Mortgage Brokers Role in Housing Meltdown

I recently heard of a Harvard University housing study which stated that one of the biggest reasons for the current US housing market meltdown is the predatory practices of many mortgage brokers around the country.

In short, the study claims that mortgage brokers which originate 45% of all mortgages and 71% of sub-prime loans have routinely steered borrowers (with deceptive practices!) towards high risk loans, because they generate much higher commissions for themselves when selling these higher risk loans.

The study claims that millions of borrowers who were eligible for normal loans were sold sub-prime loans in order for mortgage brokers to collect these hefty commissions. And of course the lender stood to make greater profits also.

Now millions of people are defaulting on these loans and millions of houses are going into foreclosure causing the housing market to collapse!

Another wonderful example of unchecked capitalism at work! Thank you mortgage brokers!! And by the way, these predatory practices are all completely legal, as we all know it is "buyer beware" even in regards to this most complicated purchase!

Below is a pretty comprehensive article regarding this matter from California Progress Report.com

Broker Abuses and Perverse Incentives

Mortgage brokers are individuals or firms who find customers for lenders and assist with the loan process. Brokers are independent contractors – they provide a way for mortgage lenders to increase their business without incurring the expense involved with employing sales staff directly. Brokers also play a key role in today’s mortgage market: According to the Mortgage Bankers Association, mortgage brokers now originate 45 percent of all mortgages, and 71 percent of subprime loans.[MBA Research Data Notes, “Residential Mortgage Origination Channels,” September 2006.]

Brokers often determine whether subprime borrowers receive a fair and helpful loan, or whether they end up with a product that is unsuitable and unaffordable. Unfortunately, given the way the current market operates, widespread abuses by mortgage brokers are inevitable.

Buying or refinancing a home is the biggest investment that most families ever make, and particularly in the subprime market, this transaction is often decisive in determining a family’s future financial security. The broker has specialized market knowledge that the borrower lacks and relies on. While brokers in California have a common-law fiduciary duty to borrowers, the subprime mortgage market, as it is structured today, gives brokers strong financial incentives to sell excessively expensive loans to borrowers.

Experts on mortgage financing have long raised concerns about problems inherent in a market dominated by broker originations. For example, the chairman of the Federal Reserve Board, Ben S. Bernanke, recently noted that placing significant pricing discretion of mortgage loans in the hands of financially-motivated mortgage brokers can be a prescription for trouble, as it can lead to behavior that violates fair lending laws.[Remarks by Federal Reserve Board Chairman Ben S. Bernanke at the Opportunity Finance Network’s Annual Conference, Washington, D.C. (November 1, 2006).]

A report issued by Harvard University’s Joint Center for Housing Studies concurred: “Having no long term interest in the performance of the loan, a broker’s incentive is to close the loan while charging the highest combination of fees and mortgage interest rates the market will bear.”[Joint Center for Housing Studies, “Credit, Capital and Communities: The Implications of the Changing Mortgage Banking Industry for Community-Based Organizations,” Harvard University, p.4-5. Moreover, broker-originated loans “are also more likely to default than loans originated through a retail channel, even after controlling for credit and ability-to-pay factors.” Id. at 42 (citing Alexander 2003).]

In summary: Mortgage brokers, who are responsible for originating over 70 percent of loans in the subprime market, have strong incentives to make abusive loans that harm consumers, and no one is stopping them. In recent years, brokers have flooded the subprime market with unaffordable mortgages, and they have priced these mortgages at their own discretion. Given the way brokers operate today, the odds of successful homeownership are stacked against families who get loans in the subprime market.

Intelligent Life in The Universe?

I recently watched a TV show on Astronomy which got me thinking about the vastness of the Universe.

Our closest planet, our moon, is about 250,000 miles away. It takes light about a second to reach us from the moon (at the speed of light). Our galaxy, the milky way galaxy, is so immense that it takes light about 100,000 years to travel across our entire galaxy!! Scientists estimate there are about 100 billion stars (like our Sun) in our galaxy alone!

This got me thinking about how many intelligent life forms there might be in our Galaxy and low and behold there is a formula, the Drake formula, which estimates this. I'll include the formula in this post. Using this formula, conservative estimates say that there could be hundreds or even thousands of communicating civilizations in our galaxy alone!

Now for the kicker: how many galaxies are there in the universe? Well in 1999 NASA scientists calculated that there might be as many as 125 billion galaxies in the Universe, with about 3,000 galaxies (like our own, or larger) currently visible from the Hubble telescope.

So then how many intelligent civilizations might there be in the universe? Well, we know there is at least one in our galaxy, us. Drake says there could be a thousand in our galaxy alone. But lets assume there is only one, us. And if you then assume that there is 1 intelligent life form in about 1% of the 125 billion galaxies out there (some estimate as many as 500 billion galaxies) that gives you about 100 million civilizations out there. You can reduce that 1% estimate much lower and still get thousands of civilizations out there.

I think its a pretty safe bet that we are not alone in the universe, the problem is (as far as making contact) that our neighbors are very, very far away!

The Drake Formula:

The Drake Equation was developed by Frank Drake in 1961 as a way to focus on the factors which determine how many intelligent, communicating civilizations there are in our galaxy. The Drake Equation is:

N= N* fp ne fl fi fc fL

The equation can really be looked at as a number of questions:

N* represents the number of stars in the Milky Way Galaxy

Question: How many stars are in the Milky Way Galaxy?

Answer: Current estimates are 100 billion.

fp is the fraction of stars that have planets around them

Question: What percentage of stars have planetary systems?

Answer: Current estimates range from 20% to 50%.

ne is the number of planets per star that are capable of sustaining life

Question: For each star that does have a planetary system, how many planets are capable of sustaining life?

Answer: Current estimates range from 1 to 5.

fl is the fraction of planets in ne where life evolves

Question: On what percentage of the planets that are capable of sustaining life does life actually evolve?

Answer: Current estimates range from 100% (where life can evolve it will) down to close to 0%.

fi is the fraction of fl where intelligent life evolves

Question: On the planets where life does evolve, what percentage evolves intelligent life?

Answer: Estimates range from 100% (intelligence is such a survival advantage that it will certainly evolve) down to near 0%.

fc is the fraction of fi that communicate

Question: What percentage of intelligent races have the means and the desire to communicate?

Answer: 10% to 20%

fL is fraction of the planet's life during which the communicating civilizations live

Question: For each civilization that does communicate, for what fraction of the planet's life does the civilization survive?

Answer: This is the toughest of the questions. If we take Earth as an example, the expected lifetime of our Sun and the Earth is roughly 10 billion years. So far we've been communicating with radio waves for less than 100 years. How long will our civilization survive? Will we destroy ourselves in a few years like some predict or will we overcome our problems and survive for millennia? If we were destroyed tomorrow the answer to this question would be 1/100,000,000th. If we survive for 10,000 years the answer will be 1/1,000,000th.

When all of these variables are multiplied together when come up with: N, the number of communicating civilizations in the galaxy. And yes, it's very boring in the Keys!

Intelligent Life in The Universe?

I recently watched a TV show on Astronomy which got me thinking about the vastness of the Universe.

Our closest planet, our moon, is about 250,000 miles away. It takes light about a second to reach us from the moon (at the speed of light). Our galaxy, the milky way galaxy, is so immense that it takes light about 100,000 years to travel across our entire galaxy!! Scientists estimate there are about 100 billion stars (like our sun) in our galaxy alone!

This got me thinking about how many intelligent life forms there might be in our Galaxy and low and behold there is a formula, the Drake formula, which estimates this. I'll include the formula in this post. Using this formula, conservative estimates say that there could be hundreds or even thousands of communicating civilizations in our galaxy alone!

Now for the kicker: how many galaxies are there in the universe? Well in 1999 NASA scientists calculated that there might be as many as 125 billion galaxies in the Universe, with about 3,000 galaxies (like our own, or larger) currently visible from the hubble telescope.

So then how many intelligent civilizations might there be in the universe? Well, we know there is at least one in our galaxy, us. Drake says there could be a thousand in our galaxy alone. But lets assume there is only one, us. And if you then assume that there is 1 life form in about 1% of the 125 billion galaxies out there (some estimate as many as 500 billion galaxies) that gives you about 100 million civilizations out there. You can reduce that 1% estimate much lower and still get thousands of civilizations out there.

I think its a pretty safe bet that we not alone in the universe, the problem is (to make contact) that our neighbors are very, very far away!

The Drake Formula:

The Drake Equation was developed by Frank Drake in 1961 as a way to focus on the factors which determine how many intelligent, communicating civilizations there are in our galaxy. The Drake Equation is:

N= N* fp ne fl fi fc fL

The equation can really be looked at as a number of questions:

N* represents the number of stars in the Milky Way Galaxy

Question: How many stars are in the Milky Way Galaxy?

Answer: Current estimates are 100 billion.

fp is the fraction of stars that have planets around them

Question: What percentage of stars have planetary systems?

Answer: Current estimates range from 20% to 50%.

ne is the number of planets per star that are capable of sustaining life

Question: For each star that does have a planetary system, how many planets are capable of sustaining life?

Answer: Current estimates range from 1 to 5.

fl is the fraction of planets in ne where life evolves

Question: On what percentage of the planets that are capable of sustaining life does life actually evolve?

Answer: Current estimates range from 100% (where life can evolve it will) down to close to 0%.

fi is the fraction of fl where intelligent life evolves

Question: On the planets where life does evolve, what percentage evolves intelligent life?

Answer: Estimates range from 100% (intelligence is such a survival advantage that it will certainly evolve) down to near 0%.

fc is the fraction of fi that communicate

Question: What percentage of intelligent races have the means and the desire to communicate?

Answer: 10% to 20%

fL is fraction of the planet's life during which the communicating civilizations live

Question: For each civilization that does communicate, for what fraction of the planet's life does the civilization survive?

Answer: This is the toughest of the questions. If we take Earth as an example, the expected lifetime of our Sun and the Earth is roughly 10 billion years. So far we've been communicating with radio waves for less than 100 years. How long will our civilization survive? Will we destroy ourselves in a few years like some predict or will we overcome our problems and survive for millennia? If we were destroyed tomorrow the answer to this question would be 1/100,000,000th. If we survive for 10,000 years the answer will be 1/1,000,000th.

When all of these variables are multiplied together when come up with: N, the number of communicating civilizations in the galaxy.

World Poverty & Environmental Statistics

Just wanted to take a second to post the following info:

20,000 people die each day from waterborne diseases or lack of water.
30,000 people die everyday from starvation.
150 million children world wide live on the streets.
842 million people across the world are hungry.
798 million people in the developing world are undernourished.
25 million people have died from HIV aids.
12 million children are aids orphans.

Economics

Half the world -- nearly three billion people -- live on less than 2 dollars a day.

The GDP (Gross Domestic Product) of the poorest 48 nations (i.e. a quarter of the world's countries) is less than the wealth of the world's three richest people combined.

20% of the population in the developed nations, consume 86% of the worlds goods.

The developing world now spends $13 on debt repayment for every $1 it receives in grants.

7 Million children die each year as a result of the debt crisis.

Today, across the world, 1.3 billion people live on less than one dollar a day; 3 billion live on under two dollars a day; 1.3 billion have no access to clean water; 3 billion have no access to sanitation; 2 billion have no access to electricity.

Resources

12 percent of the world's population uses 85 percent of its water, and these 12 percent do not live in the Third World.

To satisfy all the world's sanitation and food requirements would cost only $13 billion, hardly as much as the people of the United States and the European Union spend each year on perfume.

42 million people are living with HIV/AIDS in the world – 92.8 percent of them in developing countries. 3 million are children under the age of 15. 2.9 million of those children live in the developing world.

Each gallon of gas used by a car contributes almost 20 pounds of carbon dioxide to the atmosphere

94% of the worlds forest are unprotected

1.3% of forest is lost every year in South America

For more information visit PlantingPeace.org

The world is a sad, sad place. Give thanks for what you have.

El Puzzle de Identity

Hello, this is Pluma de Whimsy posting for the first time. Who am I? My identity is as complex as it is for many Hispanics/Latinos living in the United States. For although others try to lump us into one demographic, we know that's impossible. For we come from many different countries with many variations of customs and language. Some of us like to call ourselves Hispanics, other Chicanos, other Latinos, and Nuyoricans and so on. Some of us have lived in the United States for most of our lives or were even born here. Others just came over. We are educated and not, rich, middle class, and poor, Republicans and Democrats or neither. Some of us speak mostly Spanish and some little or not at all, but our common Spanish heritage is a link that we can be proud of.
I, Pluma de Whimsy have spent a lifetime piecing together the two sides of myself. Born elsewhere, but raised here, I've always had to wonder - who am I? Truly I'm not quite one or the other. So I've come to the conclusion that my identity is best defined by what I love. My pen name gives a clue; I love writing and literature and fantasy. Of course there is much more to me and perhaps I'll share more in posts to come. For now though I'd love to hear from others who have experienced living in a world that tries to define us all in one way.
Hasta then,
Pluma

White Trees-A Great Latino Young Urban Novel!

I recently began reading White Trees and I can already highly recommend it to anyone who reads this blog!

White Trees is a young adult novel about the two faces of South Florida. The first is the face of youth -a place of passion and strife. The other is of age - a place of longing for a lost homeland. These two places intersect in White Trees, where the past of a Cuban refugee family still impacts the present of its American-born young in a story of love, longing, and fantasy.

Pick up a copy at the link above today!

A low-cost wind generator!

As we all know energy sources, or better stated, the scarcity of cost-effective, non-polluting energy sources is one of the greatest challenges facing mankind.

Wind power is eco-friendly, available worldwide, and yet to be fully tapped. A major drawback of wind power has been that the wind turbines available up to this point have been very expensive. But what if there was a wind generator that made wind power 10 times more cost effective than today! What if we had a cheap, non-turbine wind generator? Well someone recently invented one and you can check it out at the link below.

Could there be hope for mankind yet??!!

A low cost wind generator!

Destination Three Guys from Miami

If anyone wants a quick shot of Cuban culture check out Three Guys from Miami ! The site is currently showing-off it's eighth annual Christmas edition, featuring complete recipes to fix a delicious Cuban Christmas feast!

You can learn to make mojitos, croquetas, tamales, yuca con mojo, flan, and whatever you do, don't miss their 10 step guide to roasting a pig Cuban style! (if you're squeamish or the thought of seeing a pig butchered offends you, skip the lechon lesson!)

The site also offers a complete listing of Cuban restaurants nationwide.

Destination Idealist.org

Just found an awesome website, Idealist.org , a social networking site (like myspace & others) which specializes in connecting people who are interested in non-profit causes, volunteering, and other not for profit social programs and groups.

The site has been in existence for over a dozen years, and counts with over 200,000 members worldwide! The site currently lists over 7,000 non-profit jobs, almost 12,000 volunteer opportunities, and contact information to over 70,000 non profit organizations around the globe, with almost 1300 organizations doing work in Latin America alone!

Check the site out, you can come into contact with individuals who care about the same causes you care about, or you can pack your bags to save the Amazon rain forest in Brasil! Buen viaje!!

Effective advertising!

Talk about a great ad, this ad for 3M security glass is tough to beat!!

Where's my bazooka when I need it?!!

More bad news for the US dollar!

According to a November 6 article in Currency Trading.net, seven major countries are considering abandoning the US dollar as the currency with which to conduct oil trade, as has been the case up to this point.

These countries are: Saudi Arabia, South Korea, China, Venezuela, Sudan, Iran and Russia. If these countries follow through with their plans, the status of the US dollar as a world currency is in BIG trouble!

As the dollars' demand lessens so does its' value. The article describes the dollar as a cheaply produced US export vital to the US economy, and losing this status will rock the financial lives of Anericans!!

You can read the entire article here:
CurrencyTrading.net

Destination 270 to Win.com

Oh my God, talk about depressing news on the net!!!

According to 270towin.com if the 2008 presidential election were held today, Democrats would have 183 electoral votes and Republicans would have 213 electoral votes with 142 electoral votes undecided. As the sites' title explains a candidate must accumulate 270 electoral votes to win.

Furthermore, according to the site, Republicans have an 83% percent probability of reaching 270 electoral votes and winning the 08 election, while democrats have only a 16% probability of winning.

All this despite 7 years of less than stellar governing by Mr. Arbusto!!!!

I'll need to double up on my depression meds tonight!

Destination Kiva.org, A Great Website, A Great Cause!

Kiva.org is a shining example of what can be accomplished through the power of the internet, in this case the power to connect people of means with people of needs that would not otherwise meet!

Kiva.org gives people like you and me the opportunity to lend small amounts of capital (as little as $25) to specific entrepreneurs in the developing world, empowering them to lift themselves out of poverty.

You can help people such as Nelly Torres who hopes to purchase wood for her small carpentry shop in Peru, with which to make beautiful furniture.

By the way, you are making a loan and not a gift, as to date Kiva loans are being re-payed at a rate of 99.75 %.

Destination the Real Costa Rica

Just found an excellent site with very complete information on Costa Rica. The site includes information on Costa Rica travel, living in Costa Rica, moving to Costa Rica, doing business in Costa Rica, Costa Rica health, education, real estate and much more!

So if you're interested in traveling there, moving there or you just want to find out more about Costa Rica check out The Real Costa Rica and remember that Costa Rica is Pura Vida!!

Saludos to all the Ticos and Ticas out there!

Destination California Taco Trucks

And some of you think that the net is chock-full of useless information. Well, I'm about to prove you completely wrong! You are now just one click away from knowing the exact location of every Mexican Taco truck in California!! This might not be very important to you if you happen to live in NYC, but if you reside in Cali this is life and death type knowledge!!

So to my sister Karina, click on Yum Tacos to get exact directions to El Antojito taco truck at 168th and Fig, in Gardena! The internet rules!!!

Sicko

Just finished watching Sicko and I highly recommend you check it out. The overwhelming feeling I have after watching it is that Health Care and Capitalism are just not a good mix. Seems like health care should be guaranteed to everyone, regardless of their ability to pay. Health care should be a human right guaranteed to everyone, just like freedom of speech, freedom of religion, etc.

And NO I'm NOT a communist, a believe in the free market system, I just don't think it should apply to health care! Canada, France, England and just about every other industrialized nation in the world have universal health coverage. Why can't we?

I know, I know, taxes will go sky high. Well, taxes are high now and what do you get for your tax dollars? The biggest military in the history of mankind. With which we can't even control Iraq.

The US has more than doubled it's military spending in the last 10 years, from 289 billion dollars in 1998 to a projected 640 billion in 2008. The six "rogue" states: Cuba, Iran, Libya, North Korea, Sudan, Syria and the two other super-powers, Russia and China all COMBINED spent about 139 billion dollars on their military last year, about 25% of what the US spends. I'm not anti-American, I love my adopted homeland, but I think PERHAPS we should begin allocating some of those HUNDREDS OF BILLIONS of dollars to more needed necessities.

Back to Sicko, the biggest contrast I saw in the film was between the HUMANA HMO medical reviewer in the US (a doctor by the way!) who got BONUSES for denying medical services to as many patients as possible, and the UK doctor who got bonuses for reducing as many health risk factors as possible from his patients (risk factors such as cholesterol, blood pressure, smoking, etc). In the UK, it appears, doctors are rewarded for making patients well and therefore reducing the health care costs of the nation! Wow, what a novel idea!!!!

(for more info on US military spending go to Global Issues.org

Porque no te callas! (to a Reggaeton beat!)

As you may have heard, the king of Spain recently made world headlines by telling Castro Jr. (Hugo Chavez) to shut up, when Mr. Chavez called the ex-president of Spain a fascist.

Here you'll find the whole bloody incident set to Don Omar's hit Dale Don Dale! Dale Rey Dale!! (you gotta love it!!)

Destination Miniature Earth

I'd like to share with you a site I found a few months ago, and found to be very enlightening. The site does not pertain solely to Latinos, but I believe it will be worth your while nonetheless .

The site Miniature Earth features a short film which shows what the world would look like if the planet's population was reduced to just 100 people ( based on UN and other reputable statistics.)

The statistics regarding world poverty are more than a little disconcerting, but you're left with a feeling of great appreciation for what you have, not a bad thing to have.

I wont spoil the film for you, but I'll leave you with just one statistic: If you own a bed, a refrigerator and have a roof over your head, you're richer than 75% of the world's population.

Destination BBC Mundo

An excellent online resource for Latinos to read objective (I believe) news reporting regarding Latin America is BBC Mundo .

They currently feature an excellent article regarding daily life in Cuba, titled Cartas desde Cuba , as well as great articles on the life of Che Guevara and on Hispanic veterans of war.

The reporting is in Spanish, which is always a welcome opportunity to brush up on our native tongue!

The times, they are a changin'

The Miami Herald reported recently that about 60 teens have been arrested in Cuba for wearing bracelets with the word "cambio" on them (change). The only certainty in life is change and in Cuba it appears finally....the times, they are a changin'.

(Many thanks to Babalu Blog for putting this awesome video together!)

A Breast Feeding Public Service Announcement

As a public service to our Latina mothers we publish the following information from Womens Health.gov regarding the benefits of breast feeding.

Please note that the photo of Luis Miguel's wife breastfeeding is presented ONLY to demonstrate proper breast feeding technique.

(We apologize to our male readers for the inconvenience!)

There are many benefits to breastfeeding. Even if you are able to do it for only a short time, your baby's immune system can benefit from breast milk. Here are many other benefits of breast milk for a mother, her baby, and others:

BENEFITS FOR BABY:

• Breast milk is the most complete form of nutrition for infants. A mother's milk has just the right amount of fat, sugar, water, and protein that is needed for a baby's growth and development. Most babies find it easier to digest breast milk than they do formula.

• As a result, breastfed infants grow exactly the way they should. They tend to gain less unnecessary weight and to be leaner. This may result in being less overweight later in life.

• Premature babies do better when breastfed compared to premature babies who are fed formula.

• Breastfed babies score slightly higher on IQ tests, especially babies who were born pre-maturely.

BENEFITS FOR MOM:

• Nursing uses up extra calories, making it easier to lose the pounds of pregnancy. It also helps the uterus to get back to its original size and lessens any bleeding a woman may have after giving birth.

• Breastfeeding, especially exclusive breastfeeding (no supplementing with formula), delays the return of normal ovulation and menstrual cycles. (However, you should still talk with your doctor or nurse about birth control choices.)

• Breastfeeding lowers the risk of breast and ovarian cancers, and possibly the risk of hip fractures and osteoporosis after menopause.

• Breastfeeding makes your life easier. It saves time and money. You do not have to purchase, measure, and mix formula. There are no bottles to warm in the middle of the night!

• A mother can give her baby immediate satisfaction by providing her breast milk when her baby is hungry.

• Breastfeeding requires a mother to take some quiet relaxed time for herself and her baby.

• Breastfeeding can help a mother to bond with her baby. Physical contact is important to newborns and can help them feel more secure, warm and comforted.

• Breastfeeding mothers may have increased self-confidence and feelings of closeness and bonding with their infants.

BENEFITS FOR SOCIETY:

• Breastfeeding saves on health care costs. Total medical care costs for the nation are lower for fully breastfed infants than never-breastfed infants since breastfed infants typically need fewer sick care visits, prescriptions, and hospitalizations.

• Breastfeeding contributes to a more productive workforce. Breastfeeding mothers miss less work, as their infants are sick less often. Employer medical costs also are lower and employee productivity is higher.

• Breastfeeding is better for our environment because there is less trash and plastic waste compared to that produced by formula cans and bottle supplies