You would not know it by the snap in his step, but former Navy pilot Tony Cato is a warrior on the front lines of America's mortgage meltdown. Cato, who is now a mortgage broker, has hit the streets to survey the damage and shore up the troops.
First stop: a meeting in downtown Washington with assorted real estate pros, including agents, a lawyer and a condo developer. Cato's message is blunt. "The party is over," he told them.
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That is, the party of easy money, no down payments, teaser interest rates and home values that soared like helium balloons.
"I think last year was a party," Cato continued. "Everybody came to the party … We were able basically to give out money through people not proving their income -- 100 percent on $650,000 loans, $700,000 loans."
The agents, of course, are seeking assurances that their home buyers can still get mortgage money.
"Now, what can we do if the rates are going up 6, 8 percent?" asked James Williams, a real estate agent at Cato's meeting. "What are the things that we can do as real estate agents to help lessen the burden?"
The answer is a cold splash of the new housing reality: Traditional lending standards are in, exotic mortgages are out.
No Reason to Say 'No'
"We are going to get back to the basics on conforming," said Cato. "So when I am saying let's get back to basics, if a person doesn't have any assets, if a person doesn't make the income, what are we doing putting him into those mortgages anyway?"
It's a good question, and one put to Cato himself as he hustled between appointments. After all, brokers like him made a lot of money hawking those mortgages when the real estate party was rocking.
"I could find a product for you some way, somehow, and if I couldn't do it as a primary lender, I could go to a broker who could do a subprime loan or an alt-a loan where we don't need documentation. There was just no reason to say 'no' because we had a product for you."
And why say "no" when the risk was passed right up the food chain, from brokers that sold the loans to banks that wrote the mortgages, to the Wall Street dealmakers who packaged them into securities that were snapped up by investors around the world.
For a period, it seemed that anybody with a pulse could get a mortgage.
"I think that is what the common theme was," said Cato. "There was a mortgage for everybody. We could give loans to people with credit scores down to 500… That is pretty bad. That means you've got some serious things wrong."
Risky Market, Riskier Deals
But now that so many of the riskiest loans, primarily in the subprime market are going bad, that chain is unraveling. So mortgage money is harder to get for those without good credit and cash in the bank.
In such a nerve-wracking market, brokers like Cato are scrambling to keep their current deals alive.
Over lunch with another real estate agent, he took a call from an unhappy customer whose pending deal for a $650,000 mortgage was suddenly going to cost more. A lot more.
By mid-afternoon, it's back on the road. This time, to the Maryland suburbs outside Washington and another meeting with anxious real estate executives.
But no sooner were the handshakes out of the way than one veteran real estate man laid out a scary scenario of rising foreclosures and falling prices in his county.
"Seven out of 10 sellers that I am talking to now either cannot make their payment or they don't have enough equity to sell their home," Tyrone Armstrong, a veteran realator. "We are looking at a lot of folks now who are going to be looking at foreclosure."
Ever the optimist, always the salesman, Cato still finds a silver lining.
"The numbers are overwhelming of the Americans who pay for their homes. We've got less than 1.5 percent of the folks who don't pay on time -- we are going to go into foreclosure on those -- most Americans will not go into foreclosure," he said.
Taking 'Our Share of the Blame'
But as Cato made his rounds, he ran into yet another casualty of the mortgage market. This time, it was a condo development where the first phase sold out. But now the developer is stuck with nearly 30 empty units because his customers are having trouble getting mortgages.
"The prime lending market has pretty much fallen out, and it has hurt us tremendously when it comes to being able to qualify buyers," said Vernon Allamby, a developer at DCRenvoations. "It means I have to become very creative or very scared."
Being creative means he is offering the option of "rent to buy," so those without the necessary cash or credit rating can move in.
After a long day assessing such a scary market, the question of blame came up.
"I think we can all take our share of the blame," admitted Cato. "As a home buyer or consumer, maybe I wanted that big house with all the bells and whistles -- wood floors, granite countertops … give me any mortgage that works … The party's over. Mother market is here with her strap, and it's not going to be pretty."
So the market may not be pretty, but neither is it dead. And that's what keeps this former Navy pilot moving ahead. Somewhere, somehow, someone's going to need a mortgage. And Tony Cato wants that call.