Both Sides of the Fence

A Tosa resident since 1991, Christine walks the dog, cooks but avoids housework, writes and reads, and enjoys the company of friends and strangers. Her job takes her around the state, learning about people's health. A Quaker (no, they don't wear blue hats or sell oatmeal or motor oil), she has been known to stand on both sides of the political and philosophic fence at the same time, which is very uncomfortable when you think about it. She writes about pretty much whatever stops in to visit her busy mind at the moment. One reader described her as "incredibly opinionated but not judgmental." That sounds like a good thing to strive for!

Greed'll get you: racketeering in Wauwatosa

CSMC, Economy, Wauwatosa

Last March I wrote a very chirpy little bit about Central States Mortgage Company (CSMC) and their then-CEO Richard Jungen. CSMC, the largest mortgage company in Milwaukee, is headquartered in the Fairview Building on North Avenue. The real estate market was starting to wobble, and I wanted to know how this prominent local business--my mortgage originator--was doing.

So I interviewed Jungen, who said all was well: "In business there's a saying: if you can't win by being good, be lucky. I guess I've been lucky. We've been blessed with great partners in the credit unions and with working in the Midwest where housing prices never went crazy."

Jungen's luck just ran out. Apparently his goodness ran out first. Central States Mortgage Company is suing its founder and former head, along with others, with "conspiracy to defraud the company of at least $15 million." The defendents are accused of hiding their involvement in a different company they created, Interim; making shaky mortgage loans through that company; and shfiting those distressed loans to CSMC to take the loss.

Less than a year ago, Jungen told me that CSMC was doing well because they worked with credit unions, and the credit unions did a lot of consumer education and prequalifying. Most of the people they made loans to were taking out loans they could afford, he suggested.

I asked "So you don't make those high risk loans?" His reply was a little guarded, and  he mentioned that he and some of his partners were branching out into "other related businesses." I didn't make much of it at the time, but it came back to me when the Pedro Medellin story broke.

You may remember that Medellin, a Waukesha man with learning disabilities, claimed that Central States and two ex-cons duped him into taking out a mortgage. Seeing Medellin on TV, it seemed pretty believable that he couldn't read the contract. That case is still pending. But when I heard of CSMC's involvement, it didn't jibe with the philosophy Jungen presented to me last spring. Then, I summed it up:

"Educated consumers. Lasting relationships with customers and business partners. Straight-forward business practices. What a concept! "

What a concept, indeed. Does anyone have it anymore? And what drives smart, successful, prosperous people who've put down deep roots in a community, helped build it, to take risks that could destroy not only themselves but the business they created? I don't get it. Most of us ordinary people don't. Maybe you can explain.

I need to be clear. I've done no new research for this blog entry. My account of the story is taken directly from the Milwaukee Journal Sentinel article today and my own notes from last spring. The courts haven't begun to weigh on guilt and innocence in this matter.

Still, Jungen is (or has been) a board member for the Wauwatosa Economic Development Corporation, Educational Foundation of Wauwatosa, Wisconsin Mortgage Bankers Association, Better Business Bureau of Wisconsin, and more. So it matters very much what he and other business and community leaders believe and do.

But they don't seem to get it yet.

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