Saturday, May 26, 2012
Monday, May 7, 2012
The Rear View Mirror
The case of Trayvon Martin and George Zimmerman was, and continues to be, a tragedy for all concerned, including the entire country. Those who have a pedestal that the media will follow, Jesse Jackson and Al Sharpton, for example, used the incident to incite a racial divide. Why do they do this without having full knowledge of what actually transpired.
The simple truth is that it is for their own benefit, not for Martin’s family or to help improve the plight of blacks in America.
Today, Leonard Pitts, Jr., a “News” columnist for the Miami Herald, discussed the stereotype of blacks. He made a comment that black students, who guess that 75% of whites who are murdered are at the hands of black offenders, are surprised that the actual number is only 13%. Of course, it is easy to manipulate numbers to make your article look good, so let’s take a look at the real numbers.
• Blacks were disproportionately represented as both homicide victims and offenders. The victimization rate for blacks (27.8 per 100,000) was 6 times higher than the rate for whites (4.5 per 100,000). The offending rate for blacks (34.4 per 100,000) was almost 8 times higher than the rate for whites (4.5 per 100,000).
• What is the percentage of blacks killed at the hands of white offenders? The answer is only about 5%.
• 93% of black victims were killed by blacks.
I do not know what happened in the Martin-Zimmerman matter, any more than Jackson, Sharpton or Pitts knows. In a previous opinion, Pitts made the statement “No justice – no peace!” relating issues to the Los Angeles riots after the Rodney King verdict. While I certainly did not agree with that verdict (I lived there at the time), I could not condone the violence that took place, which hurt many black business owners.
The issue is not that man in the mirror that Pitts mentions, and instead should be a matter of the rear view mirror. They make rear view mirrors in a car smaller than the windshield because it is more important to look ahead than behind. It would appear that black leaders do not agree with that, because they continue to point to the past and what has been done, instead of working within the black communities to point to the future.
Human beings will rise to the level of expectations that are set for them, especially children. Instead of raising the bar and expecting more from black communities, these “leaders” make every effort to keep those communities impoverished and dependent on government, as if it is owed to them for the “400 years of injustice,” which I had no part of and most blacks did not experience. The biggest obstacles in the black communities today are other members of the black community.
I do not care if someone is white, black, brown, yellow, red or plaid! If they make an effort, they are worthy of everyone’s support. If they are not willing to make an effort, then they are destined to remain bogged down in the swamp of sadness.
Work on making progress, rather than excuses.
The simple truth is that it is for their own benefit, not for Martin’s family or to help improve the plight of blacks in America.
Today, Leonard Pitts, Jr., a “News” columnist for the Miami Herald, discussed the stereotype of blacks. He made a comment that black students, who guess that 75% of whites who are murdered are at the hands of black offenders, are surprised that the actual number is only 13%. Of course, it is easy to manipulate numbers to make your article look good, so let’s take a look at the real numbers.
• Blacks were disproportionately represented as both homicide victims and offenders. The victimization rate for blacks (27.8 per 100,000) was 6 times higher than the rate for whites (4.5 per 100,000). The offending rate for blacks (34.4 per 100,000) was almost 8 times higher than the rate for whites (4.5 per 100,000).
• What is the percentage of blacks killed at the hands of white offenders? The answer is only about 5%.
• 93% of black victims were killed by blacks.
I do not know what happened in the Martin-Zimmerman matter, any more than Jackson, Sharpton or Pitts knows. In a previous opinion, Pitts made the statement “No justice – no peace!” relating issues to the Los Angeles riots after the Rodney King verdict. While I certainly did not agree with that verdict (I lived there at the time), I could not condone the violence that took place, which hurt many black business owners.
The issue is not that man in the mirror that Pitts mentions, and instead should be a matter of the rear view mirror. They make rear view mirrors in a car smaller than the windshield because it is more important to look ahead than behind. It would appear that black leaders do not agree with that, because they continue to point to the past and what has been done, instead of working within the black communities to point to the future.
Human beings will rise to the level of expectations that are set for them, especially children. Instead of raising the bar and expecting more from black communities, these “leaders” make every effort to keep those communities impoverished and dependent on government, as if it is owed to them for the “400 years of injustice,” which I had no part of and most blacks did not experience. The biggest obstacles in the black communities today are other members of the black community.
I do not care if someone is white, black, brown, yellow, red or plaid! If they make an effort, they are worthy of everyone’s support. If they are not willing to make an effort, then they are destined to remain bogged down in the swamp of sadness.
Work on making progress, rather than excuses.
Sunday, April 22, 2012
This is a partial excerpt from my book, "The American Dream Becomes the Global Nightmare." http://tinyurl.com/4s3exmd
When the housing market began falling, I shared my plan with many people. Part of that plan was, instead of bailing out the Banksters and their accessories on Wall Street, we could have distributed that $800 billion to the investors, who actually owned the loans. In exchange, they would agree to reduce the interest rates to a manageable 5% per annum. In real estate terms, this is known as "buying down the loan."
This would have reduced the number of foreclosures because fewer people would have been hit by the increase in payments when the interest rates adjusted under the terms of the loan. The "bailout" required on each loan, which would have been minimal, would be added to the balance of the loan.
I have heard all arguments from people at the time I made that suggestion. That wouldn’t be fair to those who were more careful in their purchase or put more money down, or that they did not want to help pay for the idiots who accepted these loan ters, and who were not deserving of owning a house anyway. "Why should they be helped, since they did it the wrong way?" I was asked.
The reality is that those people, who did not want to help those who had been taken advantage of or got caught in the lenders’ predatory lending scheme, have suffered just as much, if not more, with their lost equity and, in many cases, lost jobs. Let’s take a look at an analysis of who really lost when the prices started dropping and no one wanted to “bail-out” the buyers who made bad decisions. The scenario is that two people bought identical homes in the same neighborhood at a price of $500,000.00. Buyer A, whose credit was marginal and could only get a sub-prime loan, put nothing down and had 2 mortgages; one for 80% of the price and one for the remaining 20% of the price. Buyer B, whose credit was excellent and was able to make a 20% down payment, had only one mortgage at 80% loan to value.
The chart below demonstrates that those who didn’t want to “bail out” the irresponsible homebuyers were the ones who were hurt the most. By resisting the help to those who were irresponsible, they took their own equity and threw it away without even realizing it.
Buyer A Buyer B
Purchase Price - 2006 $500,000.00 $500,000.00
Down Payment $0.00 $100,000.00
1st Loan $400,000.00 $400,000.00
Interest Rate 2.9% pmt, 6.5% actual 5.5% fixed
Monthly Payment $1,664.92 $2,271.16
2nd Loan $100,000.00 $0.00
Interest Rate 6.5%, Interest only
Payment $541.67 None
Present Value $375000.00 $375000.00
Out of Pocket Loss Nothing $100,000.00
The big loser is the guy who was responsible, and put down 20% and had a fixed loan. He, in most cases, was the one who was most vocal against those who had been irresponsible, and took on more than they could handle or didn’t pay attention to the terms of what he was signing. The lenders took Buyer B’s $100,000.00 down payment; while the irresponsible Buyer B only lost the place that he was living in on the lender’s investment.
No one, including the banks and the government, took the time to look at the BIG picture.
When the housing market began falling, I shared my plan with many people. Part of that plan was, instead of bailing out the Banksters and their accessories on Wall Street, we could have distributed that $800 billion to the investors, who actually owned the loans. In exchange, they would agree to reduce the interest rates to a manageable 5% per annum. In real estate terms, this is known as "buying down the loan."
This would have reduced the number of foreclosures because fewer people would have been hit by the increase in payments when the interest rates adjusted under the terms of the loan. The "bailout" required on each loan, which would have been minimal, would be added to the balance of the loan.
I have heard all arguments from people at the time I made that suggestion. That wouldn’t be fair to those who were more careful in their purchase or put more money down, or that they did not want to help pay for the idiots who accepted these loan ters, and who were not deserving of owning a house anyway. "Why should they be helped, since they did it the wrong way?" I was asked.
The reality is that those people, who did not want to help those who had been taken advantage of or got caught in the lenders’ predatory lending scheme, have suffered just as much, if not more, with their lost equity and, in many cases, lost jobs. Let’s take a look at an analysis of who really lost when the prices started dropping and no one wanted to “bail-out” the buyers who made bad decisions. The scenario is that two people bought identical homes in the same neighborhood at a price of $500,000.00. Buyer A, whose credit was marginal and could only get a sub-prime loan, put nothing down and had 2 mortgages; one for 80% of the price and one for the remaining 20% of the price. Buyer B, whose credit was excellent and was able to make a 20% down payment, had only one mortgage at 80% loan to value.
The chart below demonstrates that those who didn’t want to “bail out” the irresponsible homebuyers were the ones who were hurt the most. By resisting the help to those who were irresponsible, they took their own equity and threw it away without even realizing it.
Buyer A Buyer B
Purchase Price - 2006 $500,000.00 $500,000.00
Down Payment $0.00 $100,000.00
1st Loan $400,000.00 $400,000.00
Interest Rate 2.9% pmt, 6.5% actual 5.5% fixed
Monthly Payment $1,664.92 $2,271.16
2nd Loan $100,000.00 $0.00
Interest Rate 6.5%, Interest only
Payment $541.67 None
Present Value $375000.00 $375000.00
Out of Pocket Loss Nothing $100,000.00
The big loser is the guy who was responsible, and put down 20% and had a fixed loan. He, in most cases, was the one who was most vocal against those who had been irresponsible, and took on more than they could handle or didn’t pay attention to the terms of what he was signing. The lenders took Buyer B’s $100,000.00 down payment; while the irresponsible Buyer B only lost the place that he was living in on the lender’s investment.
No one, including the banks and the government, took the time to look at the BIG picture.
Wednesday, January 4, 2012
Take a Tax Deductible Weekend!
A great way to make your business travel more enjoyable is to combine it with a tax deductible weekend getaway! You can end your business meetings on noon Friday, and then enjoy that afternoon, Saturday and Sunday at the location where your business was.
Assuming, of course, that it is a location where you would enjoy spending the weekend.
All you will need to do is have another business related meeting on Monday morning and then go home. It can be a meeting with a business associate, a prospective new customer or even an educational event that ties into your business. The key is that whatever it is that you are doing on Monday must have a direct relationship to your business.
For example, if you are a real estate agent and are going to a convention that ends on Friday, you can arrange to meet with a real estate agent in that area for the purpose of being able to exchange referrals in the future. If you are a salesperson and are meeting with a client on Friday, make arrangements to meet another potential client on Monday (or even make a cold call).
You can also bring a spouse or significant other with you. You won't be able to deduct his or her meals or travel expenses (unless you are driving), but you meals and 100% of the hotel costs will be deductible. Of course, if your spouse or significant other works with you in business, all of the expenses can be deductible. Having your spouse work for you is whole other topic, but there are significant tax savings to be had by having your spouse work for you part or full time.
If you are self employed, you are paying all of your own Social Security and Medicare taxes, rather than having one half of them paid by your employer. That means that for every dollar you can deduct, you are saving up to 49 cents in taxes, depending on your State tax structure. You might as well have some fun while you are taking your deductions.
The main thing is to keep good records of the purpose of your business both before and after the weekend, and keep all receipts. There is nothing that will prevent an audit, but by maintaining good records, it will end up with a handshake and a good-bye with the auditor, and all of your money in your pocket.
So, enjoy your tax deductible business trip with a little vacation mixed in.
For more updates like this, Like my Facebook Page - http://tinyurl.com/KenFanPage
Assuming, of course, that it is a location where you would enjoy spending the weekend.
All you will need to do is have another business related meeting on Monday morning and then go home. It can be a meeting with a business associate, a prospective new customer or even an educational event that ties into your business. The key is that whatever it is that you are doing on Monday must have a direct relationship to your business.
For example, if you are a real estate agent and are going to a convention that ends on Friday, you can arrange to meet with a real estate agent in that area for the purpose of being able to exchange referrals in the future. If you are a salesperson and are meeting with a client on Friday, make arrangements to meet another potential client on Monday (or even make a cold call).
You can also bring a spouse or significant other with you. You won't be able to deduct his or her meals or travel expenses (unless you are driving), but you meals and 100% of the hotel costs will be deductible. Of course, if your spouse or significant other works with you in business, all of the expenses can be deductible. Having your spouse work for you is whole other topic, but there are significant tax savings to be had by having your spouse work for you part or full time.
If you are self employed, you are paying all of your own Social Security and Medicare taxes, rather than having one half of them paid by your employer. That means that for every dollar you can deduct, you are saving up to 49 cents in taxes, depending on your State tax structure. You might as well have some fun while you are taking your deductions.
The main thing is to keep good records of the purpose of your business both before and after the weekend, and keep all receipts. There is nothing that will prevent an audit, but by maintaining good records, it will end up with a handshake and a good-bye with the auditor, and all of your money in your pocket.
So, enjoy your tax deductible business trip with a little vacation mixed in.
For more updates like this, Like my Facebook Page - http://tinyurl.com/KenFanPage
Tuesday, November 8, 2011
A New Christmas Tradition
I cannot claim originality on this, but it meant enough to me to share.
As the holidays approach, the giant Asian factories are kicking into high gear to provide Americans with monstrous piles of cheaply produced goods -- merchandise that has been produced at the expense of American labor.
This year will be different. This year Americans will give the gift of genuine concern for other Americans. There is no longer an excuse that, at gift giving time, nothing can be found that is produced by American hands. Yes there is!
It's time to think outside the box, people. Who says a gift needs to fit in a shirt box, wrapped in Chinese produced wrapping paper? Here are some ideas:
Everyone -- yes EVERYONE gets their hair cut. How about gift certificates from your local American hair salon or barber?
Gym membership. It's appropriate for all ages who are thinking about some health improvement.
Who wouldn't appreciate getting their car detailed? Small, American owned detail shops and car washes would love to sell you a gift certificate or a book of gift certificates.
Are you one of those extravagant givers who think nothing of plunking down the dollars on a Chinese made flat-screen? Perhaps that grateful gift receiver would like his driveway sealed, or lawn mowed for the summer, or driveway plowed all winter, or games at the local golf course.
There are millions of owner-run restaurants -- all offering gift certificates. And, if your intended isn't the fancy eatery sort, what about a half dozen breakfasts at the local breakfast joint. Remember, folks this isn't about big National chains -- this is about supporting your home town Americans with their financial lives on the line to keep their doors open.
How many people couldn't use an oil change for their car, truck or motorcycle, done at a shop run by the American working guy?
Thinking about a heartfelt gift for mom? Mom would LOVE the services of a local cleaning lady for a day.
My computer could use a tune-up, and I KNOW I can find some young guy who is struggling to get his repair business up and running.
OK, you were looking for something more personal. Local crafts people spin their own wool and knit them into scarves. They make jewelry, and pottery and beautiful wooden boxes.
Plan your holiday outings at local, owner operated restaurants and leave your server a nice tip. How about going out to see a play or ballet at your hometown theatre.
Musicians need love too, so find a venue showcasing local bands.
Honestly, people, do you REALLY need to buy another ten thousand Chinese lights for the house? When you buy a five dollar string of light, about fifty cents stays in the community. If you have those kinds of bucks to burn, leave the mailman, trash guy or babysitter a nice BIG tip.
You see, Christmas is no longer about draining American pockets so that China can build another glittering city. Christmas is now about caring about US, encouraging American small businesses to keep plugging away to follow their dreams. And, when we care about other Americans, we care about our communities, and the benefits come back to us in ways we couldn't imagine.
How about just taking the time to make your own, personal Christmas card with your words from your heart to show how you appreciate your friends and loved ones.
THIS needs to be the new American Christmas tradition.
Feel free to share this with anyone you want.
As the holidays approach, the giant Asian factories are kicking into high gear to provide Americans with monstrous piles of cheaply produced goods -- merchandise that has been produced at the expense of American labor.
This year will be different. This year Americans will give the gift of genuine concern for other Americans. There is no longer an excuse that, at gift giving time, nothing can be found that is produced by American hands. Yes there is!
It's time to think outside the box, people. Who says a gift needs to fit in a shirt box, wrapped in Chinese produced wrapping paper? Here are some ideas:
Everyone -- yes EVERYONE gets their hair cut. How about gift certificates from your local American hair salon or barber?
Gym membership. It's appropriate for all ages who are thinking about some health improvement.
Who wouldn't appreciate getting their car detailed? Small, American owned detail shops and car washes would love to sell you a gift certificate or a book of gift certificates.
Are you one of those extravagant givers who think nothing of plunking down the dollars on a Chinese made flat-screen? Perhaps that grateful gift receiver would like his driveway sealed, or lawn mowed for the summer, or driveway plowed all winter, or games at the local golf course.
There are millions of owner-run restaurants -- all offering gift certificates. And, if your intended isn't the fancy eatery sort, what about a half dozen breakfasts at the local breakfast joint. Remember, folks this isn't about big National chains -- this is about supporting your home town Americans with their financial lives on the line to keep their doors open.
How many people couldn't use an oil change for their car, truck or motorcycle, done at a shop run by the American working guy?
Thinking about a heartfelt gift for mom? Mom would LOVE the services of a local cleaning lady for a day.
My computer could use a tune-up, and I KNOW I can find some young guy who is struggling to get his repair business up and running.
OK, you were looking for something more personal. Local crafts people spin their own wool and knit them into scarves. They make jewelry, and pottery and beautiful wooden boxes.
Plan your holiday outings at local, owner operated restaurants and leave your server a nice tip. How about going out to see a play or ballet at your hometown theatre.
Musicians need love too, so find a venue showcasing local bands.
Honestly, people, do you REALLY need to buy another ten thousand Chinese lights for the house? When you buy a five dollar string of light, about fifty cents stays in the community. If you have those kinds of bucks to burn, leave the mailman, trash guy or babysitter a nice BIG tip.
You see, Christmas is no longer about draining American pockets so that China can build another glittering city. Christmas is now about caring about US, encouraging American small businesses to keep plugging away to follow their dreams. And, when we care about other Americans, we care about our communities, and the benefits come back to us in ways we couldn't imagine.
How about just taking the time to make your own, personal Christmas card with your words from your heart to show how you appreciate your friends and loved ones.
THIS needs to be the new American Christmas tradition.
Feel free to share this with anyone you want.
Saturday, September 10, 2011
Monday, July 18, 2011
New California Anti-Deficiency Law
Last week, on July 11, 2011, California governor Jerry Brown signed into law a new law to combat deficiency judgments by holders of non-purchase money junior mortgages (second or third mortgages) when the lender has accepted funds during a short sale transaction. This law protects homeowners who refinanced a loan after the original purchase loans. This was Senate Bill 458, and amends the language to the California Code of Civil Procedure §580e.
Previously, a junior mortgage holder of a refinanced loan had the right to collect on any balance unpaid after the sale of the transaction. In many cases, they specifically stated in their short sale approval documents that they retained the right to seek collection of any deficiency.
In January of 2011, a similar law went into effect that eliminated the right of a first lender of a refinanced loan to seek a deficiency judgment after a short sale. However, it did not affect secondary loans after the short sale transaction. As with all laws aimed at stemming the tide of foreclosures and distressed property sales, there is bound to be some confusion in the interpretation of these laws.
The new law only affects real estate of one to four units, and will have no impact on short sale transactions with bare land or commercial property, such as apartments, office buildings or retail locations.
In essence, the law states that if a junior lender accepts any money to release its lien against the property, it will be deemed to have executed a non-judicial foreclosure of the property. Since a California has what is known as a “One Action” rule, a non-judicial foreclosure bars any further attempts to collect on a deficiency. Therefore, if the lender accepts any money during the short sale transaction, it is the only “action” that they can take.
The law also prevents the lender from slipping in a piece of paper in the documents being executed by the sellers in which the sellers “waive their rights” under this law. Any such document will be void as against public policy.
What is going to be the result from this new law? I believe that there are three possible directions that lenders will take.
1. The first possibility will be that the junior lenders will take a stronger stand during the short sale transaction, and demand more money at the time of the sale. I have already seen situations where Chase, when in first position, will offer a second no more than $3,000-$5,000. However, when they are in second position, they are demanding $15,000.00! This could get even worse in the future.
2. The next possibility will be that they refuse to release their lien, and let the first go ahead with foreclosure. The first lender will be stuck with the property and no recourse for any deficiency, but the junior lender will only lose its security (which was probably already worthless) and still have the right to obtain a deficiency judgment.
3. The other possibility is that the junior lender will simply release its lien, without receiving anything of value to do so. As in the situation where they allow the first to foreclose, the junior lender will be free to pursue its deficiency remedies.
This is going to put real estate agents in a very dangerous position, and I will explain why. Whenever anyone approaches a lender requesting a short sale, what is the first thing that the lenders say? They say, “We need the last 2 years of tax returns and three months of bank statements.” I often wonder why they need these items, because in most cases they were not requested when the original loan was made. Te question is, do they really NEED this information, or do the just WANT this information?
When this information is provided to the lender or servicer, they are given all of the information that they need to decide if the seller has enough assets to warrant them pursuing the owner with a lawsuit. If a lender refuses the short sale, and instead sues the homeowner for a money judgment, would the real estate agent who gave the lender the information, or recommended to the seller that they do so be liable for a breach of fiduciary duty? It is a possibility that such could be the outcome.
In my opinion, and I have done this many times with lenders, the lender and servicer needs to know only a few things. They are, a) the Fair Market Value of the Property, b) the offer that has been obtained to purchase the property, and c) that the owner does not intend to make any more payments. The real estate industry has been caving in to the lenders demands for too long, and it is time to take control back.
Help your California clients know their rights and obligations under the law before you start on the short sale route. Check out the video at http://www.lawken.com/ss.htm . These are serious times, and everyone needs to know where they stand.
Previously, a junior mortgage holder of a refinanced loan had the right to collect on any balance unpaid after the sale of the transaction. In many cases, they specifically stated in their short sale approval documents that they retained the right to seek collection of any deficiency.
In January of 2011, a similar law went into effect that eliminated the right of a first lender of a refinanced loan to seek a deficiency judgment after a short sale. However, it did not affect secondary loans after the short sale transaction. As with all laws aimed at stemming the tide of foreclosures and distressed property sales, there is bound to be some confusion in the interpretation of these laws.
The new law only affects real estate of one to four units, and will have no impact on short sale transactions with bare land or commercial property, such as apartments, office buildings or retail locations.
In essence, the law states that if a junior lender accepts any money to release its lien against the property, it will be deemed to have executed a non-judicial foreclosure of the property. Since a California has what is known as a “One Action” rule, a non-judicial foreclosure bars any further attempts to collect on a deficiency. Therefore, if the lender accepts any money during the short sale transaction, it is the only “action” that they can take.
The law also prevents the lender from slipping in a piece of paper in the documents being executed by the sellers in which the sellers “waive their rights” under this law. Any such document will be void as against public policy.
What is going to be the result from this new law? I believe that there are three possible directions that lenders will take.
1. The first possibility will be that the junior lenders will take a stronger stand during the short sale transaction, and demand more money at the time of the sale. I have already seen situations where Chase, when in first position, will offer a second no more than $3,000-$5,000. However, when they are in second position, they are demanding $15,000.00! This could get even worse in the future.
2. The next possibility will be that they refuse to release their lien, and let the first go ahead with foreclosure. The first lender will be stuck with the property and no recourse for any deficiency, but the junior lender will only lose its security (which was probably already worthless) and still have the right to obtain a deficiency judgment.
3. The other possibility is that the junior lender will simply release its lien, without receiving anything of value to do so. As in the situation where they allow the first to foreclose, the junior lender will be free to pursue its deficiency remedies.
This is going to put real estate agents in a very dangerous position, and I will explain why. Whenever anyone approaches a lender requesting a short sale, what is the first thing that the lenders say? They say, “We need the last 2 years of tax returns and three months of bank statements.” I often wonder why they need these items, because in most cases they were not requested when the original loan was made. Te question is, do they really NEED this information, or do the just WANT this information?
When this information is provided to the lender or servicer, they are given all of the information that they need to decide if the seller has enough assets to warrant them pursuing the owner with a lawsuit. If a lender refuses the short sale, and instead sues the homeowner for a money judgment, would the real estate agent who gave the lender the information, or recommended to the seller that they do so be liable for a breach of fiduciary duty? It is a possibility that such could be the outcome.
In my opinion, and I have done this many times with lenders, the lender and servicer needs to know only a few things. They are, a) the Fair Market Value of the Property, b) the offer that has been obtained to purchase the property, and c) that the owner does not intend to make any more payments. The real estate industry has been caving in to the lenders demands for too long, and it is time to take control back.
Help your California clients know their rights and obligations under the law before you start on the short sale route. Check out the video at http://www.lawken.com/ss.htm . These are serious times, and everyone needs to know where they stand.
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