Republican governors on the stimulus

Three of our nation’s most interesting governors happen to be Republican, and were among the most prominent of that party to speak out over the weekend on the controversy du jour – to wit, whether the president’s stimulus bill is likely to help rescue our economy.

Gov. Arnold Schwarzenegger, laden with the curse of the old Proposition 13 legislation that gutted the California economy so many years ago, had just won a significant victory in the matter of his own state’s budget. Gutsy California legislators had managed a compromise that included some tax increases and some spending cuts, driving away the prospect of California’s imminent demise.

The good governor said that he believes President Obama “needs team players,” and that any money the other governors wanted to turn down, well, he’d be happy to accept it for his state.

Schwarzenegger, unlike some, is not rumored to be thinking about running for President in 2012 because, simply stated, he can’t, because he's not a natural-born citizen. Much to the regret of Sen. Orrin Hatch and perhaps even Mr. Schwarzenegger himself. The Republicans' most obvious ticket out of oblivion is out of reach.

Rumored to be very much in reach, on the other hand, is Gov. Bobby Jindal, wunderkind of Louisiana, who has made very strong statements against the stimulus. I’d call them “trophy statements,” for, as New Orleans Mayor Ray Nagin suggested, it seems likely that the governor is choosing his words very deliberately because he is an up-and-coming possibility for the Republican nomination in 2012 and wants to keep the base happy.

Jindal said he will not accept any funds designated to extend unemployment benefits; he explained that “I represent the taxpayers of Louisiana.” Of course, the Louisiana legislature can override his refusal, which he knows, so if and when the funds ultimately come to the aid of his unemployed citizens he won’t have too much to account for.

Gov. Charlie Crist of Florida, on the other hand, actually met with President Obama when the president arrived to promote his stimulus plan. Not only did Crist make it clear that he expected the plan to help Florida, he made it clear why: Tens of thousands of jobs and funds for local and state transportation projects.

Crist had an outlook somewhat different from Jindal’s: “I represent the people of Florida,” he said, making it clear that this includes the poor.

On cable TV a stockmarket guru named Rick Santelli delivered a rant (why do so many of these money guys shout?) in which he proclaimed that the president’s plan for the mortgage crisis would only help people who had bought more house than they could afford.

“It’s not fair!” he shouted, that taxpayers should be asked to help a neighbor who had “an extra bathroom.” (I’m not kidding; you can google it.)

Well, this is a road we’ve been down before.

America has the commitment to fairness in its DNA. We care. The exception may prove the rule, as shown by Jack Kennedy's remark, in a context long forgotten by me, that “life’s not fair.”

But “fair” has nothing to do with how we handle a national crisis, because the other essential quality in our national DNA is “fix it!”

If your neighbor’s house is aflame and you are called upon to help, as I’ve said before, it’s obviously in your interest to bring your water hose to try to put out the fire. And now I add this: Do you really want to stand there calculating the cost of your water bill before you turn on your hose?

The repeated claims by opponents of the administration that it’s all about helping people who should “never have bought houses they couldn’t afford” are unsustainable.
People who are losing or about to lose their homes include hard-working folks who have lost their jobs; just a couple of months out of work can mean getting behind on the mortgage payment. There are people hit with huge medical bills that cause them to fall behind.

Many of the people who are losing their homes are veterans of the Iraq and Afghanistan wars, who came home to find there were no jobs available, or who came home disabled and unable to work. What about them?

And there are people who believed, when they bought a home when times were good, that they’d be able to refinance in a few years because the home’s value would increase, not to worry, no problem, and they believed the lender who sold them that bill of goods.

After all, you want to believe your lender, who is the only expert available. And who was there to tell you that everything was going to come crashing down?

There is another strand of American DNA: Charity. Taking care of one’s neighbor. We always stand together in a crisis.

We are proud of the way we stood together after 9/11. In every community in America people come together to help families who have experienced tragedy, to assist a dying child, to salute a fallen hero.

Let’s not be talked down by the cynics; let’s keep on doing the American thing.

When terror strikes at home

It’s all over the news, of course. Every day more and more folks are affected by it, and when that happens even folks who may not be threatened by it begin to be fearful, wondering if it could happen to them and how they can fight back if it does.

I’m talking about the sorry state of the economy, and specifically about what is happening to home mortgages all around the country.

While the good news is that here in Texas things are a bit more stable, that doesn’t mean that foreclosures aren’t happening, and right in our own Ellis county communities.

It occurred to me that there may be people living in a high state of anxiety who can use some information that might turn out to be useful, and I want to share it.

Now, I’m not a lawyer and I don’t play one on TV, and I’m not a mortgage lender, ditto, but as a real estate broker I can offer some anecdotal evidence, gained through fairly recent experience, that there are things a homeowner can do to make it a little easier to get through these hard times and maybe even protect from foreclosure if it comes to that.

Beginning with the best-case scenario, let’s talk about the fact that mortgage interest rates are really low right now.

If everything is just fine with your credit record and your income, there is this thing called re-financing. If you can lower your mortgage interest rate by 2% or so, it may be well worth your effort to re-finance to a lower fixed rate; this could save you a few hundred dollars a month right there. Depending, of course, on the amount you still owe on your home.

Re-financing has costs — these vary wildly with the lender, but generally include some fees to the lender, the cost of an appraisal, etc. But since most of those costs are just rolled into the new mortgage you won’t feel a thing — after all, if you add a couple thousand dollars to your 30-year loan, that’s really small change over 30 years.

And consider changing a 15-year note to 30 years – if you are just dying to pay off your loan sooner than that, well, you can always pay extra along the way, but your monthly obligation will be less when spread over 30 years. That’s a little more protection against what may be ahead during these hard times.

Talk to the lender of your choice and get a good faith estimate to learn exactly how much you can benefit, then decide your best course of action.

A scarier scenario: You’ve been working hard, playing by the rules, and suddenly hit a bump in the road — been laid off, suffered a costly medical or other family emergency, for example — and just can’t make the mortgage one month but see your way clear to recovery. If that happens to you, then don’t just panic, take action. Contact your lender and see if you can defer that month’s payment, for example. Most lenders will try to work something out, if not from kindness of heart but because they really, really don’t want to foreclose.

Foreclosure is very costly to lenders. They have to hire lawyers and appraisers and pay staff to do paperwork, then try to find a buyer for the property and maintain it in the meantime; they know that in the long run they will lose money, one way or the other. That’s why your lender is as anxious to keep you in your home as you are.

In the third-case scenario — when the job is gone forever and there’s no way of continuing your monthly mortgage payment but still have some income, you should explore with your lender the possibility of a work-out to lengthen the term of your loan and reduce your monthly payment. The Obama administration’s finance team is working on finding a way to require lenders to engage on this idea. But until that’s set up, you are well advised to try to make it happen on your own. You may have to hire a lawyer, but the cost of legal help may be worth it.

My point is, don’t give up until you’ve tried everything.

Finally, when it’s clear you will not be able to keep your home, there is one more thing you can do. It’s called a “short sale,” or selling the house for less than you need to pay off the mortgage.

Why should you care? After all, if you are going to lose your home, why not just let the bank have it?

The reason is that a foreclosure on your credit record is worse, believe it or not, than a bankruptcy.

Sure, declaring bankruptcy would stop the foreclosure, but unless you can make the payments when all is said and done, what have you gained?

A “short sale,” where the lender agrees to accept less than is owed and — this is important — then call it paid in full, is a last resort, but a resort worth trying.

If you’ve done all you can (see above) and it’s clear you are going to have to give up your home, for heaven’s sake start the process as soon as possible.

Hire yourself a real estate agent who knows about short sale marketing, who will aggressively market your home and will go all-out to get a contract in place within the limited time available. You should determine even before you get a foreclosure notice that this will be your course of action, to give yourself as much time as possible.

Three years ago I wouldn’t have known all this stuff, but the sorry news is that this is where we are at the moment and I've racked up personal experience. Too many of our friends are finding themselves overwhelmed by today’s economy.

People facing any of the circumstances I’ve described are likely to become depressed and angry, and justifiably so. But you need all the energy you can muster to be proactive, for you might just find a way forward.

If you or a friend is going through this terror, remember that you are not alone. And though it’s little consolation when you’re hurting, realize that lots of other folks are in the same boat. For what it’s worth, I believe that better days are ahead.

Years ago a friend told me, “The man who falls down gets up faster than the man who lies down.”

So, if any of this resonates with you, don’t take it lying down — DO something!