March 5, 2009
Funny Money
February 25, 2009
My Response to President Obama's Address
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
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 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.
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.
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??
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
January 30, 2009
Understanding The Black Economy Pt. 2
S.F.
January 26, 2009
Redefining & Rebuilding Main Street (Pt. 2)
The Christian community outspends almost every demographic in the United States reflecting an increasing shortfall in the area of contentment. We’ve come to a place that has our fear of God being trumped by our fear of being without money and material things. We’ve become removed from the biblical accounts that define humility in finances. Instead some have followed the actions of the world and even those “Pas-stars”, whose actions and lifestyles are far from humble. Understand that there is absolutely nothing wrong with the economy if you understand that the Earth and everything in it belongs to God. Maybe God is taking a radical step to get the attention of his people in the one way that is guaranteed to do so. We’ve been idolizing real estate, vehicles, unreasonably expensive clothing and merchandise that our blessing of a job allowed us to buy. But we have a book full examples that show us how to do more with less and how if we come together we can do more than if we are separate.
In rebuilding our communities, we need to rebuild ourselves. Over the years I’ve run across many homeowners that were in such a rush to buy a large, beautiful home. Yet as time passed and the reality of homeownership sank in, I heard many of them say I wish I would have waited. I also heard them say, they weren’t ready. Growing up my parents always told me that my eyes were bigger than my stomach. I ate allot, not necessarily because I was hungry, but because great food was readily available. Many of us have made life changing purchases simply because we felt we could afford it and it’s available. We didn’t consider the long term effects of indulging our short term wants. We didn’t count the costs of ownership when we left the dealership in a brand new Chrysler 300 or BMW 3 series. We didn’t count the cost when we decided to get the 5 bedroom house versus the 2 bedroom condo. Though they may have costs the same price upfront, in both instances there is a severe difference in the cost of ownership.
At the end of the day, we need to adjust our own financial habits. One may feel that all the stars are aligned and the deal is so on time and that you have to make that purchase right away. We need to pause in the midst of our desires being tempted and ask for direction and guidance. Every analyst and tv commercial is telling us to buy, buy, buy. Buy a home because it’s the best time to buy. Buy a car, because it’s the best time to buy one. Buy stock because it’s the best time to do. The truth is, it’s anytime is the best time to buy real estate, automobiles and investments.
January 18, 2009
Thoughts on Unemployed Husbands
January 7, 2009
Rebuilding & Redefining Main Street Part 1
The Christian community outspends almost every demographic in the United States reflecting an increasing shortfall in the area of contentment. We’ve come to a place that has our fear of God being trumped by our fear of being without money and material things. We’ve become removed from the biblical accounts that define humility in finances. Instead some have followed the actions of the world and even those “Pas-stars”, whose actions and lifestyles are far from humble. Understand that there is absolutely nothing wrong with the economy if you understand that the Earth and everything in it belongs to God. Maybe God is taking a radical step to get the attention of his people in the one way that is guaranteed to do so. We’ve been idolizing real estate, vehicles, unreasonably expensive clothing and merchandise that our blessing of a job allowed us to buy. But we have a book full examples that show us how to do more with less and how if we come together we can do more than if we are separate.
In rebuilding our communities, we need to rebuild ourselves. Over the years I’ve run across many homeowners that were in such a rush to buy a large, beautiful home. Yet as time passed and the reality of homeownership sank in, I heard many of them say I wish I would have waited. I also heard them say, they weren’t ready. Growing up my parents always told me that my eyes were bigger than my stomach. I ate allot, not necessarily because I was hungry, but because great food was readily available. Many of us have made life changing purchases simply because we felt we could afford it and it’s available. We didn’t consider the long term effects of indulging our short term wants. We didn’t count the costs of ownership when we left the dealership in a brand new Chrysler 300 or BMW 3 series. We didn’t count the cost when we decided to get the 5 bedroom house versus the 2 bedroom condo. Though they may have costs the same price upfront, in both instances there is a severe difference in the cost of ownership.
At the end of the day, we need to adjust our own financial habits. One may feel that all the stars are aligned and the deal is so on time and that you have to make that purchase right away. We need to pause in the midst of our desires being tempted and ask for direction and guidance. Every analyst and tv commercial is telling us to buy, buy, buy. Buy a home because it’s the best time to buy. Buy a car, because it’s the best time to buy one. Buy stock because it’s the best time to do. The truth is, it’s anytime is the best time to buy real estate, automobiles and investments. The question you need to ask yourself is whether or not it’s the best time for me. How will it affect my household, my finances, my piece of mind, if I do this now. You can never go wrong waiting if you’re waiting on god to tell you what to do. We need to develop a stronger ability to say no to the things we want and say yes to the things God has for us.
© 2008 The Joseph Consortium, LLC
December 17, 2008
Understanding the Black Economy Part I
There is something institutionally off key when men and women of all ages, education and income levels, face the same dilemmas just on different scales. It lets us all know that we need to come together. It lets us all know that it’s time to dig deep and get it right, not just for ourselves but for generations to come. So the question today is…
“What financial foundation can we begin to build that is worth handing down to the next generation?”
There are many ways to get rich. But would you rather be rich or wealthy? It’s been made pretty clear that the Jones’s that many have been trying keep up with having been playing an incredible game of charades. The jobs, the homes(s), the cars, the private school for the children, the vacations and of course, the expensive shoes and matching purses that are the envy of the PTA. We looked at everything they had and then we had a choice to make. Option A was not to worry about what anyone else has or looks like they have. They have theirs, you’ll have yours and I’ll have mine (and together we’ll be fine...). And you thought it was just a song? Option B was to worry about why they have nice things and you don’t. Even though you work just as hard and nothing ever seems to come to you easy, but they always have nice new stuff and go to nice places and the closest I’ve been to a vacation was seeing one on the travel channel.
Why did we make a lifestyle out of competing for false wealth and short lived celebrity? Over the last 150 or so years, the percentage of African American wealth in the Total Net Worth of the United States has not changed. We remain only 1.2% of the country’s total net worth, yet we make up 13% of the total population. To put that in perspective, even though we have the most amount of African American millionaires and billionaires in history, we have not progressed beyond the same 1.2% from 1865 (Civil War Reconstruction Era). Slavery ended in 1865 with the Thirteenth Amendment and we are dead even with the net worth of the then newly free African Americans. My mind screams the necessary yet assumedly rhetorical, why?
Surely the net worth of the country in 1865 was pennies in comparison to what it was during the Clinton Administration, yet the African American population’s percentage of 1.2% hasn’t grown. There are several facts that we must acknowledge before we can begin to understand why. Do understand that when it comes to the practical application and foundations of African American economics, we all need to keep an open mind. There is no room for pride or wearing of a prized college degrees on one’s sleeves. The economy doesn’t respect documents that show people that we did well. Recipients of PhD’s, MBA’s and GED’s are all getting foreclosed on and laid off, so it’s time to let go of our usual sight lines of forecasting financial success.