Are subprime loans socially responsible?

If subprime loans had been created to share the American dream with those who might not otherwise be able to participate; then the decline of the economy might not have triggered massive foreclosures, however that is not the case. Subprime loans were created to extract the maximum value out of homeownership (Watkins, 2011). Just knowing this information and the information presented in the two previous blog post causes us to examine two important questions to determine if subprime loans are socially responsible. The first question to consider should be is there a significant racial divide or are subprime loans proportionately distributed?  The next question should be what are the consequences from making these types of loans? First we noted that subprime loans are proportionately sold to African Americans more than any other group if we looked at the rates of subprime loans sold to African Americans with an average income between 60,000 and 90,000, over half approximately 57.3 percent are sold higher interest rate loans. While the white counterparts who are in the same average income range only account for 33.2 percent of the loans at the higher interest rates (Beeman, Glasberg & Casey, 2011). This leads us to ask about the decision makers. As institutions depend on individuals to make these decisions how is it possible that these decision are being made across the board?  Decision makers are tasked to use personal, situational, and environmental knowledge to make an ethical decision (Thiel, Bagdasarov, Harkrider, Johnson, & Mumford, 2012). However knowing that these loans are designed to increase over time it becomes easy to see the motivations for making the loans. The consequences of these types of loans can devastate a household and subprime loans in particular account for almost 50% of foreclosures of all mortgages (Johnson, 2010). However the maker of the loan still got paid, and someone will take over the loan and the lender will eventually be paid, while the borrower has suffered the loss of their home and blows to their credit that was already low to begin with.  When subprime loans are written for the benefit of all responsible parties involved they can indeed be a socially responsible investment, but they should not be entered into without careful consideration and without weighing out all of the options before hand to make sure it is best for all involved.

What is a subprime loan?

Subprime loans are loans with less favorable terms than that of a prime loan. The terms are usually less favorable because the person in question has either poor credit or does not have the necessary income to support or warrant the extension of credit. There are risks involved for the lenders, and for the borrowers. Lenders run the risk of never getting their money back or having it take a long time to see any return on their investment. So in order to absorb some of the risk there are stipulations often added to help insure the lender will get their money back. This often includes adjustable interest and ballooning payments (Smith, & Hevener, 2014) for the life of the loan.  Many of the borrowers of subprime loans tend to be African Americans. Many African Americans are served in their loans by agents that specialize in higher rate loans regardless of their total income (Beeman, Glasberg, & Casey, 2011), this speaks to the other issues of subprime loans and predatory lending that cause us to question the leadership in institutions and the ethics involved in the decision making process. However this is not just because African Americans are less likely than their white counterparts to receive home loans from any sources, because they are more likely to accept subprime loans and therefore are more likely to be victims of predatory lending (Lacy, 2012).  This begs the question of why subprime loans are pushed more towards minorities. It seems to me that the only way to grow the amount of home owners is to either allow those who can’t qualify for prime rate loans to work towards a prime rate loan, or create a separate type of loan that would provide a pathway for those who might never get to a place financially that would allow them to take advantage of a prime rate loan. However in the creation of these types of loans there should be added safety policies that protect the borrowers from those who would harm them and seek to make money off of their circumstances outside of the additional assessment of interest or payment obligations. This would assist leadership in making ethical decisions about what a borrower can afford and how they can still make money off of the transaction.

What’s the big deal with subprime loans?

In order to understand the impact of subprime loans, it is necessary to understand the goals that drive the economy. In this blog we cannot cover the full gambit of measures that drive the economy, so for the purpose of this blog we will focus on home ownership. One of the ways the government strives to grow the economy is through home ownership for moderate to low-income families (Avery, & Brevoort, 2015). This benchmark goal set in to motion loans for mortgages with people who were not financially in a position to actually purchase a house. Many of these people were considered a high credit risk. Many were either not making the actual income they claimed in order to afford the home, or they were not credit worthy. This lead to loans being made with adjustable rates, or ballooning interest rates. All was well as long as the economy was stable for many of these people. The American dream of home ownership seemed to finally be coming true. However when the economy began to take a down turn there was concern this dream quickly began to turn into a nightmare. In 2007 over a million homes began to be foreclosed on as a result of the failing economy (Gilbert, 2011). Many of these foreclosures took place as a direct result of the subprime loans that were made in order to grow home ownership. Many argue that the it was unethical to make such loans to people, however it is my opinion that it was not necessarily the loans, but the amounts the loans were being written for. Many loan officers may have acted unethically in the amounts they were approving and the verification of the information given. These foreclosures also seemed to effect African Americans disproportionately because many of the loans written to African Americans allowed interest rates to grow beyond the risk being assed (Beeman, Glasberg, & Casey, 2011).  So the facts those loans were being made to people who could not normally afford a prime rate loan, or a loan with an average interest rate, and were often being over sold into a house they could not afford and charged more interest than they could afford made it a perfect unethical storm when the economy began to fall and homes began to be foreclosed on. This is why subprime loans were discussed as a viable factor of the failing economy.

Making America Great Again: Public Schools

Last week I wrote the first of a series of articles on how to make America great again. This week we continue in that series by taking a look at the public school system. Are we putting our children in the best possible environment to want to learn?  In a world where our country is falling further and further behind in technology innovations how do we stimulate our youth to become the next wave of great thinkers to address the worlds growing issues?

  I come from a broken family. My parents split up when I was eight years old, and we moved from an Air Force Base and what I would later find was a far more advanced education. It was not necessarily advanced in the things they were teaching, but in the programs they had in place to stimulate how we learned.  Upon starting at my new school I found that I was slightly ahead in some of the concepts we were learning, and since I was I felt I didn’t have to work as hard. This feeling would continue through out the rest of my public school career. It wasn’t until I left high school that I found I was not remotely prepared. In the wake of my public school experience I felt lost. This was further compounded by the death of someone close to me. It took me ten years and a ton of mistakes to come full circle and return to college, this time with the end goal in mind.  This brings me to the present. Now I am currently a Ph.D candidate and doing pretty much what I love, maybe not on the level I wish I was on yet but I have to remind myself I took ten years to get back on track I cannot expect to bridge that gap in less. This also got me thinking about my children and their education.

For this article we are not really looking at the drop out rate, what we are looking at is students that can think for critically on their own. Somewhere along the way we stopped teaching our children how to think for themselves and started treating the public school system as a factory to mass-produce a product. Providing the same education as if we are all cookie cut. Why, maybe, because it is easier than the alternative. Having to pay teachers more money and create a modern system that educates our children for the new world we live in. So I offer to you a story from NPR that may get you thinking enough to spark a change for the future. 

http://www.npr.org/player/v2/mediaPlayer.html?action=1&t=1&islist=false&id=432582341&m=432910352

We can not expect our children to grow up and become adults that can solve problems and think outside of the box if we have not equipped them with the proper tools. What we have done to our school system is allowed it to become stagnate like a pond cut off from the streams and rivers that once fed it and made it vibrant. We used to allow the world into the classroom to allow students to learn and not just memorize. If we are to ever get back to a level where we are competitive and productive we need to stand up demand changes and educate our children so that they may learn to truly think for themselves. I know this is a dangerous idea for the current way of life, but if we continue to travel down this road what kind of future can we really expect for our children. More and more people with a sense of entitlement, dodging their own responsibility for their lives. Let's choose the road less traveled. The harder of the two and do what is necessary to change our goals and expectations of the public school system.

Here is a funny but true sketch from Key and Peele Enjoy and think about it.

https://youtu.be/dkHqPFbxmOU

What happened to substance in Hip-Hop?

Y'all remember when hip hop was about more than just making money. I do. I can remember hanging out as a small kid new to a small town where everyone was family except my family. Being a former military kid I had grown up with lot of people and wasn't used to the community or the way things were in small town America. The one thing we all had in common I found was the love of this thing called rap and the substance that a lot of it provided. Of course there were some songs that were just party tracks and I got to hear a lot of that via my neighbors. Their father was a Dj in the area and had a show on the radio and hosted parties. I cam up on tracks like this.

I did not realize what an effect Hip -Hop would have on my life at the time. It was just something to break the ice and to help me fit in at the time. For some time I was just in awe of the way the words meshed with the tracks and would spend hours listening to music trying to decode all of the lyrics. I figured since I couldn't dance I could at least know all of the words to the songs while I was hoping for a dance. This however turned to me focusing on poetry and eventually getting on stage as a performer in a rap group, and producing my own music. The substance in the songs I grew up with influenced me to embrace the art. It wasn't about the money ever in those days we did it for free and loved it. This got me thinking what was the point where hip hop lost it's substance, it's soul. When did we trade the ability to impact and inform our communities for dollars, or more like cents on the dollar. Up until recently I could count on at least one or two good albums a year with some kind of value to them. A concept album or an album that had something to say other than pop molly, shoot a nigga, drop something twerk something, and bust it open if ya real. Where did all of this come from? Is it just laziness? This new school is missing the message literally, and I blame the artist of yesterday for the decline. Has everyone lost their minds for a little bit of money? Do we not realize what a force we have and how powerful the voice of an artist is? This is what we have left for our children to help keep the revolutionary spirit alive, and seek out injustice and social inequality.

Let's keep it 100 there are a handful of artist out there still making music with some substance but they are fare and few between mainly because the support for that type of music is sparse at best. This is another reason the blame for our youth emulating what they see lays on the older generation as well as the consumers of such garbage music. I know everyone has a right to express themselves and that is only fair, however the practices of the industry to pander to the cheapest and most useless, and soulless forms of entertainment have only become more popular recently because first, we who know better sit in silence and accept it. Hiding behind the rhetoric that they are just making money; it's a business. Second we don't want to acknowledge the effect that music has, because that makes us accountable for what we put out there. That's the real problem people, artist, consumers no one wants to take any responsibility for the footprint they are leaving, because rather you actively make a choice to do something or you passively let it fly because it's not your concern you have to live with that choice. We are living with the choices of inaction now. So the next time you hear some subpar ish on the radio or on a show remember the good ole days, and make a choice. Me I'm turning nonsense music off.

Making America great again and where to start

 With the presidential elections closer than we would care to think, we as citizens of this once great country have to start asking ourselves do we want more of the same. Are we going to sign up for the statuesque and rhetoric that has become the norm over the past three decades? We were once a society of innovators and neighbors focused on making life rich and full for each other. However as the amount of wealth grew for a select few, so did the gap in our ability to empathize with others and to understand we are all a part of this community. Recently while I was watching the republican debate I heard Donald Trump, multi-billionaire, mention he wanted to make America great again. Which started my wheels turning. What would it really take to make us great again? My ideas of what made us great and what has the ability to heal us as a society come from my understanding of some basic business principals and some things that seem to be common sense to me. We have some issues that we need to address before we can even think about calling ourselves great again. This will be a series of the issues I deem important not just for us and the culture we have created in this country, but world wide as we are often imitated around the world, lest our climate of apathy and callousness for each other spread.

So if people with less can be innovative and find ways to take care of others with the waste they would throw away why can we here in a country with so much not find a way to do the same in all our communities to feed those who do not have? It is mainly because of the social stigma attached to not having food or a home. Our society does not see a person in need, we see individuals who have some how earned their place on the streets or their position. When in fact the statistics are staggering.

In 2010, 14.5% (17.2 million) of households in the United States experienced food insecurity at one time. 

• Households with children have almost twice the rate of food insecurity as households without children.
• 26.1% of Hispanic households and 25.2% of black households experience food insecurity, compared to 10.8% of white households experience food insecurity.
• Almost 14% of households experiencing food insecurity consist of a married couple with children, but 35.1% of households consist of a single woman with children, and 25.4% of households with a single father and children experience food insecurity.3

Food insecurity and hunger stem from poverty and a lack of reliable income sources. This climate is controlled by some of the jobs that used to pay a living wage being outsourced overseas. This causes a high rise in the rate of homelessness, healthcare, and petty crimes.

 If we are ever to get back to being a society of innovators we need to start taking care of each other in a way that says we are not just in it for the money. What do you think? Let's really start working on the problems and not just treating the symptoms.

 http://www.npr.org/player/v2/mediaPlayer.html?action=1&t=1&islist=false&id=431960054&m=432036132&live=1

References:
Nord, Mark, and Mark Prell. "Struggling To Feed the Family: What Does It Mean To Be Food Insecure?" Amber Waves June 2007. USDA Economic Research Service.
2.U.S. Conference of Mayors 2010 Status Report on Hunger & Homelessness. Rep. Washington DC: City Policy Associates, 2010.
3.United States. USDA. Economic Research Service. Household Food Security in the United States in 2010. By Alisha Coleman-Jensen, Mark Nord, Margaret Andrews, and Steven Carlson. 2010.
4.Grief, Meridith J., and Barrett A. Lee. "Homelessness and Hunger." Journal of Health and Social Behavior 49.1 (2008): 3-19.
5.Alaimo, Katherine. "Food Insecurity in the United States An Overview." Topics in Clinical Nutrition 20.4 (2005): 281-98.
6.Supra note 4
7.Cook, PhD, John, and Karen Jeng. Child Food Insecurity: The Economic Impact on Our Nation. Rep. Chicago: Feeding America, 2009.
8.Ibid
9."Food Desert Locator Documentation." USDA Economic Research Service - Home Page. United States Department of Agriculture Economic Research Service.
10.United States. USDA. Economic Research Service. Access to Affordable and Nutritious Food Measuring and Understanding Food Deserts and Their Consequences : Report to Congress. [Washington, D.C.]: U.S. Dept. of Agriculture, Economic Research Service, 2009.
11.Baer, Kathryn. "Acute Food Needs Now Monthly Events For More Than Three Million U.S. Households « Poverty & Policy." Poverty & Policy.Wordpress.com. 27 Oct. 2011.
12.Ibid.
13.United States. USDA. Economic Research Service. Food Security Improved following the 2009 ARRA Increase in SNAP Benefits. By Mark Nord and Mark A. Prell. [Washington, D.C.]: U.S. Dept. of Agriculture, Economic Research Service, 2011.

Building the Dream

I want to thank everyone who has hung with us through the difficult times. We have been working very hard to shape our brand into something we can be proud of. This has been a task in and of itself as we needed to take a few steps back in order to serve people and clients better.

During our absence we have secured our own studio location, shot several short films, been to a few festivals and written our first feature scheduled to begin shooting late next year. There a couple of other irons in the fire but we will keep that in our back pockets until the time is right.

It is important for people not to just talk about their dream. I mean if all you want to do is dream, then talking about it is just fine. However if you want to make it a reality there is a lot of hard work that must come before you can begin to live it. So here is the hard truth, everyone will not be able to live their dream. It's not because they are not special, or because they don't deserve it. It is simply because they are not really willing to work for it. Many people believe that other successful people stumble on to it out of luck or having the right connections. The facts actually are that many successful people have worked many hours sacrificed time with family and doing the fun things in life that others may do on a daily basis to be able to reach that point. Just because they are not out sharing those hours with others does not mean they did not earn the it or that it was handed to them over night.

So the very first step in building your dream is to be willing to work for whatever it is.  So with that being said I want to share a song with you from an Artist named P-Dash it's called Work.


Photo courtesy of iampdash.com