin can in hand and singing in harmony “Brother, can your spare a dime?” with all the other financial industry hobos.

So I figured that there has to be something here that doesn’t meet the eye. Why has such a well lubricated and fabulously successful industry suddenly collapsed? Contrary to the financial sectors, their operational and risk models have not significantly changed for over 100 years. Cars today are designed and built faster than they were 40 years ago and they are cheaper to manufacture and sell.

After pondering this for a while, I realized that this failure has been long in the making and just like in many active Ponzi schemes, this one has been finally flushed out when consumer spending came to a screeching halt.

In the aftermath of World War II as manufacturing was going civilian again, the car industry more than any other sector embraced a strategy that focused entirely on building a product with the highest degree of of obsolescence (an average car would be recycled every n years) and greatest curb appeal. Traditional engineering principles like safety, longevity, efficiency and environmental friendliness were sacrificed. They were replaced with a lot of chrome, increased fender size, overpowered V8 engines and pink leather. This was the wisdom of the time; you can’t charge higher prices for less car.

In the 70’s, when the Japanese car manufacturers finally introduced a new concept of vehicles very different from the traditional tank, domestic car manufacturers after much soul searching, publicly embraced the banner of the new smaller more efficient car. In reality, however, they continued to practice the same philosophy as they do to this day. So in fact, not much has changed. Yes, the large fenders and chrome bumpers are gone, but in their place we have a whole new list of bells and whistles. Apparently, the car manufacturers have been taking lessons from the software industry and are now playing the feature functionality game.

Go to any domestic dealership and you are guaranteed to find the following list of “key” features:

  • Rain-sensing wipers
  • Heated/cooled seats and cup holders
  • V8 with extra torque
  • Extended Length
  • Remote starter

What is noticeably missing from the list is an engine and transmission that are guaranteed for 300K miles or the 80 mpg gas efficiency, both of which are easily achievable in this day and age.

Unfortunately for all of us, the car industry has spent the last 60 years mastering the fine art of consumer psychology and honing of their salesmanship skills with too little time spent on developing quality products.

Thank you very much, but I’ll have to decline! Contrary to what the focus groups are saying, I don’t need a Hummer. And no, throwing in a free electric cup warmer is not going to change my mind. I am, however, interested in a bug free safe electric car that can go 400 miles between charges if there are any takers.

© Copyright 2008 Yaacov Apelbaum All Rights Reserved.