When you read a book about mortgage compliance (we know your shelves are stocked), you might not expect it to be prompted by a family tragedy. Or to include references to Plato, Albert Einstein and Homer Simpson.
Then again, not every book is written by Mike Eising, a mortgage industry veteran since 1989 who regularly shares his industry observations on LinkedIn with cutting wit. His new book, “Rethink Everything You ‘Know’ About Mortgage Risk and Compliance,” is now available.
While the book is full of practical advice and direction to be ingested by those familiar with the small print of mortgage guidelines, it also serves as a form of catharsis for Eising after the death of his son Zach following injuries caused by a distracted driver.
Eising doesn’t shy away from the topic — either in the book, or in discussing it. Instead, from the start, he uses the experience as an illustration of how allowing risk to accumulate can have tremendous impacts.
“We all know better, right? As soon as you get behind the wheel, you know you’re not supposed to be on your cell phone. We all know you’re not supposed to be playing with the radio. You’re not supposed to be distracted,” Eising emphasizes in a phone call with Scotsman Guide.
The driver of the vehicle that had hit his son’s vehicle was a military reservist, a military police officer and a volunteer firefighter.
“Of all the people who should know better, the person that you would trust to run into a [dangerous] situation is the person who did it,” Eising says. “What I really wanted to talk about in the book is, it isn’t just enough to know better. You have to do better.”
Eising applied that sentiment to the mortgage industry.
“It’s not the person who wakes up in the morning and chooses, ‘Hey, I’m going to commit mortgage fraud today.’ That’s not how risk enters our system,” he explains. “Risk enters our system by a mindset of this won’t matter. This little thing here won’t matter. It enters from just waving something through once and hoping it doesn’t catch you. And then pretty soon, you do it a couple times, you do it a few times.”
Eising observes those are choices that don’t live in isolation. They stack.
“Pretty soon you’re standing in front of a decision or a series of decisions that you didn’t recognize making,” he says, “and where it becomes dangerous is your exceptions become the rule.”
The book’s foreward was penned by Brian Vieaux, president of MISMO, a nonprofit subsidiary of the Mortgage Bankers Association that develops standards for exchanging information and conducting business in the mortgage finance industry. Vieaux, who has also authored a book in the “Rethink Everything” series, tells Scotsman Guide that he is a big fan of Eising’s writing.
“He has a rare ability to take complex, often heavy topics like risk and compliance and make them not only understandable but genuinely engaging,” Vieaux observes. “That’s not easy to do, and Mike does it exceptionally well.”
Adds Vieaux: “This isn’t just a book for compliance and risk professionals. It’s for anyone in the mortgage industry who serves consumers. Loan originators, in particular, will find insights in these pages that will elevate how they advise and educate their borrowers. Knowledge is power, and Mike delivers a tremendous amount of both in this book.”
That knowledge was drawn from many presentations Eising has given over the years, almost always emphasizing the point of avoiding risk.
As Eising puts it: “As compliance people, what do we really see? It isn’t about rules so much. We can write policies, we can write procedures, we can put all the controls into our loan operating systems. But what it all boils down to is, did somebody find a way around it? Is somebody asking for an exception? And how do you manage the gray areas?”
Sometimes there are reasons to look for a way around rules, Eising concedes, “because loans are messy. And I spend my days managing the gray area. If it was black and white, you don’t need me.”
Eising points out this challenge in the book by referencing the “Ring of Gyges” from Plato’s “Republic,” which concludes that most people only act ethically when accountability exists.
“Remove oversight, and their character gets tested fast,” Eising writes in the book. “That is not ancient philosophy. That is modern risk management.”
Another chapter, titled “I Solved 99 Problems But You’re Looking at the One,” starts with the story of when Einstein entered a classroom and wrote a simple pattern on a chalkboard with every line correct, until he made one mistake, which led to the class reacting. Einstein then observed that nobody had acknowledged what had been done correctly, or the consistency. All of the attention was focused on the one wrong answer.
Eising equates the Einstein anecdote to reputational risk, and how regulators will look past the 99 loans that were done without issue and focus on the exception.
Talking about one of the things he hopes people will take away from the book, Eising paused and became reflective again, remembering his son.
“Did I tell you the story of the cover? It looks like a Homer Simpson donut. And you’re probably wondering, why in the world does it look like that for a compliance book?’” Eising chuckles. He then explains that his son had been a video game tester, and his online persona was an amusing spin on the “Simpsons” character. As tributes, his son’s friends got tattoos with variations of Homer and his beloved donuts.
“This was my homage to Zach,” Eising says. “I wrote it more of a catharsis for me. It got to a point of, maybe I should go ahead and make this into a book.”
Eising talked publicly about his loss for the first time during a recent presentation to about 30 compliance and risk professionals near Chicago. The presenter before him discussed the standing of the Consumer Financial Protection Bureau (CFPB). She did a fantastic job, Eising recalls, stating it was important information.
“I went up and said, you know, I can get up here and talk about rules and regulations. But what I really want to talk about is that mortgage doesn’t lack rules or procedures. It lacks judgment,” he says. “Do I want to relive that day every day? No. But I think there’s more value in that than talking about CFPB reform.”
