Friday, December 07, 2007

Mortgage 'freeze' buys time for some

Many wait too long for adjustable rate help
Staff Writer
The Tennessean
Published: Thursday, 12/06/07

A mortgage freeze to be unveiled by President Bush today may provide only limited relief to thousands of financially strapped homeowners, and may not be enough to cure the foreclosure crisis, advisers who work with troubled borrowers in Middle Tennessee said.

The Bush administration's plan, which would freeze the interest rates on many adjustable-rate mortgages at their lower introductory levels, excludes many who need help the most, including those in foreclosure and those already behind on adjustable-rate monthly payments, officials from several Nashville-area housing organizations said.

The plan, which has the support of major banks, relies on borrowers and lenders to come together to revise terms of loans before adjustable loans accelerate — sometimes to double-digit rates.

Many first-time Middle Tennessee homebuyers in danger of foreclosure don't realize how bad their situations are until they are too far behind on payments, loan counselors said. "They're trying to figure this out themselves … and when (a solution) doesn't occur, that's when they come forward," said Rosalind Robinson, president and founder of Residential Resources Inc., an east Nashville housing counselor. "For this to work, they're going to need to set aside those emotions."

Delaying higher adjustable-rate payments won't always solve the underlying cause — a propensity of homeowners to buy a home they cannot afford, some advisers said. "The mistake that they made is they were able to buy a $120,000 house, but they fell in love with a $180,000 house," said Rod Williams, director of housing services for Woodbine Community Organization, which offers financial counseling. (To read all: Mortgage 'freeze')

My Commentary
This recent announcement of a mortgage rate freeze is a positive development but will probably help few people. What we know about it at this time is that people must apply for the mortgage rate freeze before their adjustable rate mortgage resets and they must not have been late on any house payments. If they qualify, they may have their introductory rate frozen for up to five years. Unless there is a big advertising campaign most people won't even know of the program until after their mortgage resets and they have trouble making their higher house payment. This program will help only a few people, just as will the recently announced FHA Secure program.

I do not advocate a general bail out of homeowners or mortgage companies. The people who took out bad loans and the mortgage companies that made bad loans should surfer the consequences. Small steps to slow the defaults are all we should be doing. For the people who got in a house with no money down and got a teaser rate, if they lose their home, while it is emotionally devastating, in reality they are not really losing anything since they have no equity in the house. For two years they got to live in a house they could not afford. We should not feel too sorry for them. While we need to try to mitigate the effect of the mortgage crisis, we should not reward bad decisions.

However, we should not just ignore this mortgage default crisis either. It could affect the general economy. Also, even if your home is not at risk, you can be harmed by this foreclosure problem. If three houses are foreclosed on your street, the property values could drop. If the houses set empty and get vandalized, prices can drop more. For some people who were going to downsize when they retired and a lot of their wealth was in their home, they will find they are less wealthy than they thought. Also, if a lot of home prices drop, local government will reap less tax revenue from property taxes. There is a public purpose in slowing the rate of default.

A response to the crisis that would help more than anything is additional funding of housing counseling. People do not know their options, and they do not know how to present their case to the mortgage company. Unfortunately, the people at the mortgage company are often uninformed about their own options. When it is a win/win and the mortgage company can me made to understand this, many times the home can be saved or at least foreclosure avoided. About 90% of the people I counsel avoid foreclosure. To avoid the foreclosure however, someone has to know what is doable and how to propose it.

Another thing that would help mitigate the mortgage default crisis is a rescue lending pool. As part of a comprehensive loan modification or forbearance plan, the pool could loan the homeowner additional funds to bring the payment current or to make a couple house payments. Sometimes if a homeowner can be helped with only a couple house payments they could save the home. The pool should be very limited however, and funded by the lending industry. If structured correctly, this could be a plus for all concerned. Stopping a foreclosure is not only helpful to the homeowner, but the lender as well. Government leadership could establish the mechanism to establish the rescue lending pool and convince the industry that this was in the industry’s best interest. The funding pool should be used sparingly and only when part of a plan that will avoid a foreclosure. We have to accept that some of the defaults should occur, but those that can be saved by a three hour counseling session or an infusion of a small loan should be saved.

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Tuesday, December 04, 2007

Saving the Planet!

"Phasing out the human race will solve every problem on earth, social and environmental." Dave Forman, Founder of Earth First!

"Tell a child on the eighth day that we are not lighting the last candle as a sacrifice for the environment" 'Green Hanukkia' campaign sparks ire December 4, 2007

"I live in North Carolina. I'll probably never eat a tangerine again," Elizabeth Edwards , McClellanville, North Carolina, July 24, 2007

"If you want to save the planet, I want you to start jumping up and down!" Madonna, live from Live Earth. July 7, 2007

"I propose a limitation be put on how many sqares of toilet paper can be used in any one sitting.I think we are an industrious enough people that we can make it work with only one square per restroom visit, except, of course, on those pesky occasions where 2 to 3 could be required." Sheryl Crow,

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O Frabjous Day! Nuke Iran? World War III? Oops, Nevermind….

By Don Williams

Add another reason to be grateful in the post-911, post-Thanksgiving world. Turns out our intelligence regarding Iran was wrong and—guess what—Iran has no nuclear weapons program to speak of. Said program was suspended in 2003, according to the latest National Intelligence Estimate. That’s the estimate provided by all the nation’s intelligence agencies combined. (Read about it here in the New York Times.) Yes, it’s scandalous, stupid, inexcusable and… heavenly to learn that the Bush administration would change course and ease up on the saber-rattling. (To Continue: O Frabjous Day!)

My Commentary

Hallelujah! I have been fearful that any day we may wake up to news that the U. S. has bombed Iran. I could hardly believe the report yesterday when the National Intelligence Council announced that Iran had essentially discontinued its nuclear weapons program in 2003. In a recent post on this blog I had expressed my distrust of the Bush Administration but also worried that their is always the possibility that Bush could be right. (See Bush Might be Right)

In this article my liberal brother, the award-winning columnist Don Williams rejoices in this development and speculates on its meaning. While I may express myself in a slightly different tone of voice, I think he is essentially correct is his assessment and I share his relief and joy at this turn of events.

Don speculates on why this development occurred and I find his speculations plausible. I would like to add one more: Maybe the loyal and professional people in the intelligence community who were manipulated into cooking the intelligence books to take us to war in Iraq, refused to let it happen again and decided to cut the President off at the pass by giving an honest assessment before it was too late.

This event does not mean that Iran is still not a renegade country and a potential future nuclear threat, but any rationale for a war with Iran has been removed and the next President can deal with Iran. We can sleep easier tonight.

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Sunday, December 02, 2007

Study: Immigrants don't raise U.S. crime rate

Eunice Moscoso
Arizona Daily Star

"The misperception that immigrants, especially illegal immigrants, are responsible for higher crime rates is deeply rooted in American public opinion and is sustained by media anecdotes and popular myth," said Ruben G. Rumbaut, a sociology professor at the University of California-Irvine. "This perception is not supported empirically. In fact, it is refuted by the preponderance of scientific evidence."

The incarceration rate of U.S.- born men 18 to 39 years old in 2000 was 3.5 percent — five times higher than the incarceration rate of their immigrant counterparts, the study found.
The report — which analyzed data from the U.S. Census Bureau, police records and other sources — also shows that a large increase in illegal immigrants has not resulted in a rise in crime. Since 1994, violent crime in the United States has declined 34 percent, and property crime has fallen 26 percent. At the same time, the illegal immigrant population has doubled to around 12 million.

The study also details a "paradox of assimilation" in which second- and third-generation immigrants have higher crime rates than those who first come to the United States.
For example, foreign-born Mexican men had an incarceration rate of 0.7 percent in 2000, more than eight times lower than the 5.9 percent rate of U.S.-born males of Mexican descent. To continue: Study..)

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Urban Legends

New immigrants may be the best thing that ever happened to American cities, but don't wait for the leading presidential candidates to tell you that.
By Christopher Dickey
Newsweek Web Exclusive
Updated: 4:28 PM ET Nov 28, 2007

The "Safest City" awards published a few days ago by Congressional Quarterly back up this kind of thinking. Among the top 10 with populations over 500,000, four are in Texas: Fort Worth, San Antonio, Austin and the border town of El Paso, which is the second-safest big city in the country. Two are in California: San Jose and San Diego, which, again, is right across the line from Mexico. The safest city of all is Honolulu, with its very diverse population, while New York City ranks fourth. (New York City also looks as if it will have fewer murders this year than at any time since reliable statistics became available, in 1963.) "I would say, if you want to be safe, move to an immigrant city," Robert J. Sampson, chairman of the sociology department at Harvard University, told me on the phone this afternoon. (To continue: Urban Legends)

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