It’s Magic!

I love magic shows. Not only did I actually know the legendary Harry Blackstone, he even used me on stage for a trick once. I have seen David Copperfield’s show and on a trip to Las Vegas a few years ago I was able to see Siegfried and Roy. Absolutely enchanting!

I have spent some time trying to figure out why magic has such allure to me, and obviously to others as well. One sage once said it best. He said that for magic to work, the magician must cause you to “suspend your sense of disbelief.” I think that phrase is wonderful.

We all know that a magician really did not make the elephant or train disappear. Nor was there a rabbit in the hat. The card you selected from the deck really was not in your pocket all the time. What makes it fun is that we are willing to enter into an implied contract with the magician that if he is clever enough with his trick, we will marvel in it and believe his illusion. If you just want to be rational about the whole process, it’s no fun anymore.

Let’s talk about facts and belief in getting a mortgage. In my view, you should not believe anything you hear or read from my industry that is not backed up by facts. This is especially true of rate information. Sadly, I find people willing to believe statements that, to me, sound preposterous. Here are a few examples of some statements and what I think are appropriate responses.

"Your loan is approved."         "May I see a copy of the lender’s approval letter?"

"I can get you x% rate."          "May I see a copy of the rate sheet that shows that rate?"

"Your loan is locked in."          "May I see a copy of the lock confirmation?"

The answers were that people did not get those written proofs of someone’s statements, and, of course, three weeks later when the loan was ready to close, they found out the truth, which was that they were being lied to all along. Those lies would have been exposed if they were able to get proof earlier in the process. Of course, the liar knows that too, which is why he will never send out proof that demonstrates he is a liar.

It makes me wonder why they were so gullible in the first place, especially when one considers the poor reputation the mortgage industry has for truth-telling. All I have been able to come up with is that people engage in wishful thinking. They want so badly for their transaction to work, that they are willing to suspend their sense of disbelief.

Also no one wants to admit that they have been taken advantage of by a slick-talking loan officer. They really want to believe they are getting a 5% loan when everyone else is paying 6%. Maybe they attribute their apparent success to their cleverness. Whatever the psychological genesis, the gap between a borrower’s expectation and reality is often pretty wide. Of course, the wider the gap, the more it costs the borrower.

There is a time for magic, and it is when you are at a magic show. When you are getting a mortgage, it is time for you to get the engineering side of your brain in high gear. No one gets hurt in a magic show, but when people suspend their sense of disbelief when getting a mortgage, it won’t just be a rabbit that pops out of the hat; it’ll be your wallet. When you get the wallet back, there won’t be as much money left in it. That hurts!

Be careful out there.