Here is a nice story about how sometimes what we do not know we have stored in our attic might just someday save our hind ends! (hint to wife..take note there is a reason for me to save the things I have stocked away-besides just avoiding trips to the store late at night to finish a school project!).
I hope in this economy this works out for this family. Notice they have not actually auctioned off the comic but I am assuming they stopped packing?
This cartoon was titled “How Our School System Has Changed.” Really? How about “How Parents Have Changed?” I see it way too often..excuses made for a child by their parents. Think about this as you start to get ready for school again.
Time to sober up! The headlines blare the possible triumph of the Home Affordable Modification Program yesterday claiming the redault rate is much lower than anybody projected. According to the US Treaury’s housing scorecard, the re-default rate (90 or more days past due) for homeowners for at least six months is just 1.7%. Wow! This news will make HAMP the greatest loan modification program in history!
Under the program, homeowners who qualify can have their mortgage payments cut to 31% of their monthly income by extending their loan term to 40 years or slashing their interest rate to as low as 2% for five years. Participants must make three monthly payments during a trial period before they receive a permanent modification.
As much as we all wish this news to be true, as it would surely lead us back to housing stability as we quickly modify home loans and fix the housing crisis…it just is not accurate. We return to the central point of many of my posts. Numbers can be presented in many ways and statistics can be used to make many different, and often conflicting points.
In what I will propose is a lack of research in our media or understanding of this economic situation, combined with just the right words utilized through the Treasury Department, renewed optimism now exists that loan modifications may be a very successful part of our economic recovery. Oh, I hate being the person to throw cold water on this whole idea but here goes.
I for one look forward to the day we see stabilization in housing. The debate continues as to what is the best way to accomplish stability. Nothing is going to stop the train that is long ago out of the station that is pursuing every possible action to keep homeowners in their homes. It serves the government to send out this type of news to work on the optimism factor that is very much in a deficit today.As I look across my own neighborhood, not knowing what the circumstances some of my neighbors carry, but seeing their inability to maintain their homes to community standards, I am again reminded that just because a method is offered to reduce a mortgage payment, the likelihood that suddenly a homeowner can pay for replacing windows, maintaining landscaping, and trimming overgrown tree branches hanging over their homes, is only solved through an orderly sale and relief of their debt through liquidation, or prosperity. The prosperity thing seems to not be a likely option as most states are now seeing an actual increase in unemployment rates and many people have left the job market entirely.
What do modifications really provide in the big picture and why do so many press organizations trumpet success when there are hard questions that really need to be asked about those results?
For almost two years now, the buzz in the real estate community is the new answer for staying in business (if you are a Realtor) and more importantly, saving American housing, has been the short sale. Briefly, short sales are when a homeowner is able to get their mortgage company to accept less than the balance of the loan in order to complete a sale of the home.
For years we have struggled with short sales and I feel that experience gave me some insight others may not. For a long time, I have been skeptical that short sales will be a big part of the housing solution. Primarily because there are so many stakeholders in the game that have to agree, it is basically selling a home by committee..and a large committee at that.
Earlier this year the federal HAFA program began and with it I believe we have the most significant step in creating a process to assist people who need to sell with a short sale. Unfortunately, simply identifying who NEEDS to use a short sale for a sale of their home is not as easily done as said. HAFA goes a long way toward placing some boundaries on identifying these parties. The primary one is the owner must have tried first for a government loan modification and failed to qualify. While this parameter had to be built in, many homeowners are barking because they simply DO NOT want to stay in their home and DO NOT want a modification. Yet..they are underwater on their mortgage and few think they should be required to use any of their own cash in order to settle on their debt. There are also many innocent people who HAFA can assist because they do not have any resources so they are not going to qualify for the HAMP modification, clearing their path to a HAFA short sale.
It is the group of people that have the resources to settle some part of their unpaid mortgage balance that are now seeking creative ways to complete a short sale. Besides the attempts to hide assets, a new game is playing itself out where the short sale is orchestrated by several parties, outside the lender’s awareness. Simply, sales are being created that are not arms length. For the players in this scene, the banks are eventually finding out and prosecuting. The most comon scheme is known as “Home Flopping”. Federal agents say these schemes are on the rise.
“Home Flopping” involves the listing agent for a home convincing a bank to complete a short sale for an amount the listing agent recognizes will allow a second sale to a third party for an increased amount. In other words, the increased amount is what the bank should have accepted and received in the short sale. The parties to the transaction (Seller, Realtor, Buyer #1, and the Broker Price Opinion agent) all split the profits. The FBI is prosecuting one of these right now where the Realtors have pled guilty of convincing Regions Bank to accept a short sale of $102,375 and two month later selling the property for $132,500. Profits were likely distributed to all parties.
The biggest challenge for short sales? Greed! All the parties to the transaction, and I can think of about eight possible ones, all have their motivations and the committee rarely can totally agree. Throw in a few of the parties who have additional profit schemes in mind and you can see why I remain skeptical about the success of short sales ever really being a large part of the solution to the housing crisis.
The best solution-a revived economy. Next to that, modification or a controlled Deed In Liew of Foreclosure. Modifications allow people to stay in their home with a new payment plan, orwith a Deed In Lieu they may leave their home and the bank avoids the laws that cause homes to deteriorate sitting vacant for months to years awaiting foreclosure. Two simple solutions that take the greed factor out of the equation. Time will tell..but this is a message I have been putting out there for two years now and so far, little has happened to prove me wrong.
I hate to say I am not surprised, but I am not. The Atlantic offers a piece this month titled “The End of Men: How Women Are Taking Control of Everything” and it is a nice blow to the man’s super ego! The story summary:
Earlier this year, women became the majority of the workforce for the first time in U.S. history. Most managers are now women too. And for every two men who get a college degree this year, three women will do the same. For years, women’s progress has been cast as a struggle for equality. But what if equality isn’t the end point? What if modern, postindustrial society is simply better suited to women? A report on the unprecedented role reversal now under way— and its vast cultural consequences.
I am looking around my neighborhood and see numerous men who have been out of work for a year or more. Their wives are the bread winners and they are home taking care of the family and house. For one thing this recession has created an environment where the higher priced middle age men were the ones let go. In the meantime, I am a witness to the business advantages being offered company’s owned by anybody other than a male (and while this is not a post about race, all the disclosures I am exposed to also ask my race so I think it must be acceptable to add the classification “white” to the group affected). So, in addition to the societal advantages this article so aptly exposes, there is also an orchestrated direction in our society to move women (and other groups) in front of (white) men in the food chain. The two factors combined explain why so many men may be permanently out of the work force as we once knew it.
Regarding the societal changes-some outtakes from this article that are relevant.
“Men seem ‘fixed in cultural aspic.’ With each passing day, they lag further behind.” Numerous college women assume they’ll be primary bread winner; guys “are the new ball and chain.”
“As thinking and communicating have come to eclipse physical strength and stamina as the keys to economic success, those societies that take advantage of the talents of all their adults, not just half of them, have pulled away from the rest.”
“The evidence is all around you [e.g.] in the wreckage of the Great Recession, in which three-quarters of the eight million jobs lost were lost by men. The worst-hit industries were overwhelmingly male and deeply identified with macho: construction, manufacturing, high finance.”
“Of the 15 job categories projected to grow the most in the next decade in the U.S., all but two are occupied primarily by women.”
“Women hold 51.4% of managerial and professional jobs—up from 26.1% in 1980. … In 1970, women contributed 2 to 6 percent of the family income. Now the typical working wife brings home 42.2%—and four in 10 mothers are the primary breadwinners in their family.”
“What’s clear is that schools, like the economy, now value the self-control, focus and verbal aptitude that seem to come more easily to young girls.”
If you have raised boys and girls, this last point brings all of this home in a different light than just blaming cost-cutting and diversification efforts. The information age we now live in favors the skill sets of women. It is part of their genetics..better communicators, better understanding of a problem, more focused. If you are raising a boy today, it may be the greatest gift you can give to allow them to absorb the skill sets that involve the characteristics that are those of great communicators,organizers, and disciplinarians. Boys have been raised, and continue to be raised, to excel on the playing field and in stiff competition. We, as the American society, reward our boys for success on the football field, and tend to overlook failure in Composition classes. Girls, this is reversed. Where is your child’s future?
If this article is correct, for the first time boy’s are now arriving in the future at a disadvantage. I see evidence of this change everywhere. Better consider the affect of your priorities on your son’s. Very few of them are ever going to play a sport after high school, and fewer yet will ever receive a dime for their athleticism.
This article is a wake up call. Not much you can do if you are a middle aged (white) guy like me, but you sure can recognize what the world will look like for your children.
Fannie Mae announced yesterday that homeowners, who in good faith do not try and find an alternative to foreclosure, will be denied the ability to get another Fannie backed loan for seven years. What I think has a little more bite is the fact that Fannie also plans to pursue legal actions (default judgements) where the law allows it against these same homeowners. The message to troubled property owners..you better not hide from your problems!
The take away:
With the options available to sub prime borrowers in the last boom period, I doubt that not being able to borrow (insured by Fannie Mae) in order to buy another home, is going to have much affect on so-called “strategic defaulters”.
I think the target for the default judgement announcement is the investors who so loosely utilized funds to buy properties and never spent a dime because they figured they could flip the property. This is not a stab at investors in our free-market system…just also asking them to take the responsible steps of honoring their obligations.
The carrot of encouraging borrowers to work with their lender to resolve their problem has appeal. I hope that this effort will be more geared to short sales than modifications. I fear to much emphasis on modifications in order to help a homeowner keep a home they can’t afford and still can’t afford after the modifciation.
Orderly liquidations of these homes should be the goal. Why did it take so long for Fannie to say “no mas” to the strategic defaulters? Where is Freddie Mac on this topic? How about all of the direct lenders?
By now most people are done writing about Fathers Day. Did that last week…right?
A few bells went off in my head yesterday from the fantastic day I was honored to experience. My kids (and my wife) made sure I felt special. From that I learned a few things.
I really enjoy sitting outdoors in the morning. I just do not have a great place to do that. I now have a major goal for our home.
It is really nice to not have to apologize for disappearing for an hour to ride my bike or exercise. I normally feel bad leaving Jennifer alone with whatever issue arises at home while I enjoy some sweat time. No guilt in leaving to bike yesterday for an hour. Lesson learned is do everything possible to allow my wife to feel the same way when she wants to do something she enjoys.
I really love coming back from exercising on a beautiful morning to a hearty breakfast. I am not sure this is a lesson. Just sayin…
I love being around and with people. Yet, there is a gift in taking the kids to the pool and allowing a Dad time to putz around the garage, read the Sunday paper, and listen to a ball game. No interruptions. I would not want to live my life like that, but 3 hours on Fathers Day..what a treat!
Of course, Fathers Day is not just about me either. My Dad is 75 and he loves his kids and grandkids. My Mom can cook like no other, and a late afternoon and evening spent at their home with most of the kids and recognizing my Dad (and brother in law Scott also) was a way to balance out my own gluttony!
My Dad likes driving little Roadster sports cars with the top down.
My older daughters still call me Daddy and wished me a final Happy Fathers Day before they went to bed. Life has been pretty good to you if your kids are that appreciative when they are 19 and 16.
Joey loves giving crazy cards with pictures of crying toddlers with their pull ups on-equating them to his Dad!
I am blessed in ways I could never have imagined.
Hopefully I can remember all of these lessons by next May for Mothers Day!
Can you believe this story? All because a school system created a zero-tolerance policy that allowed no room for 
any subjective reasoning.
I remember my first exposure to zero-tolerance thinking. We can argue about the merits but remember when IU Coach Bob Knight was placed on a zero-tolerance policy in 2000? First time he had an issue (lets admit, there was no way he was not going to get caught up in some controversy-after all he is Bob Knight!) Indiana University had no choice but to dismiss him. I suspect that ten years later, most people would consider this moment of lack of subjectivity to be the start of a long period of difficulties and loss of prestige for a basketball program and its reflection on the University. There was no choice but to fire him when the zero-tolerance policy was created and then violated.
Now we have schools that create policies out of the fear activist parents will challenge and sue the school, its administration, and staff if they are forced to use subjective judgement in the management of thousands of children/teens. Sure, the zero-tolerance approach provides consistency and a backbone to policy. Yet, just like the long term effects of the zero tolerance policy that Indiana University used in 2000, many such policies when enforced (as they have to be) create damage far beyond the original intent.
We seem to have come to a point in time where every decision requires a manual and procedure. People in academia and business are no longer encouraged to utilize their own good judgement to make decisions based on all the circumstances. In my opinion this way of thinking takes the zest of life and squashes it. The ability to problem solve and be creative now requires a policy or procedure.
I think history shows society’s greatest achievements came when the rule book was tossed aside and somebody was willing to look at a problem in a unique, curious, reasoned way. Then they created a solution to match the problem. If there was a policy, it was ignored.
Are you willing to ignore policy and do what is right to make sure your career or life is not stamped with the label of following a policy and procedure that puts a 12 year old Boy Scout in jail for 2 days due to zero tolerance enforcement? Are you the reasonable person who believes the world still needs subjective, creative, problem solving? If not, what would it take for you to become the kind of leader we need today?
This news caught my eye over the weekend. I was not sure if the News-Press is raving about this or is being critical when the story leads with the fact that 225 jobs have been created in Lee County as a result of the receipt of $213.4 million in Federal recovery funds. I think they are being critical but the story does explore the intricacies of how these calculations are created. Worth a read if you want to try and understand how tricky tracking these federal recovery funds can be.
Obviously, we all can see the good these projects offer. I know I will enjoy the extra lanes on roadways offering less traffic hassles. Yet, the point continues to be made that most of these projects were going to get done and the same jobs created. Just how the funding was to be arranged was the issue. The feds created a way to move the project forward.
Job creation arguments are hard to prove and hard to measure. I think we can all agree that most of these projects have done more to improve quality of life than lower unemployment. This lesson was learned in the late 1930′s and now again in the early 2000′s. Maybe it is a concept that needs to be brought off the shelf every 70 years just to see if something has changed.
Lets hope the same lessons of the late 1930′s don’t evolve into today’s job creation solutions. If you recall your history lessons, what really puled the US out of the Great Depression was war and related production. How hard would it be to follow a similar path today? Politically..not going to happen unless something tragic forces a change.
I hate to say it but in the current business environment of tax and regulate, significant job creation is not going to occur in the private sector. It will be through the government. Two ways to do that. One is programs. The other is purchasing. Major purchasing happens through defense spending. Put it together. I sure hope somebody decides letting up on taxes and regulation is a better alternative.
Or I guess we can continue to create a job for almost a million each. Anybody have a Greece flag they want to fly?
“It is my earnest hope, indeed the hope of all mankind, that from this solemn occasion a better world shall emerge out of the blood and carnage of the past, a world founded upon faith and understanding, a world dedicated to the dignity of man and the fulfillment of his most cherished wish for freedom, tolerance and justice. Let us pray that peace be now restored to the world, and that God will preserve it always.”
General Douglas McArthur
