Don’t Blame the Housing Crisis on Poor People

Whether you are a gardener or a physician or an auto mechanic or whatever, you have probably had people share their uninformed but strongly held opinions about your area of expertise. A lot of people have strong opinions about things they know little about.

I am a housing counselor and have helped many low-income people become homeowners. I routinely hear people assert that the reason we have a housing foreclosure crisis is because the government had programs that helped low income people become homeowners. I have heard Rush Limbaugh make this assertion and our local Rush-want-a-be and lot of other people say this.

It is true that a large part of the housing crisis was caused by lenders making loans to people who should not have gotten loans. It is true that there were many irresponsible borrowers. There were a lot of people who bought houses with no money down. Some of these people were low-income but many of them were not. These people who were low income did not get these bad loans due to government assistance programs.

Those low-income people who got government assistance for down payment probably were less risky borrowers than the typical borrower. There have been a variety of programs that helped low-income people become homeowners over the years.

In recent years the most widely available program was the Bush Administration’s program called American Dream Downpayment Initiative (ADDI). Under this program, the borrower could get into a house for an out-of-pocket cost of only 1% of the sale price and the balance of the closing cost and downpayment was provided in the form of a grant or a loan.

To take advantage of this program, the first mortgage had to be an FHA loan, or VA loan, or conforming conventional loan. This meant that the borrower could not get a “liar’s loan,” also know as a “stated income” loan. They could not get a negative amortization mortgage or an interest only mortgage or the really bad adjustable rate mortgages. The borrowers had to have decent credit and could not have excessive debt and their housing cost, including escrowed taxes and insurance, could not be over 32% of their gross monthly income.

ADDI is but one of a number of similar programs that I have been familiar with over the years that were designed to help low income people become homeowners, but almost all of them had these same requirements. Most of these programs also required that the borrower attend homebuyer education programs. These borrowers were better informed homebuyers than the average buyers.

Another reason that low-income people who become homeowner using down payment assistance programs are not likely to default on their mortgage is because the agency that assisted them usually ends up holding a second mortgage on the property. The second may be in the form of a “due-on-sale” mortgage, which means the assistance will be paid back if the property is ever sold. It may be a “forgivable loan,” where for example, 20% of the downpayment assistance is forgiven each year for a period of five years. The assistance could simply be a low-interest, long-term second mortgage.

If one wishes to refinance a first mortgage, one cannot do so without paying off the second mortgage, unless the second agrees to subordinate. When the non-profit agency holds the second mortgage, they can prevent the homeowner from refinancing into a bad loan or persuade the borrower that it is not wise to do so. Many borrowers end up refinancing when it is not in their best interest to do so, but borrowers who got downpayment assistance usually can’t do this.

I think that programs that help low-income people become homeowners is money well spent. It helps lift people out of poverty rather than subsidizing their life in poverty. These programs have genrally been sucessful.

While it may be popular to blame the housing crisis on government programs that helped poor people become homeowners it is simply not the truth.

Top Stories

Reading Wine

I love wine. I love to drink wine and try new wines and read wine labels and shop for wine and read wine reviews. I love going to wine tastings. I would not consider myself an expert, but I have learned a little about wine over the years. I don’t “cellar” wine. I don’t invest in wine. I cannot bear to pay over $20 for a bottle, except when dinning out and then $20 is a good price.

It is hard to tell someone what something taste like or smells like. You can say something is tart or sweet but most often you have to resort to comparing one taste to something else with which one is familiar in order to convey what something taste like.

I have experienced enough wine to know what to expect from some wine descriptions. If a white wine is described as having “apple” on the palate, I sort of know what to expect. I understand “oaky” or “citric” or “minerally.”

A red wine may be described as “blackberry” or “dark fruit” or “strawberry.” I sort of know what to expect from those different descriptions. The terms “tobacco,” “coffee,” or “leather,” I think describe the same aroma and I think I know what that means.

Some descriptions of wine leave me totally baffled. Sometimes I think the writer is not trying to describe the wine but is a frustrated poet writing flowery prose. Sometimes I think the wine writer is putting us on. Just like I sometimes wonder if an artist really thinks his box of dirt is a work of art, I wonder if the wine writer is really trying to describe a wine or just trying to see how far along he can sting the reader.

Frank Sutherland, a former editor of The Tennessean, writes a regular wine review column for The Tennessean. He and a panel of experts compare four to six wines of the same category and then Sutherland writes the review, describing the aroma, palate and the panel’s verdict of the wine. I always enjoy reading his column.

One time Frank described a white wine as tasting of “Texas pink grapefruit.” Now, I could understand “grapefruit” or even “pink grapefruit”, but “Texas” pink grapefruit? Honestly now, how many of you can tell a Texas pink grapefruit from a California or a Florida pink grapefruit.

He once described the aroma or the taste of a wine as “dusty tomato stems.” I don’t know what dusty tomato stems smell or taste like.

In a recent review of Pouilly Fuisse, he described the palate as “flavors of apples, pear skins, tangerine peel, apricots and wet stone.” Ok, I can’t detect all of those flavors, but I accept the apples, pear skin, tangerine peel and apricots, but I draw the line at “wet stone.” What does wet stone taste like?

He described the aroma of a 2007 Rodney Strong Russian River Pinot Noir as “bacon.” Ok, maybe so. He described the aroma of the 2007 Benot-Lane Pinot Noir as “yellow cake batter,” and “green banana skins,” and the palate as “cotton candy.” The aroma of the 2006 Spindrift Pinot Noir was “Luden’s Cherry Cough Drops.” Not just cherry cough drops mind you, but “Luden’s” cherry cough drops.” He wouldn’t want us to think that the wine had the aroma of Vicks Cherry Cough Drops or Smith Brothers Cherry Cough Drops; no it has the aroma of Luden’s Cherry Cough Drops. I myself am just not that much of a connoisseur of cough drops.

Maybe my tastes are just not that sophisticated and discerning or either Mr. Southerland is putting us on. I don’t know that I am learning that much about wine from reading his column, but I am being entertained. I will keep reading Frank’s Wine in Nashville column.

Top Stories

Regarding Torture

When I was younger, I saw the world in much more vivid contrasts of black and white; now, I see so much of the world in shades of gray. I almost wish for the innocents of youth and the purity of ideas that saw a lot more black and white. I try to remind my self that because there are a lot of shades of gray that that does not mean that there is not a black and white.

Torture is wrong. I do not condone torture. On the other hand, we must have more tools at our disposal than simply asking politely when trying to get information from the bad guys. Anything between asking politely and absolute brutality with disregard for human life is a shade of gray. We know that intelligence activity involves lying and betrayal and deception and getting our hands dirty. In our everyday life, we do not condone these things.

As I have thought about the issue of the CIA’s roll in the use of what is generally considered torture, I think that the CIA was trying to draw a fine line somewhere along the scale of gray. There were complex rules that stated how many times waterbording could be used in any one 24 hour period and in any one month, and how long each session could last. I understand there were even requirements for the temperature of the water and a requirement that a doctor be present.

Were all of the rules governing waterboarding sufficient to keep the use of this “enhanced interrogation techniques” from crossing the gray scale from light gray to dark gray? I don’t know.

It is worth keeping in mind, that the CIA was not operating in a vacuum. This was not just George W. Bush and Dick Cheney acting independently or the CIA going it alone. There was Congressional oversight. Top legislators knew of interrogations. The CIA briefed Democrats and Republicans on the congressional intelligence committees more than 30 times about the use of enhanced interrogation techniques. Congress could have stopped it. Congress did not object or withold funding.

Among those who were briefed and tacitly approved the techniques were many of the same Democrates, including Nacy Pelosi, who now want to prosecute George W. Bush. We should keep in mind, that these techniques occurred in the aftermath of 9/11 when everyone thought that another attack was eminent. If I would I have been one of the congressmen who sat in on the CIA briefing, would I have objected and publicly condemned it? I don’t think I would have. Maybe later I would regretted that I did not, but at the time, I would have probably acted no differently than the congressmen who sat in on those briefings. If Bush is prosecuted for approving the use of torture, so should Nancy Pelosi and every congressman who acquiesced and did not publicly object and try to stop it at the time. That is all of them.

Top Stories

Diane Feinstein, The FDIC, and a lucrative contract

Yesterday, the Washington Times revealed that Senator Diane Feinstein (D-CA) offered on October 30th, 2008 to secure $25 billion in taxpayer money for the Federal Deposit Insurance Corporation (FDIC) directly on the heels of the agency awarding a three-year contract to CB Richard Ellis (CBRE), a company run by Feinstein's husband, Richard Blum. What makes this case especially interesting is that Ms Feinstein is not even a member of the Senate Committee on Banking, Housing and Urban Affairs which has jurisdiction over FDIC and the FDIC is supposed to operate from bank-paid insurance premiums and not tax dollars.

Were not the Democrats going to end the “culture of corruption” in Washington?

Can anyone say "apparent conflict of interest?"

The Senate Ethics Committee needs to investigate to determine if the government contract was awarded in return for the Senator introducing the legislation funding the FDIC. Does anyone expect it to happen?

Top Stories

Barack Obama and Hugo Chavez

Ronald Reagan and Mikhail Gorbachev

Richard Nixon and Mao Tse-tung

Franklin D. Roosevelt and Joseph Stalin

Top Stories

Dick Cheney Blast Obama

Mr. Cheney, Please just shut up!

Mr. Cheney, please exit the stage. ‘Please turn out the lights; the party’s over; they say that all good things must end.’

You had your turn. Not many people like you. Fairly or not you are perceived as the person who was the real power behind the throne, who led us into an unnecessary war and generally mismanaged the country for eight years. Many perceive you as a Dr. Strangelove-type character. I seriously doubt anyone is listening when you speak except for a handful of neocon Bush loyalist.

I suspect that every time you speak, you drive some wavering Obama supporters, who may be having buyers remorse, right back into the Obama camp. They see you and remember why that voted for “change.”

The Republican party needs new faces and new voices. There is plenty of room to criticize Obama, but please let someone else do it. In this interview you criticize Obama’s apologizing tour of Europe and his handshake with Chavez. Other people are doing that. Do you think it helps coming from you? You also defend water boarding and torture. I think the less said about that from you, the better. If you feel you must defend those policies, write a book.

Your former “boss,” President Bush, has had the good grace and decency to keep his mouth shut since leaving office. I admire him for that.

Please, Mr. Cheney, go home, play with the grandkids before that ticker gives completely out and write your memoirs. But please, keep your face off of the TV.

Top Stories

U.S. need not become a nation of economic bozos

By: James Bowers, OpEd Contributor, Washington Examiner, 04/13/09

April is Financial Literacy Month. This year its importance is more apparent than ever as America faces an economic crisis largely caused by our collective failure -- from bankers, to legislators, to homebuyers -- to make smart financial choices.
To highlight this lack of economic and personal finance knowledge, our organization released the startling results of a new survey which shows just how much we still don’t know. [Full Article]

Top Stories

Obama's shift in United States policy toward Cuba

Last Monday, President Obama issued an order to eliminate all limits on travel and remittances by Cuban Americans to Cuba. Previously, the US government only allowed Cuban Americans to visit the island once a year and limited to $75 a month the amount of money Cubans could send to relatives. This policy change may be a minor change but it represents the most significant shift in United States policy toward Cuba in decades.

In another move, a policy change permits U.S. telecom network providers to build fiber-optic cable and satellite communications facilities linking the U.S. and Cuba. These moves, as well as statements from President Obama saying he wanted to have discussions with Cuba, have been met with a positive response from Raul Castro, who has said that his government was willing to discuss everything with the US Government including human rights, freedom of the press and political prisoners. Theses are welcome developments.

Since Fidel Castro’s retirement, we have seen small positive changes taking place in Cuba. The government has legalized private taxicabs, it has given individuals the deed to their homes, it has allowed Cubans to own cell phones, it has permitted Cubans to stay in luxury hotels, and it has encouraged and expanded private farms. These changes are encouraging.

This new policy allowing Cuban Americans to visit relatives in Cuba more often and send more money home will lead to more change. The more Cubans have contact with their relatives in the US, the more they will come to realize that communism is a failure. They will develop a thirst for freedom and a desire for an improved standard of living. If their relatives in America can send them money, they will be less dependent on the Cuban government for all of their wants and needs. With money to spend, there will develop pressure on the government to permit markets to satisfy market demand.

Unless, Cuba really does something stupid, like shoot down an airplane or arrest a visiting Cuban American on trumped up charges of spying, we should quickly move toward a complete lifting of the embargo and travel restrictions. If the US would end the embargo and travel restrictions, we would see an acceleration of Cuba’s transformation. If American dollars could flow freely to Cuba, we would see concession on the part of Cuba to accommodate investors and a relaxation of restrictions on Cuban’s so they could provide goods and services that would capture American dollars.

Our policy toward Cuba has lacked all logic for a very long time. Our embargo of Cuba is a counterproductive Cold War relic that keeps Cuba a nearly orthodox communist society by inhibiting the growth of other spheres of influence. It also allows Cuba to blame all of its problems on the United States and the embargo rather than Cuba’s socialist policies.

I think President Obama’s most recent move lifting restrictions on Cuban American travel to Cuba and remittances was the right think to do. I encourage him to take the next step. The cold war is over; It is time to lift the embargo.

Top Stories

Wine in grocery stores will not happen this year

Support wine sales in Tennessee retail food storeshttp://e2ma.net/go/1913006645/1752096/65204978/goto:http://www.redwhiteandfood.com
Dear Red White and Food members,

Thank you for your hard work and dedication this year. You are part of more than 15,000 Tennesseans who have joined and supported the Red White and Food campaign.
Wine in grocery stores was one of the most talked-about issues on Capitol Hill again this year. Not since the income tax debate of the late 1990s has a group of citizens worked so hard to make their voices heard -- and legislators have noticed.

As you have probably learned by now, our House bill sponsor, Rep. David Shepard, withdrew the wine in grocery stores legislation from consideration during Wednesday's meeting of the House State and Local Government Committee. You can read more about his decision to do so here:

Read The Tennessean's coverage

This does not mean that the bill is dead. Unfortunately, it does mean the bill will not pass this year. We are disappointed the Tennessee General Assembly has chosen not to listen to the overwhelming number of Tennesseans who want this change.

At the same time, we believe the legislation will return at some point. Accomplishing this change was going to be difficult in the best of circumstances because of the strong opposition from wine wholesalers and retailers. We just have to keep at it.

The most important outcome of this year's effort is that legislators are talking seriously about overhauling what they believe are antiquated liquor laws. They realize there is a lot of work to be done to make our state's alcoholic beverage laws fair for everyone involved, especially consumers.

We expect to share more information about the legislation in the weeks to come. We will provide you with updates as they become available and will share ways in which you can continue to make your voice heard.

Thanks again for your support.

Cheers,

The Red White and Food Team

Comment

Oh well, maybe next year. In Tennessee, when the Babtist and the liquor industry join forces they are to beat. The tide will turn. Tennessee is becoming less Babtist all the time and more people who have lived elsewhere are finding our arcane liquor and beer laws ridiculous.

Top Stories

Me at the Tea Party

I really was at the Tea Party. The next day, I opened The Tennessean and the Tea Party was front page news with a large picture. I casually scanned the picture to see if I recognized anyone in it, and there I was. They got about two-thirds of my face. My lovely wife, unfortunately, was hidden by the sign.

The Tennessean said about 3000 people attended the event. I think there were a lot more than that. I counted a block of 100 people (ten across, ten deep) and then did some quick calculating and there were about 250 on the steps adjoining the stage on each side of the stage and about another 200 on the hill behind the stage. So, that is 700 people either parallel with the stage or behind the stage. And, the plaza was packed with people spilling into the side streets and into the courtyard of the Memorial building. The plaza is a park about the size of a half city block. It can hold a lot of people. There may have been as many as 8 to 9,000 people there. I certainly think 3000 is a low estimate.

In addition to the people on the ground, there was a constant steam of cars circling the site, blowing their horn in support. Also, there is no way to know how many people would have attended if there was not a shortage of parking. On a work day, Nashville has a shortage of parking, within walking distance. There is a limit to how many extra people can park downtown on a work day. There was no organized shuttle from satellite parking facilities. In any event it was a capacity crowd, well in excess of The Tennessean's estimate of 3000.

If I am not at an event and only read about it, here is my rule of thumb for interpreting news accounts of crowd estimates: If the event is a liberal cause, I cut the reported estimate by a third; if it is a conservative cause, I multiply by three. If it is a non-political event I figure the estimate could be between 50% and 200% correct. Estimating a crowd is difficult no doubt, but I certainly think they underestimated the size of this crowd.

Here is the The Tennesseans coverage of the event:

Riled Tea Partiers rip government spending

By Colby Sledge • THE TENNESSEAN • April 16, 2009

Nearly 3,000 protesters gathered outside the state Capitol on Wednesday to take part in a nationwide "Tax Day Tea Party," the latest and largest version of a widespread conservative effort to protest taxes and government spending. [full article]

Top Stories

Obama’s Gitmo

The Next Guantánamo
The New York Times, Editorial, April 12, 2009

The Obama administration is basking in praise for its welcome commitment to shut down the American detention center at Guantánamo Bay. But it is acting far less nobly when it comes to prisoners held at a larger, more secretive military detention facility at Bagram Air Base in Afghanistan. [full article]

Commentary

As a Senator and as a presidential candidate, Obama repeatedly and forcefully said that he thought prisoner held at Guantanamo deserved the right to challenge their detention in a U.S. court. Now on the same issue, but a different facility, he is singing a different tune.

Recently the United States District Court for the District of Columbia ruled that non-Afghan detainees at the US Bagram Prison in Afghanistan captured outside Afghanistan had the same due process rights that the Supreme Court last year gave to prisoners at Guantánamo. At issue were three prisoners at Bagram, two from Yemen and one from Tunisia, held by the U.S. military at the Bagram facility in Afghanistan without charges for more than six years. The Court ruled they have a right to challenge their detention in U.S. courts. The Obama administration is appealing the ruling.

I am not quite sure how I feel about the whole issue of giving captured prisoners due process rights. I oppose extending constitutional protection to captured POW’s. We should follow the Geneva Convention and established rules of war. However, in an unconventional war, how does one determine if someone is an “enemy combatants” or someone who just got rounded up accidentally? When the enemy is not the army of an opposing nation and wears no uniform, it makes the rules a little murky. I don’t want to turn loose terrorist to kill again, however we should not hold indefinitely people who may be innocent. While the issues are not simple, the Court has ruled narrowly and I think wisely. I think the Bush administration was wrong and the Court was correct.

The issue regarding Bagram is exactly the same as at Guantanamo and the position of the Obama administration is exactly the same as the position of the Bush administration. Obama is appealing the ruling and arguing that the ruling would “impose serious practical burdens on, and potential harm to, the Government and its efforts to prosecute the war in Afghanistan.” Does that sound familiar?

The NY Times has taken issue with Obama on his reaction to the court ruling, but most of the establishment is keeping quite. It seems Obama can do no wrong even when his position is indistinguishable from the Bush position on the same issue. Where are all of those voices that condemned Bush? Were they expressing a principled conviction or just anti-Bush? Do I detect some hypocrisy? Either Bush and Obama are right; or, Bush and Obama are wrong.

Top Stories

Am I an Enemy of the State?

The Department of Homeland Security Report Rightwing Extremism: Current Economic and Political Climate Fueling Resurgence in Radicalization and Recruitment (read the PDF file here) is a piece of propaganda that identifies those who hold views contrary to the politically acceptable liberal position as potential terrorist. Those concerned about the threat to their second amendment rights, those who are concerned about illegal immigration, those who oppose free trade, returning war veterans, and those who oppose abortion are profiled as potential terrorist.

Imagine if a similar report had identified gay rights activist, pro-choice advocates, peace activist, and environmentalist as potential terrorist. What would be the response of civil libertarians and the mainstream media?

I am actually somewhat moderate on several of the positions listed in this report. I am pro free trade and I advocate comprehensive immigration reform, nevertheless I feel a chill. I love my country but I am beginning to fear my government. I assume the purpose of this report is to intimidate those who hold views that differ from those of the administration. It contains nothing that could be of value to law enforcement.

A report in the Washington Times says that a Department of Homeland Security spokesman, confirmed that the department's Office of Civil Rights and Civil Liberties raised objections about some of the language in the nine-page report before it was sent to law enforcement officials nationwide, yet it was issued over their objections. This report should concern anyone who loves liberty.

Top Stories