We constantly hear about how the education system has deteriorated in America, especially for those of us in California. Our government, of course, thinks that the cure to the problem (as it thinks is the cure to any problem) is to through more money and bureaucracy at education efforts. Isn’t it funny how our governments do the same thing time after time, and yet expect a different result?
Here are some simple solutions to the education problem, which will also have a dramatic impact on other trouble areas.
1. Everyone becomes an adult at the age of 18 for everything. That means we reduce the drinking age to 18, and raise the driving age to 18! One other provision, however, will be that you cannot obtain a driver’s license until one has received a high school diploma.
The impact will be that a) we will not need parking lots at the high schools for anyone except teachers, b) high school aged people won’t be driving around for fun, and can spend more time studying, c) there will be fewer deaths caused by reckless driving by teenagers, and d) there will be an incentive to stay in school to get their diploma, rather than drop out.
If they do not get their diploma, they cannot obtain a driver’s license until age 21, which means they cannot consume alcohol until that age, or upon obtaining a high school diploma, whichever is earlier.
2. There should be a uniform dress policy in every school until college. Too much emphasis is placed on image and popularity, and not enough on results. If the children want to dress differently after school, and their parents do not have the backbone to maintain some form of discipline in how their children dress, they can do so outside of school hours.
3. Eliminate “Standardized” testing. Our schools are like automobile assembly plants … crank them out as fast as possible. Teachers, many times at the insistence of school administrators, pass kids on to the next level, even though they have not earned that promotion. Teachers make exams simple, so the kids can pass them and not be held back (or damage their fragile self confidence).
The writer and publisher of the textbooks should include exams that are to be used in conjunction with the textbook so that all students are being tested in the same manner, and so the exams actually test to see if the students have absorbed the material that is being presented. If they do not pass, then they repeat the class. Remember … no diploma, no driving.
4. Allow teacher to teach and administrators to administrate the day to day workings of the school. Parents may not interfere with these people as long as they are following all of the rules that are created for all schools. Instead, hold the parents responsible for the conduct of their children, and give the schools more authority to discipline those who require it.
5. Finally, let’s move to a year round school calendar. Coordinate all of the local schools to the same calendar so families can plan vacations, but keep the school year moving with no more than 4 weeks off in any one stretch.
These three simple suggestions will resolve numerous problems in addition to those already mentioned. There will be less truancy, meaning less crime committed by teens. This will ultimately lead to a reduction in other crimes and help reduce the long term prison population. Furthermore, our children will actually become educated and be able to obtain better jobs, and be more productive to our society, which will result in more American initiative and ultimately more tax revenue. We will no longer need to import educated people from India and China to fill the highly skilled jobs.
Our children will rise to the level of expectation that we set for them. Let's raise our level of expectations now!
Saturday, August 8, 2009
Thursday, July 23, 2009
Jerry Brown Rides Away Again
Once again, the illustrious Jerry Brown has grandstanded on behalf of the little people in order to get some headlines, and then turns his back on them while running for governor.
More than a year ago, as attorney general for the state of California, Mr. Brown filed a lawsuit against Countrywide Home Loans and its subsidiaries for its unlawful predatory lending practices, which was shown in great specificity in the complaint that was filed. Countrywide and Bank of America agreed to settle the lawsuit by agreeing to spend $8 billion dollars to modify those predatory loans.
Once that agreement was put into place, Mr. Brown pounded his chest and told everyone who was listening that he brought Countrywide to its knees, and that thousands of people would have their homes saved and the crash in real estate values would end. Countrywide/Bank of America announced their home retention program through which they would address all of these loans.
Fast forward one year, and we discover that foreclosures still take place, the value of property had continued to plummet, and realistic mortgage modifications are few and far between.
I have worked with many victims of these predatory loans, and my experience has been that they either say “You don’t qualify,” or they come up with a “modification” that is meaningless and unworkable. That allows the lenders to say, “Most of the modifications that are made are defaulted on again.”
Furthermore, Countrywide is a small percentage of the problem. Why didn’t Brown sue the others, such as World Savings (now, Wachovia and Wells Fargo) and Washington Mutual (now Chase)? There are dozens of others that continue to use government bailouts, while allowing the victims of these predatory loans to wallow in despair, destitution and continued unemployment.
Oh, I forgot. He needs to concentrate on another run for governor.
More than a year ago, as attorney general for the state of California, Mr. Brown filed a lawsuit against Countrywide Home Loans and its subsidiaries for its unlawful predatory lending practices, which was shown in great specificity in the complaint that was filed. Countrywide and Bank of America agreed to settle the lawsuit by agreeing to spend $8 billion dollars to modify those predatory loans.
Once that agreement was put into place, Mr. Brown pounded his chest and told everyone who was listening that he brought Countrywide to its knees, and that thousands of people would have their homes saved and the crash in real estate values would end. Countrywide/Bank of America announced their home retention program through which they would address all of these loans.
Fast forward one year, and we discover that foreclosures still take place, the value of property had continued to plummet, and realistic mortgage modifications are few and far between.
I have worked with many victims of these predatory loans, and my experience has been that they either say “You don’t qualify,” or they come up with a “modification” that is meaningless and unworkable. That allows the lenders to say, “Most of the modifications that are made are defaulted on again.”
Furthermore, Countrywide is a small percentage of the problem. Why didn’t Brown sue the others, such as World Savings (now, Wachovia and Wells Fargo) and Washington Mutual (now Chase)? There are dozens of others that continue to use government bailouts, while allowing the victims of these predatory loans to wallow in despair, destitution and continued unemployment.
Oh, I forgot. He needs to concentrate on another run for governor.
Friday, May 22, 2009
As Rome Burned
What is happenening in the United States?
The national debt has almost doubled since 2000 from $5.3 trillion to almost $10 trillion, and climbing daily. What does that mean? That means that every man, woman and child living in the United States today would need to write a check in the amount of almost $80,000 to bring us to zero?
Why and how has this happened?
The number one reason is that we have become lazy, and those "in charge" promote and encourage that laziness. Our standard of living has rapidly increase, while our production has plummeted. We are a nation of consumers rather than a nation of producers. Then, when all of the jobs go to Japan, then Korea, then China and Mexico, everyone complains and screams "Buy American Made Products!"
Of course, when they go to buy American Made products they learn that the price is much higher, and in some cases, the quality is less. Then, instead of trying to work together, labor wants higher wages so they can afford the American Made products, while business tries to get the government to reduce its tariffs against products that it has manufactured overseas.
The legislators (local, state and federal) have much more important things to consider ... like re-election. While the signs of imminent disaster regarding the collapse of the housing market, and therefore, the banking industry, the government officials went merrily along throwing mud at their opponents and getting donations in order to win election or re-election. In the mean time, Rome started burning while they played their fiddles.
There are some difficult decisions and actions that need to be taken in the years to come, and it is going to hurt. The world is smaller because of the Internet and the time for travel and shipping.
And we cannot depend on "The Government" to make it all better. They are the ones who helped screw it up in the first place. It has to come from each of us. It starts with education. Turning off the television, dumping the X-Box and making ourselves more valuable to the world economy as producers, rather than consumers.
Watch for my upcoming book: GREED: The American Dream becomes The Global Nightmare.
The national debt has almost doubled since 2000 from $5.3 trillion to almost $10 trillion, and climbing daily. What does that mean? That means that every man, woman and child living in the United States today would need to write a check in the amount of almost $80,000 to bring us to zero?
Why and how has this happened?
The number one reason is that we have become lazy, and those "in charge" promote and encourage that laziness. Our standard of living has rapidly increase, while our production has plummeted. We are a nation of consumers rather than a nation of producers. Then, when all of the jobs go to Japan, then Korea, then China and Mexico, everyone complains and screams "Buy American Made Products!"
Of course, when they go to buy American Made products they learn that the price is much higher, and in some cases, the quality is less. Then, instead of trying to work together, labor wants higher wages so they can afford the American Made products, while business tries to get the government to reduce its tariffs against products that it has manufactured overseas.
The legislators (local, state and federal) have much more important things to consider ... like re-election. While the signs of imminent disaster regarding the collapse of the housing market, and therefore, the banking industry, the government officials went merrily along throwing mud at their opponents and getting donations in order to win election or re-election. In the mean time, Rome started burning while they played their fiddles.
There are some difficult decisions and actions that need to be taken in the years to come, and it is going to hurt. The world is smaller because of the Internet and the time for travel and shipping.
And we cannot depend on "The Government" to make it all better. They are the ones who helped screw it up in the first place. It has to come from each of us. It starts with education. Turning off the television, dumping the X-Box and making ourselves more valuable to the world economy as producers, rather than consumers.
Watch for my upcoming book: GREED: The American Dream becomes The Global Nightmare.
Friday, April 4, 2008
Mortgage Crisis - The Rise
Oh what a mess has been created in the real estate market. Foreclosures, short sales, job losses and no end in sight. What caused this situation?
The cause can be summed up in one word: GREED!
The residential real estate market was doing well. Prices were going up, interest rates were down, people were moving up and in many cases, keeping their old homes as investments. Homes were appreciating at a slightly above normal pace, but nothing out of the ordinary. So what happened?
1. Where there is money to be made, people will flock to the source. In this case, thousands of people became real estate agents and mortgage brokers. Some of these people had no idea what they were doing, and did not go to work for brokers who would properly train them.
2. Low Doc, no doc and stated income loan programs came into being. Oh, they have been around for many years, but normally required significant down payments. These loan programs allowed for nothing down. Anyone could get a zero down, stated income loan if their FICO scores were high enough. While many mortgage professionals understood the meaning of "stated incomes", others used it to mean that they could write in anything they wanted in order to get a loan approved.
3. Lenders representatives, including some of the big name banks, actually coached mortgage brokers on how to prepare the loan package in order to get the loans through. Some of the things that they were teaching were outright loan fraud.
4. Mortgage brokers not only received a commission for putting a loan together, but could also receive what was known as a "yield spread". What is a yield spread? Well, if you can get the borrower to accept a certain program that benefited the lender, an additional fee would be paid to broker! Often, these fees were as much as 3% of the loan amount, on top of the fees the broker was already collecting. What would trigger these fees? Loans with higher interest rates after the start rate. Adjustable loans instead of fixed loans. Prepayment penalties that would lock in a borrower so they could not refinance for a certain period of time without paying the penalty, even if the rates went down. Didn't these need to be disclosed to the borrower? Of course, but it was just another piece of paper in the midst of dozens, which in many cases were never explained or read.
5. Real Estate agents started doing loans as well as represent buyers and sellers. A real estate agent representing a seller of property could end up representing 5 transactions! Think about it. An agent represents the seller, and meets a buyer at an open house. He gets the buyer to make an offer, using the agent's services as a real estate agent and as a mortgage broker. He is going to represent the seller in the sale of his house, as well as when purchasing a new home and taking care of the financing on that one, too. A transaction like this could amount to $100,000 in commissions to the agent. Where are that agent's loyalties?
6. Prices were too high in California for investors, so mortgage people who could do loans in other states began forming investment groups. They would have meetings, present properties and actually take a bunch of people to places like Las Vegas, Arizona, New Mexico, Florida and North Carolina for the sole purpose of making offers on property in those states. How did they get the money for these purchases? Why, they would refinance their primary residence to make the purchases. Appreciation was now spreading across the country.
7. Finally, the crooked people learned that they could manipulate the paperwork to literally steal from the lenders and from uneducated or naive people. I have worked on cases where a broker literally stole almost $2 million from 22 homeowners, and ruined the credit of those he recruited under the guise of helping people get out of trouble. Another case that I worked on involved identity theft, where an individual ended up owning 5 houses which he did not know he owned. The list goes on.
Yes, there were legitimate reasons for much of the appreciation in the real estate market. Unfortunately, due to the fraudulent loans and easy credit (aka, subprime), part of the increase was an illusion. The "bubble" that everyone predicted for 6 years grew from these illusionary loans, and those loans have created the downfall that is now being experienced in the real estate market place.
There are other reasons for the depth of the downturn. Just as there was artificial appreciation, there is currently artificial depreciation. More on that, next time.
Ken Koenen, LLM
Attorney at Law
Law Offices of Ken Koenen
6200 Stoneridge Mall Rd., #300
Pleasanton, CA 94588
Office: 925-924-0100
Fax: 925-397-3044
Email: ken@lawken.com
Web Site: http://www.lawken.com/
Blog: http://lawkentoday.blogspot.com/
The cause can be summed up in one word: GREED!
The residential real estate market was doing well. Prices were going up, interest rates were down, people were moving up and in many cases, keeping their old homes as investments. Homes were appreciating at a slightly above normal pace, but nothing out of the ordinary. So what happened?
1. Where there is money to be made, people will flock to the source. In this case, thousands of people became real estate agents and mortgage brokers. Some of these people had no idea what they were doing, and did not go to work for brokers who would properly train them.
2. Low Doc, no doc and stated income loan programs came into being. Oh, they have been around for many years, but normally required significant down payments. These loan programs allowed for nothing down. Anyone could get a zero down, stated income loan if their FICO scores were high enough. While many mortgage professionals understood the meaning of "stated incomes", others used it to mean that they could write in anything they wanted in order to get a loan approved.
3. Lenders representatives, including some of the big name banks, actually coached mortgage brokers on how to prepare the loan package in order to get the loans through. Some of the things that they were teaching were outright loan fraud.
4. Mortgage brokers not only received a commission for putting a loan together, but could also receive what was known as a "yield spread". What is a yield spread? Well, if you can get the borrower to accept a certain program that benefited the lender, an additional fee would be paid to broker! Often, these fees were as much as 3% of the loan amount, on top of the fees the broker was already collecting. What would trigger these fees? Loans with higher interest rates after the start rate. Adjustable loans instead of fixed loans. Prepayment penalties that would lock in a borrower so they could not refinance for a certain period of time without paying the penalty, even if the rates went down. Didn't these need to be disclosed to the borrower? Of course, but it was just another piece of paper in the midst of dozens, which in many cases were never explained or read.
5. Real Estate agents started doing loans as well as represent buyers and sellers. A real estate agent representing a seller of property could end up representing 5 transactions! Think about it. An agent represents the seller, and meets a buyer at an open house. He gets the buyer to make an offer, using the agent's services as a real estate agent and as a mortgage broker. He is going to represent the seller in the sale of his house, as well as when purchasing a new home and taking care of the financing on that one, too. A transaction like this could amount to $100,000 in commissions to the agent. Where are that agent's loyalties?
6. Prices were too high in California for investors, so mortgage people who could do loans in other states began forming investment groups. They would have meetings, present properties and actually take a bunch of people to places like Las Vegas, Arizona, New Mexico, Florida and North Carolina for the sole purpose of making offers on property in those states. How did they get the money for these purchases? Why, they would refinance their primary residence to make the purchases. Appreciation was now spreading across the country.
7. Finally, the crooked people learned that they could manipulate the paperwork to literally steal from the lenders and from uneducated or naive people. I have worked on cases where a broker literally stole almost $2 million from 22 homeowners, and ruined the credit of those he recruited under the guise of helping people get out of trouble. Another case that I worked on involved identity theft, where an individual ended up owning 5 houses which he did not know he owned. The list goes on.
Yes, there were legitimate reasons for much of the appreciation in the real estate market. Unfortunately, due to the fraudulent loans and easy credit (aka, subprime), part of the increase was an illusion. The "bubble" that everyone predicted for 6 years grew from these illusionary loans, and those loans have created the downfall that is now being experienced in the real estate market place.
There are other reasons for the depth of the downturn. Just as there was artificial appreciation, there is currently artificial depreciation. More on that, next time.
Ken Koenen, LLM
Attorney at Law
Law Offices of Ken Koenen
6200 Stoneridge Mall Rd., #300
Pleasanton, CA 94588
Office: 925-924-0100
Fax: 925-397-3044
Email: ken@lawken.com
Web Site: http://www.lawken.com/
Blog: http://lawkentoday.blogspot.com/
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