My name is RB and I endorsed this message - Platform priorities

Yesterday I explained that I wanted to lay out what I thought were important priorities for the Presidency 2012-2016. This will be the planks of my platform should I decide to stick with the idea of the run (it will have to be a write-in campaign).

In preparation, I looked back at what I said in 2008. I think the same issues apply, so I'm going to steal heavily from my ideas back then. One difference I notice between 2008 and 2012 is the lack of focus on change. In 2008, almost every candidate was talking change (both the D's and the R's). Well, change happened, we went from a Republican in the White House to a Democrat. Some might say too much changed, some might say too little. But change happened.

My focus will be pretty much the same as last time, with some change thrown in for good measure. Here are the areas I see that need to be addressed for the next four years. This post won't tell you my opinion on any one topic, but instead will list topics I intend to cover later. They will be somewhat in priority order, but that's subject to change (there's that word) later on.

In my platform, I intend to address these topics:
1. National Defense - Iraq is over. Afghanistan will be soon. The current budget outlook for defense means major cuts. We're relying less on boots-on-the-ground and more on drones-in-the-air and special ops. Where do we go from here?

2) Foreign affars - Russia, Pakistan, Iran, India, Europe, Africa, South America, China (including trade) and Mexico (including immigration) - My only update to this list is to add the Middle East (Egypt, Libya, Israel, Syria, etc) and North/South Korea

3) Isolationism vs. becoming entangled in the affairs of other nations - it seems one candidate wants us to pull back and focus on US alone, I'll look at my ideas four years ago and update them.

4) National economy - Jobs, training, mortgages, housing, taxes and spending. I know you think this should be higher. When I look at the economy, I'll explain why it's ranked #4.

5) Healthcare, education and abortion, global warming, carbon credits (hopefully, I'll explain why I grouped these)



6) Points of light - This is an old George H Bush idea. I mentioned it yesterday in a phone conversation with a friend and think it needs to be addressed.

What did I leave out? What do you, the voter and my readers, want me to address?

Count the cost

I started to name this post "How much is that doggy in the window," but decided that most people wouldn't get the point (that phrase is from a VERY old song - older than me).

One of my favorite Bible verses is Luke 14:28. Roughly it says you should "Count the Cost" before building a house. You need to know the cost of the house before you start, otherwise you'll run out of money partway through. Of course in today's world, you wouldn't run out, you'd just run down to the bank and take out a mortgage or you'd whip out your credit card.

It occurs to me that there are times when you don't count the cost. If you're in an accident, you don't shop around for the cheapest ambulance service, you call 911 and take the first one that gets there. After the bill comes, you figure out how to pay. If you have a heart attack, you don't ask the doctor ahead of time "How much is this going to cost?" or "do I have enough money in the bank?" If your roof is leaking, you may call around for the best price/service, but you will go ahead and get it fixed, regardless how much it costs (or at least you should).

Certainly you should have money saved up to cover these kinds of cost, but that's not the subject of this post (maybe a follow-up). My question is, what situations merit this type behavior? Maybe you need a new high-def TV, but not sure whether or not you can afford it. Ok, that's probably an extreme example, but suppose your car is failing. You need a car to get to work. And because of the kids, it has to be a safe car. Do you count the cost or just go out and buy a 2010 BMW. Those cars are safe and reliable.

So my question to you is, when do you count the cost and when do you just go out and do something? This could apply to items like cars, medical treatments, etc. and it could also apply to government.

In real estate - everyone's an expert

Some of you know that our house was recently on the market. "Was" is the operative word. The contract we had with the sales agent expired and we've decided to pull the listing all together. Oddly enough, we had a showing on Saturday - the last day of the contract. If that prospect shows any promise, good, otherwise we'll stay where we're at for a while.

Everyone we've talked to about the sale has reasons that things didn't go well this time. We've gotten references of 3 or 4 agents and we appreciate them. We've also heard from people who can explain what we need to do different.

It occurred to me that real estate is one area where everyone knows something. They have good ideas (and many are truly good) and aren't afraid to express them. It's been an interesting 3 months and I'm sure it will be interesting when we put the house on the market again....

Homeless

Our house has been on the market for about 3 weeks and we have the first showing to a potential buyer today. We're excited.

While it's highly unlikely and the odds are against it, we could be homeless in 24 hours.

Kids, we're moving in with you!!!

Forget on a plane, try snakes near the drain

Ok, I admit that I stole the subject line from this story. I heard about the story on my local television station and wanted to see if I could find out more details.

Imagine this, you wake up Sunday morning and decide to take a nice relaxing bath. You turn on the water, slide into the tub, close your eyes and let the water run over your feet as you think "Calgon, take me away".

Then you feel something solid against your feet, you catch a glimpse of a flicker around the water spout, or maybe a shadow. You open your eyes and what do you see? A foot-long snake swimming in the tub beside you.

At this point, you'd probably be trying to do a Jesus walks on the water scene (it is Sunday morning) or maybe Moses parting the Red Sea. (Later, you'll want to turn the water into wine, but for now, it's just a desire to GET OUT).

This happened to Elena Trowell in Ocean Ridge Florida. She yelled (DUH) and her boyfriend came to help her out (must resist the urge to teach a moral lesson here). They decided to try to take care of the snake themselves by trapping it in a tupperware container from the kitchen. When they returned to the tub, they found a second, larger, angrier snake.

Well, the snakes were removed from the tub and the Ocean Ridge utilities official have and the local Critter Control animal removal services has said it's unlikely the snakes came from the faucet, rather they came up through the drain from under the house. According to the local news story, the couple have decided to keep the snakes (described as corn snakes or rat snakes depending on who you believe) as pets.

Now, had this happened at my house, we would not be keeping the snakes. My daddy always said there's only one good kind of snake and that's a dead snake. Also, we wouldn't have to worry about it happening in our house twice. Instead, my wife would have immediately (after getting dressed) left the house and never returned. The first phone call would not be to Critter Control or the local news, it would be to a real estate agent. The house would be for sale that day.

Foreclosure relief

Back on January 28, I asked the question "When is a rebate, not a rebate?"

Now I ask about foreclosure relief. Seems there are two types of people who are being foreclosed on, first the man (or woman) who simply can't afford his (or her) house. Maybe he had some credit problems when he mortgaged the house and had to settle for a so-called subprime loan (I hate that term). Now the payments are going up. Or maybe some other bad luck has hitten, he's maxed out the credit cards, lost a job or other ways pinched. Bottom line, he can't afford the payments.

The second type of foreclosure is the person who looked for bargains, bought homes on the margin, with little or no money down. Now that home prices are falling, he owes more on the house than it's worth and the prices are likely to never (or at least not soon) go back up. His investment has lost money and he is looking to get out. He's decided to stop throwing more money at it and he will just let the house go to foreclosure.

Government is talking about some sort of foreclosure relief. In the short term, the banks are offering extensions before they enter the foreclosure process. This isn't really an extension, without this if a consumer contacted his bank he would already get extensions. Banks don't want to foreclose, they have enough houses and look at it as a lose-lose proposition. If they do foreclose, they lose money because they can't sell the house.

The short term solution is good because (hopefully) it will make some consumers wake up. They can re-negotiate their mortgage and possibly keep a house they might would lose. Sure it's a stop-gap, but it will help some.

Longer term, there are calls for banks to "forgive" parts of mortgages. I think this is a bad idea. If a house is now worth less than the mortgage, the bank "forgives" the execess mortgage amount. This rewards buyers who put little down or used bad mortgages. It also invalidates a contract. The buyer signed a contract to pay a certain dollar amount, now he's backing out. If the government forces banks to accept these contract changes, the banks lose and will likely not lend money as quickly in the future.

This mess was created over a period of several years, it will take several years to get out of it. Just because this is an election year doesn't mean an action has to be taken. Some people will lose homes, some people will not be eligible for loans. Some young couple who wants a home will be turned down and they didn't do anything wrong. It's just that now they look like a credit risk.

I encourage the government not to do anything to adjust mortages. I also encourage banks and other financial institutions to look carefully at future customers. Any who walked away from a house should be treated like the risk they are. Those who took out bad mortgages should also be treated as a risk.

My take on sub-prime

I've been watching the sub-prime fiasco for some time. The questions are 1) What is sub-prime lending?, 2) Why are lenders in this business? 3) Who loses? 4) Who's to blame? and 5) What can (should) we do about it? The next several paragraphs explore these questions. It's long, but should be easy to read. Please comment.

During my MBA studies, I paid attention to real estate and to legal matters. While I didn't explore either in enough depth to get a real estate license or a law degree, these areas interested me. For my White Collar Crime class, I did a paper on real estate fraud. So I've done some research.

First and foremost, I need to define sub-prime lending. Most lending today is done by a FICO score. If you watch enough TV, you'll see ads about getting your FICO score (don't do it, not worth you money). Basically, you get a score from 0 to 850 that tells your liklihood of repaying a loan. Lenders group everyone into two categories, those with high scores are called "prime" and those with low scores are called "subprime" (sounds like beef). Typically, prime borrowers get good rates and good terms, subprime get higher rates and terms that aren't as good.

Second is why are lenders in this business? Simply put, it's business. Lenders have found that they can make money on these kinds of loans. They may have to increase fees, prevent the borrower from refinancing, increase rates over the life of the loan and anything else. They are taking a higher risk by lending these people money, so they want a higher reward (MBA motto - more risk = more reward).

Another part of the answer to why lender are in this business is that borrowers are in this business. In the past (and somewhat now that the crisis is upon us), subprime borrows simply couldn't get a loan. They weren't able to buy houses at all. Now, thanks to subprime lending, we have the highest home ownership rate in history.

So third is who loses when the subprime industry falters? Well the borrower is the one who is most affected. The borrower who can't pay his mortgage loses his house, trashes his credit and makes the next house even harder for him to buy. His family is rooted up out of his house and his part of the American dream becomes a nightmare.

The lender also loses. Sure they make up for it on other borrowers, but they lose for each borrower who goes under. And in the long run, some subprime lenders will fail. This means the stock-holders lose their investment. Other companies who have supported the lender (including mortgage brokers, appraisers, real estate agents, etc) also lose. Jobs will be lost, mothers will go home to report that they have to look for another job. And because credit tightens up, prospective home buyers everywhere will pay more interest for their mortgages.

One additional loser is the renter. Since mortgages have been so easy, many renters purchased homes. Less apartments have been built and now, the renters are returning. So the supply of rentable space has decreased and the demand has increased. Guess what happens to the average rent payment? (it goes up).

So the next question is who's to blame? The republicans or the democrats? The borrower or the lender? Big business or the little man? Simply put, there's enough blame for everyone. As mentioned earlier, the low rates and easy credit has given us the highest home ownership rate in a long time. More importantly, low income families have benefitted the most from the easy credit situation. They are likely now to lose the most. Everyone who takes credit for the former, also gets credit for the latter. Our capitalist society (in which I gladly participate) means when there is a need, someone will fill it in search of a dollar. So the lender is simply filling a need. Big business is finding a way to help the little man. Could they do it with better terms? Sure, but less people would get loans.

Now, what can we do about it? First and foremost, I believe in personal responsibility. The borrower needs to learn the ins & outs of mortgages (at least HIS mortgage) before he applies. He also needs to practice some discipline, show the lender that he will indeed pay his bills on time and wait for a home until he can actually afford one. Lending terms need to be policed a little better. This burdens me to say this, I typically avoid most legislative changes. But some of the terms in these subprime loans are simply wrong. The purpose is to trap the borrower. Only by cleaning up the laws can lenders be held accountable.

Please post your comments here.