Yolanda is a signature on a contract my brokerage drew up at 4801 Sheriff Road, in Prince George’s County, Maryland. She is 34. She has 2 kids and a cousin with a truck and a credit score of 619 and a down payment of $8,312 she saved in 3 years of $240 monthly deposits at the credit union down Eastern Avenue, and I closed her $237,500 mortgage on the seventeenth of May because I am the broker the bank calls when its community-benefit pledge needs a body to put into a loan. The bond in your pension fund owns 0.4% of Yolanda’s mortgage at 82 cents on the dollar. The Lord giveth the rate; the Lord taketh the door. I keep the spread.
You read Howard Husock in the National Review this week, telling you that Secretary Scott Turner is right to investigate Wells Fargo for racial bias in mortgage lending, because the bank’s $60 billion pledge to commit toward 250,000 mortgages by 2027 has likely relaxed credit standards and left Black borrowers worse off when the loans fail. He is right about the foreclosure. He is wrong about who keeps the door.
Open the file. The bank required a credit score of 620. She had 619. The broker — me — moved her from the declined stack to the approved stack with a one-page letter that counted an unreported $187 monthly child-support receipt as a compensating factor. The underwriter accepted the letter because the bank had signed a community-benefit agreement with the National Community Reinvestment Coalition that pledged it would lend in her ZIP, and the underwriter had been graded on volume not loss. I was paid 1.5% at close. That is $3,562.50. The $187 is hers. The compensating factor is mine.
The first missed payment came on the fourteenth of August. The bank required a $35 fee to apply for a modification. The $35 was the cab fare to the modification office she did not take. I did not tell her the fee was waivable. The waiver is on page 4 of the handbook my shop keeps on the second shelf. The handbook is mine. The silence is mine. The fourth missed payment came on the fourteenth of November. The foreclosure was filed on the eighth of December. The door at 4801 is mine at 9 a.m. on the morning of the eighth.
| Metric | Q4 2026 |
|---|---|
| Originations | 247 |
| Avg. loan | $237,500 |
| Broker fee @ 1.5% | $3,562.50 |
| Silent $35 fees × 247 | $8,645 |
| Projected defaults (12.5%) | 31 of 247 |
| Auction recovery (avg.) | $189,000 |
The $35 would have bought the modification. The $35 is what it costs, on average, to ride to the office that might save a loan. The 247 loans that will default this quarter out of my shop will each pay me a $35 fee they did not know was waivable. The 31 that will be foreclosed will each lose me the $189,000 the auction pays the bond. The 1.5% is already mine. The $35 is already mine. The door is the ledger.
Here is where the underwriting taught at my school meets a housing stock you haven’t inspected yet.
Marshawn is a 31-year-old tenant-buyer on a manufactured home I own the note on outside Hope, Arkansas, in a gravelled park off Highway 67 where the lots are 22 feet wide and the wind comes straight down the row. She makes $14.80 an hour at a plastics plant on the east side of town. She signed a note for $42,000. The appraisal says $42,000. A buyer without me would pay $19,000. The $23,000 between those two numbers is mine. Her door is warped. The lock doesn’t catch. She has stacked a milk crate against the jamb. The trailer you would not let your sister live in is hers. The 9.4% she is paying me is the yield in a fund in a 401(k) you haven’t read the prospectus of. The 9.4% does not ask for a door. The Lord sees the 9.4% and the door, and the 9.4% is what the Lord keeps.
The home has a soft floor. The soft floor costs $6,400 to replace. She cannot afford the $6,400, which is why the floor remains soft, and which is also why, when she falls through it in October, the soft floor will not be replaced by my insurance. The insurance is a form. So is the appraisal. I am the form. The floor remains soft.
A pre-purchase inspection costs $385. I don’t require it. I’ve never required it. The lender I package the note to doesn’t require it either, because the loan is on the lot, not the home, and the lot doesn’t need an inspection. The home needs an inspection. None of that is on the appraisal. The appraisal is the form.
In Phenix City, Alabama, there is a 27-year-old single mother named Chantay who works the breakfast shift at the Waffle House on the bypass. She signed a note in January for a 1996 single-wide I bought for $7,400 and sold to her for $39,200. The 1996 is hers. The 9.4% is mine. The water heater died in May.
Let me put the water heater where you can see it. A new water heater, installed, costs $1,180. I haven’t retained service contractors since 2021. I’ve retained a “vendor list” — a Google Doc written by an intern in the summer of 2021 who is no longer with us. I haven’t updated the Google Doc. Chantay tried the Google Doc. Three of the four links are dead. The fourth is a plumber in Opelika who said he’d do it for $1,600 installed. Chantay doesn’t have $1,600. Chantay has been filling the bathtub from the kitchen sink for 11 weeks. The bath is hers. The $1,180 I saved by not retaining a service contractor is mine.
I teach the seminar the bankers who buy my paper sat in, off I-30 in Texarkana, twice a year, for 2 days, at $4,200 a banker. I’ve taught it 27 times. I grade the final. A man who can’t write a 9.4% on a 42-month box on the right side of a one-page worksheet doesn’t pass. A man who can pass writes a check. A man who writes a check gets a C — that is, he is competent. A man who is competent gets a B if he can structure the next loan before the first one defaults. The B men are on the community-benefit panel at NCRC’s annual in March, by which I mean the panel that writes the new pledges. I’m proud of the B men. The Wells Fargo officer who flew in from San Francisco to draft the $60 billion pledge was in the class of 2019. He is a finer instrument than I am. He moves the bar faster than I move the bar. I haven’t read the comment letters on the Texarkana lot. The class of 2019 wrote the pledge. The class of 2019 also graded the test. I’m an emeritus member of the faculty. The faculty is the curriculum. My textbook — Calibrated Deprivation: A Manager’s Guide to Employee Motivation — is on the shelf in the training office of every bank with a community-benefit agreement on its books. The underwriter who accepted Yolanda’s $187 letter was one of my graduates. He is sitting in your bank. He is pricing your mortgage on a different ZIP with the same pen.
The milk crate Marshawn bought at Family Dollar in May cost $4.95. It is the only capital improvement she has made on a $42,000 home in 7 months. It is the only thing in this column that isn’t on my ledger. The door is hers. The lock is mine, and the lock is broken, and the broken lock is also mine.
Isaiah saw this 2,700 years ago:
“Woe to those who join house to house, who add field to field, till there be no place, that they may be placed alone in the midst of the earth.” — Isaiah 5:8
The new vocabulary is “community-benefit agreement.” The old vocabulary is “field to field.” The arithmetic is the arithmetic. I did not invent it. I kept the same schedule.
The auction on Yolanda’s house is the nineteenth of January. The house will go for $189,000. The bond in your fund will mark to 79 cents on the dollar. The 0.4% will print a loss. The 1.5% is already mine. The $35 is already mine. Yolanda’s kids will wake on the nineteenth in your sister’s guest room, three doors down. The door at 4801 will have a new lock. I have not asked what happens to Yolanda after the door. I am told there is a used-car lot two blocks down Eastern Avenue that finances at 29%. I expect the owner is one of mine.
The next 247 files are in the drawer. The next note is being signed in Phenix City as I write this. Hope. Texarkana. Shreveport.
Marshawn is at the plant. The door is hers.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.