This will be a Rant… On Personal Responsibility, Cause I don't know where they learned it... Wait a minute, Yeah I Do...I have a Frat Bro that when we send emails that are out of order he tells us to "Get in the corner" I've got a feeling that I should start walking...
“Don’t whip your kids, ‘cause it teaches them how to hit. Pleeze…It don’t teach them how to Hit, It teaches them how to Sit Down…” Comedian Sinbad circa 1991
I Agree 110% with Sinbad…
When I was young if I did wrong my momma beat my butt. Period, Point Blank, End of Story! She taught me that there were consequences to my Bad (“Stupid” for you Non-PC people) decisions. Those temporary stints of “Intense Pain” and my deafening cry’s of “Momma, I ain’t gonna do it no mo!!!” solidified my character as it is today. Now, it amazes me that as a grown man I watch many of my black peers (many of whom got whippin’s) move to the side of the tracks that condones becoming your child’s “Friend.” My mother was Not my “Friend,” until I became grown, and the critical days of rearing a young black male to survive in this Constitutional Republic, Capitalistic Society that we call America were behind me. This same movement of thinking condones “Time Out.”
Time Out??? As a kid I played Red Rover, Red Light Green Light, Kick Ball, 4-square, Hide & Seek, & the my personal favorite Catch a Girl Kiss a Girl and I was well aware that when someone called “Time Out” that meant either someone got hurt & was crying, they momma called them, or for the times we played in the street, a car was coming. After all cases when the issue passed, the previous mode of play resumed. So In my opinion “Time Out” only means you got a pause from your previous activities, no matter how bad they may have been.
However, due to the respect & love that I have for my mother there are things that I may do or say in my own home that I will not do or say in hers, this is solely because of my mothers preferred method of using whippings versus time out. She overtly let me know that I didn’t own anything in that house & was allowed by her grace and that of the good Lord to occupy the space in which I stood. I now see kids that I consider out of control, ineligible to critically think & solve problems, and believe that things are supposed to be given to them… Could this be a result of Time Out???
I don’t have any kids, nor do I want any, but if I did (and this applies to my niece & nephew) I have & will continue to Whip their A$$. Period, Point Blank, End of Story! I ain’t changing that paradigm…
Sunday September 7, 2008 under what I deem the cover of darkness the federal government made the decision to bail out Fannie & Freddie Mac.
WHAT? DID I JUST TYPE THAT CORRECTLY??? YOU HAVE GOT TO BE KIDDING ME!!!
In my opinion this is the equivalent of putting the Mortgage industry in Time Out. It is a pause so that they can in the future continue the bad behavior that put them in this position to begin with.
A saying that I have used many times is that Black folk get “Half the Good, and Twice the Bad.” In most things that happen in America this is the case.
During this entire mortgage boom the status quo for black folk continued in the following manner:
Home Ownership & Borrowing Power1. Fewer than 50% of African Americans own their own homes compared to more than 75% of white Americans. The truth is we spend & save at the same rates as white America…the only difference is, when they get in trouble they have a home that they can pull money out of if need be
2. African Americans are more that 3.5 times as likely as white Americans to receive a home purchase loan from a sub-prime lender & 4.1 times as likely as whites to receive a refinance loan from a sub-prime lender. Sub-prime is usually 1 to 6 points over the prime rate, and is reserved for lending to businesses that do not qualify for prime rates.
3. In neighborhoods’ where at least 80% of the population is African American, borrowers are 2.2 times as likely as borrowers in the nation as a whole to refinance with a sub-prime lender
4. Upper Income borrowers that live in predominately African American neighborhoods are twice as likely as low income white borrowers to have sub-prime loans.
5. Home Ownership is important however too often we are using our homes as a piggy bank. Removing equity and never achieving ownership, which makes us perpetual renters that happen to get a mortgage interest deduction. Therefore Nullifying any and all Net worth we achieve
(State of the Black Union, 2006)
These were the statistics during the height of the mortgage boom. It has been said that when America coughs Black Folk catch a cold. In this case America has the Flu, black Folk have Double Pneumonia, Hepatitis C, & the Gout.
Fannie & Freddie are not and have not been Government entities since the early 1980’s Congress made them public institutions, traded on the stock exchange. However the public continued to believe that they were backed by the government, their prevailing thought was that “what could be safer than the government & realestate.” I believe, that if a business fails it should go out of business, or at a minimum file reorginization bankruptcy (Chapter 11). Investors may loose, but that is the risk you take when you invest, that is why in finance is is labeled "Investment Risk." Most businesses when they take a balance sheet whipping go out of business. The article that I read said “They are too Large to Fail.” What in the world does that mean "...too large to fail" Black People, lets put this in perspective, I am 6’2” my momma is 5’4” I was not too large to take a whipping or fail. The redeeming quality in all of that is to learn from your mistakes. My fear is that the financial markets, the home buying public, & the government have not learned anything. They never have to learn how to build a strong balance sheet. The government is swooping in with a dollar sign on its chest like "Captain Save-a-…" (Well I can’t say it but you know what I mean…) This is the equivalent to the current trend in Pee Wee sports where “There are no winners or losers, everyone gets a trophy.” As a youth one of the things that helped me figure out that I had better have an A, B, & C plan is the fact that around 9 years old I was on a baseball team that went 0-13. We didn’t get a trophy, we were loosers and everyone knew it. I quickly learned that If baseball was my Plan A I was in trouble. Plan B was Basketball I have always had a great outside shot & great defensive skills, but my lack of endurance hindered my effectiveness. I quickly learned that If basketball was my Plan B I was in trouble. School quickly became my Plan C. I may not be able to beat you in a physical race but I can out think you!
Fannie & Freddie are not regulatory agencies, they are servicing corporations. HUD is a regulatory agency they set standards for the housing markets to operate. Home loans are backed by bonds. Fannie & Freddie package those loans, bundle them together with similar loans and resale them in the Secondary market to Investors, investment banks, Mutual funds, ect. That is why they are called "Mortgaged Backed Securities." Those Investors hold them for the associated payment stream. (i.e. you pay your mortgage the investor receives the principal & interest payments). The main issue that is being cited is that the good loans (15 or 30 year fixed) have been packaged with the bad loans (Interest only, ARM’s, Option Arms, Backend Balloon, ect), and the bad ones make up a greater percentage of the package than the good not only because of 1st mortgages, but Equity Refi’s, HEOLC’s, 120%, etc. Therefore, it is not as simple as stripping out the bad loans because that makes the entire loan package (the bond) worthless (Gee, Thanks Fannie & Freddie). Remember, in my previous post I discussed the importance of building a Strong Balance Sheet?
This is what Your Balance sheet looks like:
- Asset – Your House (You want to keep your house)
- Liability – Mortgage (You want to get rid of your mortgage)
Note: Hopefully, your mortgage owed is less than the value of your home... (loss of value of the underlying asset is another post)
This is what Fannie & Freddie’s balance sheet looks like:
The issue is that there are people that have given up and walked away from their houses pre or during foreclosure due to ARMS, HELOC, 120's, or Interest Only. That essentially gives Fannie & Freddie (via your bank) a bunch of houses. (Or in simple terms a bunch of Liabilities on their books.) If the market is slow & the buyers are scarce the bank is in trouble which means Fannie & Freddie are in trouble.
So with Fannie & Freddie holding these as the loans go into default, they can’t provide new funds (they don’t have the payment streams or the cash flow) at reasonable rates to the primary market (Wells Fargo, Citibank, Wachovia, BofA) which means they can’t lend to the home buying public.
I made the statement that they want to keep you in a Mortgage as long as they can… Here’s the facts:
Word Association Time
What do all these words have in common
- Morbid
- Mortician
- Mortality
- Mortified
They all mean in some way Death. Because they are all derived from the latin root “Mortuus” which means dead, deceased, passed away, gone West, departed.
What about these words
Engage
Baggage
This suffix in latin means to attach, to promise, to collateralize, assurance, surety.
Is this word in any way similar???
Mort-gage – It means A Promise (An Attachment) till Death
Knowing how the mortgage market works I don’t believe that Fannie & Freddie would have failed. I believe like any other Publically traded company they would have file reorganization bankruptcy (Chapter 11) had their bumps, bruises, and scars only to come out on the other end as a company able to make better choices. Now if this caused there to be stricter lending standards then so be it. The markets, individuals, banks & institutions would be better for having learned the lesson. This should be a true exercise in La Se Fair Capitalism… The market should work this out without government intervention.
I guess I need to remember that these companies are now run by people who got “Time Out” & Not “Whipping’s”…
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