Tuesday, August 14, 2007

Faith-based mortgage lender denied redemption

Sorry, but faith-based lending ranks right up there with faith-based civil engineering for the title of Most Unsustainable and Probably Dangerous Idea. Would you want to drive over a bridge built by engineers who trust that God will provide?

WSJ: Mortgage WoesTake Toll on Lender With Roots in Faith
While many mortgage brokers screamed through the real-estate boom with blaring television ads and exotic loan structures, HomeBanc Corp. positioned itself as the good guy.
Inside the company, executives opened companywide gatherings and internal meetings with Christian prayers. Every branch office kept a chaplain on call. The company's $365,000-a-year human-resources chief, Dwight "Ike" Reighard, was the founder of a mega-church in an Atlanta suburb. He says he encouraged employees to pray, put others first and become better workers -- and also performed weddings and funerals for employees. "People who never attended church would tell me, you're my pastor," Dr. Reighard said in an interview on Saturday.
But over the past few weeks, as investors fled securities tied to mortgages, HomeBanc's sources of loan funds dried up. Unable to continue originating loans, the company staggered under the burden of its expensive sales infrastructure.
On Thursday, HomeBanc filed for bankruptcy-court protection. It fired most of its 1,100 employees on Friday and is shuttering its 22 branches and 139 kiosks in real-estate and builders' offices, exiting the mortgage-loan origination business and processing no new loans, including ones in its pipeline.
Countrywide Financial Corp., of Calabasas, Calif. -- struggling with troubles of its own -- said it was buying at least five HomeBanc branches.

Ah, faith. An amazing number of financial scams, from MLM's to Ponzi schemes (HYIP's, anybody?) proliferate through church groups like pinkeye at a daycare.

I'm not saying everyone who goes to church needs Richard Dawkins and electroshock therapy, but the gullibility quotient certainly acts like a magnet for people who need a steady supply of suckers.

I've got to give props to the former CEO though for dressing up brazen moxie as turning the other cheek:

Mr. Flood, the former CEO whose January severance package was $5 million, plans to start another faith-based mortgage company. He says HomeBanc employees and customers will take what they learned and plant the seeds wherever they land. "When Jesus got on the cross, people at the time thought that he failed because he died and the ministry ended," he said. "But people around him have cascaded it into the greatest movement in history. The company being a financial failure doesn't mean that the work has ended."

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Anonymous said...

Somehow, I don't think anyone took a look at Jesus hanging off the cross and said "He's dead!" only to see His eyes pop open and hear Him say "Dead serious about helping you buy a house!"

- Sean

Flatland Pastor said...


There isn't going to be enough room (or sustainable interest I suspect) for me to comment fully on this story, but having said that I'll invest my two drachmas' worth.

Firstly - money, investment and Christianity are not as mutually exclusive as one might expect. Christ talked about money more than he did the Kingdom of Heaven during his earthly ministry. Much of the wisdom literature in the Old Testament (Proverbs, Job, Ecclesiastes, et.al.) deals with the reality of wealth and the wise use of one's assets. Although HomeBanc's leadership may have failed, there are other faith-based financial lending and investing institutions that have long and successful track records and that have taken precautions against being damaged by market fluctuations. Check out CEIF as an example. Still, investing is always a risk - as living is, even more so if one tries to be a follower of The Way - and bad stuff happens to good people.

While you are correct Lee, in your observance that church congregations seem to often fall victim to hucksters who have a convincing line of patter designed to take advantage of the Christian worldview, I would submit that they are no more susceptible to scams and bad investments than seniors, divorced women, single men in their 30's or mid-life crisis inured WASPs. Still it does happen - my favourite recent example being John Phillips III's book "God Wants You To Roll", of which I have an autographed copy - it is for me a cautionary tale of deeply significant relevance.

Perhaps we Christians make ourselves easy targets because secular expectations of us as a group are often far, far beyond what is expected of others. To be fair, generations of Christian leaders who have spouted the opinion that "Christians" live a superior lifestyle compared to others has done little to curry sympathy from the media and secular society - especially when some of our brothers and sisters demonstrate that our feet can be made of the same clay as anyones else's.

My reading of the article about HomeBanc does not suggest to me that they fell afoul of any particularly bad business practices, except the same general lack of investment prudence that other American lenders (some with much, much larger portfolios) have demonstrated and now find themselves paying the price for.

While self-proclaimed Christians are no more immune to hubris and self denial than any other person, I find it a bit harsh to relegate Mr. Flood's comments to the category of "brazen moxie". It seems to me there isn't enough information or evidence in the article you cite to draw that conclusion. Still, it is your opinion, and I will respect it even while I debate it.

As a developing disciple of Jesus Christ I make no claims that I have all of the answers - only that I am learning to ask better questions. Money is a reality in my life, just as it is for everyone. I must make decisions about what to do with what God blesses me with. God's word teaches discretion, generosity, prudence and wisdom in the area of money. But, it teaches one lesson more than any other - that is "perspective". Money is important, but it is not everything - and it is a poor substitute for love, relationships, trust and family - and it is a cruel and harsh master if you succumb to it.

I am trying to learn what it means to live my life in the light of that truth.

(one possible meaning of this word is "prosperity"}

Lee_D said...

FP, I knew that this would bring you out of your semi-retirement.

You're absolutely correct that Christians as-a-whole are probably no more easily duped than the population at large.

What I take umbrage is vice dressed up as virture, which is why I gave vent to my observations about financial schemes taking advantage of the trusting nature of people who blitely believe that because someone is part of the same church group, they are less likely to be a bad person.

My feelings of outrage at hypocrisy are surprising, considering my own personal lack of attachment to religion, go figure.

My real bile rose to the fore not so much at Mr. Flood recieving a $5 million payday while his underlings got $20 gift cards, but at the way that he compares the misfortune of his MONEY LENDING business to the trials of Christ. If that isn't raging irony, I don't know what is.

Flatland Pastor said...


You are spot on the money (humor intended) in reacting to Mr. Flood's unfortunate analogies. By the way, no one needs a "religion" to be emotionally affected by the truth - which was what affected you.

I hope I've made it clear that I'm not into "religion" either. Blind obedience to others based upon their ability to manipulate catchphrases is a path to destruction not only for the individual but for society as a whole.

My hope in my previous posting was to caution the discussion to not fall into using stereotypes to explain what happened to HomeBanc.

The chief executives screwed up - plain and simple - but other financial institutions that try to apply Christian principles in their business models - some of which were mentioned in the article you cited - have shown that prudent money management and Christian faith are not necessarily mutually exclusive pursuits.

By the way, my bile did rise over Mr. Flood's "golden parachute". As a Christian I believe in sharing in the suffering of my tribe - not insulating myself from them. That is what the incarnation really is all about.

Keep blogging my friend.