If we could change ourselves, the tendencies in the world would also change. As a man changes his own nature, so does the attitude of the world change towards him. … We need not wait to see what others do. -Ghandi

Good Advice

This is an excerpt from Paul Graham’s Rarely-Asked Questions page:

How can I avoid turning into a pointy-haired boss?

The pointy-haired boss is a manager who doesn’t program. So the surest way to avoid becoming him is to stay a programmer. What tempts programmers to become managers are companies with old-fashioned corporate structure, where the only way to advance in salary and prestige is to go into management. So if you want to avoid becoming a PHB, avoid such companies, and work for (or start) startups.

I never had to manage anyone in our startup, even though I was the president. The other hackers were my peers, and would have given me the raspberry if I’d tried to “manage” them. We operated by consensus. And the rest of the company reported to our experienced COO, who was also more of a peer.

Why be a manager when you could be a founder or early employee at a startup?

Good point!

About.me

About.me is a neat little site I stumbled across that allows you to create a custom splash/profile page. The site is in private beta at the moment but allows you to reserve a url.

Sites like these are great for personal branding, especially if you’re able to use your own registered domains to host/point to them. I’ve been looking for something like this for awhile and have come across a couple of similar services such as flavors.me and card.ly but about.me seems to be the best of the three.

I like the simplicity of these sites. Just add a photo, write a short bio, provide an email address and configure your social networks if you choose and you’re done.

Strategic Foreclosures

Recently a story was aired on the news about the housing market in Patterson, CA and the dramatic decrease in median home values due to a high rate of strategic foreclosures. Also known as buy and bail, strategic foreclosures is the act of borrowers who have negative home equity in their homes – typically in the hundreds of thousands – qualifying for a loan on a second home, purchasing the second home and then defaulting on the first home mortgage.

Given the current housing market borrowers are able to purchase an equally sized home, sometimes larger and often within close vicinity of their current location for hundreds of thousand dollars less than what they paid for their current home. At a high level this makes financial sense. Why pay more for a home which you can buy down the street for half the price?

The downside to this process is that the people who “buy and bail” face seven years of bad credit with the inability to purchase a home for five years. However, in many cases borrowers face foreclosure on their first home anyway so they have little to lose. What I don’t understand is how people who face foreclosure on their first home qualify for a mortgage on a second home.

Apparently the process is perfectly legal although there are some ethical issues behind it. Some say it is fraud to buy and bail. However, I think home owners who face foreclosure have a different opinion. Many have begged and pleaded with lenders for loan modifications to avoid foreclosure with no results. Basically they are met with the response that unless you are in a “hardship” situation there is nothing they can do to assist you. What’s the definition of a “hardship” situation? Basically it means you have missed payments on your existing loan.

How are borrowers supposed to interpret this response? It seems clear to most borrowers in this situation that lenders are implying missing payments to receive help. Nobody wants bad credit and most borrowers have made legitimate efforts to work with lenders to work out an agreement which allows them to keep their home and repay their mortgage obligations with no avail. Lenders are simply not willing to help unless they are seeing a loss through missed payments.

In general, I think lenders are gambling that most borrowers who contact them about loan modifications are not willing to voluntarily take the plunge into foreclosure. However, the increased activity of buy and bail is evidence that borrowers are less concerned about their credit rating and more concerned about crawling out from underneath a mound of negative equity and high mortgage payments.

As a result, lenders are taking note and responding with stricter lending guidelines which require borrowers to show sufficient income to make payments on both properties without considering any rental income from the first property in the approval process.

So, what’s your opinion? Is buy and bail fraud or is it just the public response to a housing market that banks and lenders created in the first place?