February 25, 2009

My Response to President Obama's Address

I think it's safe to say that Gov. Jindal's response to President Obama's address last night was (fill in the blank). I left it blank because I want to focus on the financial dilemma that he represents for the constituents across his state. With his state in dire straights and a $2 billion dollar budget deficit fast approaching, we would think that Jindal would take every penny of the $4 billion dollar stimulus package. Especially being that the hurrican ravaged regions could benefit tremendously from the $538,575,876 that has been allocated to Louisiana. Under the stimulus plan the state stands to gain 50,000 jobs within two years. Let's say that he didn't take the money. Louisiana is currently is on track to create 347,790 by 2016. The stimulus plan will accelerate this by at least one year. The city of New Orleans has been limping along since Katrina and really wasn't on top it's game before the storm either. The cost to rebuild the coastal infrastructure is immense and the jobs that will come, will bring tax revenue, which will bring replenished budgets and thats how you rebuild, from the bottom up.

With that being said, it's clear that the GOP's new pawn that got thrown under the bus Tuesday evening, just doesn't get it. Sound like anyone else we know? I'm more amazed at the fact that we walked smack into a political minefield and started breakdancing with a G.W. hand movements and the Nixon smirk. I penned a brief response to President Obama's address, the one that a well qualified and level headed GOP member should have made. An address that is free of pork in the form of self interest. Ladies and gentleman, here it goes...

Greetings,

My heart is heavy and there is such a joy that I’m going to attempt to put into words. I had the pleasure of speaking with a gentleman prior to the polls closing on November 4th and part of the discussion was on his experience as a child not being able to drink from a non colored water fountain. He was amazed that during his lifetime he will see an African American man become president of the United States.His words brought to my mind the many living legends that braved water hoses, stones, dogs, batons, fires and all other manners of oppression. It brought to mind C.T. Vivian, Andrew Young, John Lewis and Dick Gregory. I watched as Rev. Jesse Jackson was in tears as President Obama took the stage to make an address heard around the world. I listened as the congratulatory words were brief and the reality of the day was expressed.

We must come together and move forward as one, this is that reality.No longer can we rest on the uncultivated laurels of the aberrant undertones in the civic, social and business communities. We can no longer excuse nor fool ourselves in thinking that there is strength in solitude and liberation without liability. We govern and preside over an immense cornucopia of individual organizations, non profits, small and large businesses, representing millions of employees. We also govern over 4 million unemployed Americans that are ready to hit the ground running and proudly get back into the workforce here in the United States. The nation has galvanized as one voice. The business community must galvanize as one voice. The financial industry, the auto industry, the oil industry must break their silence in transparency and galvanize as part of this one voice. The government can no longer be mute to the collective voices screaming for change. We, as a congress must be the ever listening ear to receive this growing voice.

As we move forward together and as we mission to rebuild the legacy of our country and respect of our new allies found around the world; let us move forward in boldness and with a relentless creed to no longer accept ignorance, otiose, mediocrity and apathy from one another.

Thank you and God Bless America.

February 20, 2009

What Does It All Mean? - The Homeowner Affordability & Stability Plan

First and foremost, I want to say thank you to both TheIcon and TheDiva for inviting me on their 1st Blog Talk Radio show this past Sunday. It was an awesome experience!!! Be sure to tune in on Sundays at 6pm by visiting http://www.blogtalkradio.com/thesavvysista

I'm amazed at what big businesses and government can do when a nations back is up against a wall. I am a few days behind in posting this because of the amount of financial happenings in the last few days was overwhelming. So now that I've been able to take it all in, including the New York Post's idea of a comic strip (no comment) let's break down what it all means for you.

On Tuesday The American Recovery & Reinvestment Act of 2009 was signed into law. 24 hours later on Wednesday, President Obama announced his Homeowner Affordability and Stability Plan and with the strokes of several very nice pens, the future of over 7 million homeowners became a little bit brighter. But was does it mean for you and your neighbors and how soon will the tension begin to get relieved from this $75 billion dollar investment. Well lets begin with the facts. The gives way to new provisions that will put lenders in a do or die situation. Lenders have until March 4th to decide if they will meet the following requirements:

  • Reduce the interest rates to an agreed affordability level which is set at a 38% Debt -To-Income (DTI) Ratio on the borrowers current income.
  • Partner with the federal government, who will match dollar for dollar, the further reduction of mortgage payments to a 31% DTI ratio.
  • Agree to maintain the newly modified payment and interest rate in place for five years and have the option to reduce the mortgage principal in order to meet this requirement. The lowest interest rate that can be obtained is 2%

So you may be wondering what's in it for the lenders and servicers, because we all have seen that generosity isn't exactly at the center of their business model. Keep in mind that many mortgage lenders OWN the servicing entities as well. You knew there was going to be some shadiness. Well here's what they'll get:

  • $1000 up front for every eligible modification that servicers establish after March 4th and $3000 over 3yrs if the borrower stays current on the modified loan.
  • $1500 for mortgage holders and $500 for each modification made while the mortgage is still current.

Now that you see that the lenders and servicers aren't going to be participating solely out of the goodness of their heart, be sure to call them up after you read this to make sure that they will be participating in the initiative. The will be compensated plenty of money for doing what they should have been able to do on their own all along. In essence, the funds given to participating lenders and servicers is going to determine your eligibility. If its going to cost the lender less money to foreclose on your property than it will to modify your loan, you may be in trouble. Additional funds, short sales and other measures will be made available by the initiative to offset the difference on a case by case basis because most homeowners will not fall into this dilemma.

There is a win win for current homeowners, however the eligibility requirements are as follows.

  • Your mortgage MUST be a CONFORMING LOAN owned or guaranteed by Freddie Mac and Fannie Mae. Before you get too excited, double check with your mortgage holder to make sure that your loan falls within this category.
  • Being late on your mortgage or at risk of going into foreclosure
  • Mortgaged property MUST be OWNER OCCUPIED and the mortgage balance cannot be higher than Fannie Mae or Freddie Mac's current conforming loan limits. If you are an investor looking to flip properties or save your vacation home, sorry for you.
  • If your total household expenses (mortgage, car note, utilities, etc.) is greater than or equal to 55% of your total household income then you will be required to complete a debt counseling program. Whether or not it needs to be completed before or after your modification has not been determined yet.

If you want to know what the limits are for your area,

Visit Fannie Mae:
http://www.fanniemae.com/aboutfm/loanlimits.jhtml?p=About+Fannie+Mae&s=Loan+Limits

Visit Freddie Mac: http://www.freddiemac.com/singlefamily/news/newsletter/2008/11/limits.html

Borrowers that are able to have their loans modified and stay current on their payments get a $1000 a year reduction in their principal balance for up to 5 years courtesy of the initiative. If you have met all of your lender or servicer qualifications and you are still unable to get a modification, a bankruptcy judge will have the authority to waive any balance above the homes current appraised value and modify the payment and principal balance . Now that's powerful. Considering that it is limited to the middle class homeowner properties that are within the conforming limits set by Fannie & Freddie.

Now after all of this, you're probably wearing a grin that says “this sounds great, but how can we know that we wont get the shaft for the 3rd time? Well, the Obama Administration, the FDIC and several other organizations are developing newer, stronger and more detailed guidelines that will be in place by March 4th, 2009 and will be available online. All participating financial institutions and credit unions will be required to show and prove that they have modification plans in place that strictly adhere to the guidelines that will be created.

In my opinion this plan will work well for those that need it the most and it will irritate those that it doesn't. At the end of the day, there will never be a plan that will help and please everyone, so they went for the greater piece of the pie which is homeowners with conforming loans.

Job well done Mr. President.

February 10, 2009

Give Yourself Some Credit... Literally

I’m sure you’ve heard of the credit repair companies that have been promoting what they can do to for the credit ratings of individuals across America.

“I went from having a 550 to a 690 in 5 months! It was so easy!”
“I was able to refinance my car and negotiate my credit card interest rates, saving my family over $1,000 a month!! They saved my marriage!!”

With the negative impact and changes due to credit repair programs, it would be a tragedy not to share the basics and provide a proper education on how to manage and maintain your credit rating, yourself. Credit repair has proven to be a less than adequate means of solving our country’s credit problems. We have all learned that credit is important and necessary in this day and age. We have all heard the horror stories of companies pulling our credit reports, and instead of facing that new car or home, we face decline letters, increased stress, decreased lines of credit, divorce, loss of available credit, depression and in many cases, closed accounts.

To bring everyone up to speed on current credit situations surrounding credit repair, allow me to present some facts.

Legally, there isn’t anyone that can remove information from your credit report that is negative and/or accurate. By law you can investigate incorrect and/or incomplete information on your reports at no charge. The Fair Credit Reporting Act (FCRA) states that you are entitled to a free credit report anytime that you have been on the receiving end of adverse action such as declined applications for bank accounts, car loans, mortgages and even employment. For more detailed information, on FCRA see below.

You are also entitled to request a free copy of your report from each of the three consumer reporting agencies, once every 12 months. This can be done through the mail for free. Trust me when I say there is nothing FREE about free credit report dot com or any other site that has to pay to advertise services that you can do yourself for free.

As you can see, if someone legally can’t do the work for you, how can they really help you? That’s right, they can’t. With the average cost of credit repair on the rise it has now become an expense that you can keep for yourself and apply toward your own bills. But let’s make sure that we understand exactly what a credit report is. Credit reports are a numerical representation of our financial character and fiscal maturity. Our financial habits are translated into a score and that score determines our eligibility of obtaining credit lines, homes, vehicles and in some cases employment. Credit doesn’t have to be a hit or miss or even blind luck. Let’s uncover three myths regarding credit and credit management as well as provide options to building a positive credit profile.

Myth #1: Run your credit card up and pay it down with the minimum monthly payment.
Fact: This is one of the fastest ways to ruin your credit.


Anytime your credit card balance exceeds one-third of your credit line, your credit score becomes stagnated and begins to decline. Why? When you exceed 1/3 or 33% of your credit limit your Debt-To-Limit (DTL) ratio begins to decrease. Your DTI is the difference between what you have spent and the maximum that you can spend. For example, on a credit limit of $1,000 and a balance of $800 then your DTL is 80%. That’s 47% above where it should be. Pay down your existing balances and you will see a near immediate change in your credit score.

Myth #2: Make sure and pay your bills when the statement comes.
Fact: By the time you’ve received your statement, if you receive it at all, then you are already late.

We have been misled into thinking that statements are a lifesaver and if we don’t receive our statements, we don’t have to pay. I’ve heard it all. The fact is that when it comes to mortgage statements, only homeowners with adjustable mortgages are required by law to provided monthly statements from they’re mortgage service provider. For fixed rate homeowners, mortgage companies are not required to provide anything more than an annual statement. If you don’t receive a statement from a creditor that doesn’t mean that you don’t pay the debts that you signed your name too.

Myth #3: I should only use my credit cards for large purchases or in emergency situations.
Fact: It’s actually better to make regular purchases on your credit card and pay them off in full immediately.


Credit cards are nothing to be scared of or placed on a pedestal. They do however need to be handled with respect. Of the two types of credit, revolving and installment, revolving is usually the more difficult to maintain. Revolving credit in particular is a luxury and should only be utilized in place of the cash you already have on hand. Cash in hand won’t do anything for your credit, however substituting a cash purchase for a credit card purchase will affect your credit. As a rule of thumb, if you have the option to use a credit card versus cash, make a wise decision depending on your situation.

In order to build a positive credit file, we need to understand all the pieces of the puzzle called a credit score. Here is a breakdown of the different areas involving credit and how much they weigh on your score.


  • The history of your payments equates for 35% of your score.


  • A healthy mix of revolving and installment debt accounts for 10% of your score.


  • The balances and DTL ratio accounts for 30% of your score.


  • 15% of your score is derived from the length of time you have been with your creditors.


  • Random inquiries and new credit lines make the remaining 10% of your score.



There's something beautiful about learning something new, especially something that you want to know about. It removes the opportunity to continue operating in ignorance. You know better, now do better. It's time to leave a better legacy. It's time to own something. It's time to give yourself some credit... literally.




The Λdvocate

February 4, 2009

ECONOMIC EQUALITY: HAS THE DREAM BEEN REALIZED??

Many of us have been bathed in the words of Dr. King's “I Have A Dream” speech, however the purpose behind his words have seemingly gone down the drain of our eardrums. We will all be mistaken if we continue to believe that his dream has somehow been realized and that we have reached the mountaintop. A major part of Dr. Kings dream was economic equality. In his 1967 speech, “Where Do We Go From Here: Chaos or Community?”, he stated:
The curse of poverty has no justification in our age. It is socially as cruel and blind as the practice of cannibalism at the dawn of civilization, when men ate each other because they had not yet learned to take food from the soil or to consume the abundant animal life around them. The time has come for us to civilize ourselves by the total, direct and immediate abolition of poverty.


Let's fast forward to 2009. Eleven million Americans are out of work; this equals the total population of New York City and Chicago combined. When it comes to the unemployment rate among African Americans, it is over eleven percent -- double that of any other race in the United States. When it comes to income, out of 13.7 million African American households sourced in the 2004 Census, almost 10.5 million households (68%) earn less than $75,000 a year. Out of 23.5 million Americans earning over $100,000 a year, over 87% are Caucasian and 1.04% are African American. And as for poverty, 12.5% of Americans live in poverty and of them 24.5% are African American according to the 2008 Census.

To answer the question, no, the dream has not yet been realized, a notion that was seconded by members of the King Family on Inauguration Day. On a socio-economic level, we are unprepared to handle the opportunities that will be presented with the election of an African American president. In and of himself, President Barack Obama's inauguration doesn’t automatically give us, the black community, a voice. It gives us an new opportunity to be seen. Not necessarily appreciated, but it gives the world an opportunity to give us a second look. A second look is needed because the first spotlight view that the world had of us as a people since Dr. King’s passing has been unfavorable.

The last group of individuals or leaders that placed the African American community in the spotlight included Jesse Jackson, Sr., Al Sharpton, Michael Vick, D.C. Mayor Marion Barry, Tupac, Marion Jones, Michael Jackson, 50 Cent, Detroit Mayor Kwame Kilpatrick, and a slew of embattled pastors. They all have left a tainted inward view of what it really means to be Black in America from a global perspective. Before President Obama took office, the sum of the African American community was sports, drugs and entertainment and it was unfairly perceived and packaged as being rooted in Hip Hop. We as a people looked unfavorable on a global front because of the publicized personas and actions of few. For Black America to somehow think that we have arrived says that allot of us have been asleep at the wheel.

So where did we go wrong? We’ve lost our grasp of what has always been the mainstay of the black economy and that is ownership. We've gotten away from what I call Grandparent Economics. Think about how momma and them owned their home free and clear, owned their vehicle free and clear, raised 5-10 children, put them all through college and can still afford to financially support the entire family 30 years later. Now think about how a family of four making twice as much money is struggling to meet the monthly bills and can't be called on to help anyone else. We have also gotten away from being landowners. In 1905, African Americans owned over 19 million acres of land. As of 2005 we own 1.1 million acres and falling. Ironically the average black farmer earns over $600,000 a year and you read earlier about how many of us earn less than $75,000 a year. Numbers don't lie, but we as a people have been lying to ourselves. We created a rush to be integrated into everything that we were denied, but didn't pause to see what things we already did better or if it would really work for us in the long term. The Black Economy has always been rooted in ownership and as of 2009, we are losing our roots. We need to return back to the basics of our own economy if we are going to see the essence of Dr. Kings dream materialize in our lifetime. In a way, Dr. King's dream of economic equality for America as a whole has turned into a fiscal fantasy that is a clear and present nightmare for African Americans.

Having an African American President is a significant milestone for the American people as a whole, not just the African American community. Mainly because he is not the black people’s president, he is the American president. Our dreams of having an African American in the highest office in the land, The President of the United States of America, is the only dream that has been realized.

The Λdvocate