Each year we celebrate many holidays in the country, from the Fourth of July to Christmas, and we also celebrate regional holidays as such as Sweetest Day and Juneteenth.  So, I ask you, Mr. President, why not create a new holiday?: The Mortgage Holiday.

Now many of you may be asking: What you are talking about Warren Ballentine?  Well, I am talking about a one year Mortgage Holiday where homeowners will not be required to pay their mortgage for one year! Do have your attention yet?

Here is how it would work:

1.    It would be optional. You only do it if you choose to.
2.    You cannot be more than three months behind on your mortgage.
3.    The interest on your loan will continue to accrue during the “holiday” year.

If a homeowner is paying a mortgage of $1,500 a month on a 30-year fixed at 7%, about $1,275 of that is going towards interest in the first half of that loan. Which means $225 is going against the principle—$225!!! The mortgage holiday puts an extra $18,000 in that homeowners pocket for that year—$18,000!

With the housing market and the economy in disarray this makes perfect sense. The banks will not lose a dime; in fact they will make more money over the course of the loan with the extra year of interest. Homeowners will be able to catch up on their bills and become credit worthy again, thanks to the extra monthly income they have. The economy will rebound more quickly with the extra cash and credit in the market.

So again I ask you, Mr. President: How about a holiday?

Warren Ballentine is a motivatonal speaker attorney, political activist, and host of The Warren Ballentine Show on radio.

Loan modification usually allows borrowers to reduce their interest on their loan, extend the length of the loan, offer a completely new loan, or some combination of the three. Since the cost of modifying a loan can be less than the cost of defaulting, this method can be mutually beneficial.

Unfortunately, companies are taking advantage of vulnerable homeowners. The Federal Trade Commission has filed complaints against Calif.-based Federal Loan Modification Law Center LLP, and Bailout.hud-gov.us, as well as Florida-based Home Assure LLC, and 68 other companies for fraud. Bill Anz, founding partner of Federal Loan Modification Law Center, defended his operation in an interview with the Associated Press. Anz said he will offer a refund to anyone who doesn’t get a modification. So far about 20% of the company’s 5,000 customers have received a modification, he said, with more in the works. “People might not like it,” Anz told AP, but “realistically, the problem is so large that the private sector must step in.”

The companies charge $1,000 to $3,000 in up-front fees that the FTC says legitimate nonprofit organizations don’t charge. After collecting the fees, many do little or northing to help consumers.

To combat these ill-intentioned reprobates, the FTC has joined forces with the Justice , Treasury and Housing and Urban Development departments (or as I like to call them, the Justice League). As part of the multi-agency effort, the justice department has more than doubled the number of agents investigating mortgage scams, and created a National Mortgage Fraud Team. The efforts come on the heels of Obama’s Making Home Affordable plan, announced in February , aimed at keeping up to nine million Americans in their homes by lowering monthly mortgage payments.

“American homeowners desperately need the relief this program offers, but the very last thing they need is to be taken advantage of as they try to hold on to their homes. This administration is deeply committed not just to providing at-risk homeowners with assistance but also to cracking down on anyone who seeks to defraud them,” Treasury Secretary Timothy Geithner said earlier this month.

Under the Justice League’s efforts, Chase Home Finance, Suntrust Mortgage, GMAC Mortgage, and American Home Mortgage Servicing, are distributing advice to consumers about avoiding mortgage relief scams and directing them to free, legitimate counseling services for at-risk homeowners.

How do you know if you’re being targeted by one of these nefarious companies? Here are a few questions to ask:

Are you required to pay fees upfront? If so, that is a red flag and you may want to reconsider using the company.

Were you asked to pay a fee in exchange for housing-counseling services or modification of a delinquent loan? These services are offered for free by consumer advocacy groups, so walk away.

Were you asked to sign over your deed? “Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt,” says Making Home Affordable Website.

Were you asked to submit mortgage payments to an organization other than your lender, without your lender’s approval? That’s a no-no and a huge glaring red flag.

Where to turn if you’re facing foreclosure:
Obama’s site www.makinghomeaffordable.gov/
HUD-approved counselors
Homeowner’s HOPE Hotline at 1-888-995-HOPE
Refinancing FAQs

Renita Burns is the editorial assistant at BlackEnterprise.com

Sen. Chris Dodd said that it may be necessary to temporarily nationalize some banks. Bank shares tumbled to a new low. (Photo source: White House)

President Barack Obama met with Chief of Staff Rahm Emanuel in the Oval Office with earlier this month. (Source: White House/Pete Souza)

President Barack Obama signed the American Recovery and Reinvestment Act into law into law today during a ceremony on Denver, Colorado.

The economic stimulus bill “provides a direct fiscal boost to help lift our Nation from the greatest economic crisis in our lifetimes and lay the foundation for further growth,” said Obama after signing the bill into law. “This recovery plan will help to save or create as many as three to four million jobs by the end of 2010, the vast majority of them in the private sector.”

The sweeping $789 billion economic package is expected to jumpstart job creation, consumer spending, and boost economic confidence. Jobs created will be in a range of industries from clean energy to health care, with over 90% in the private sector.

The new law will make a huge investment in roads, bridges, mass transit, and other infrastructure, said the president. “It will make investments to foster reform in education, double renewable energy while fostering efficiency in the use of our energy, and improve quality while bringing down costs in healthcare.”

There is a middle-class tax cut and increase aid to the most vulnerable. The new law will distribute tens of billions of dollars to states so they can head off deep cuts and layoffs. It provides financial incentives for people to start buying again, from first homes to new cars.

The bill also gives aid to the poor and unemployed, with a raise in unemployment benefits and subsidies for food and health insurance.

The bill will also creates a clean energy finance authority and offer renewable tax credits that will leverage an additional $100 billion in private investment in the renewable energy sector.

Obama plans to sign the stimulus bill at the Denver Museum of Nature & Science alongside Vice President Joe Biden, Gov. Bill Ritter, and Interior Secretary Ken Salazar and then take a tour of the museum’s installation of solar panels.
Deborah Creighton Skinner is the editorial director at BlackEnteprise.com.

I’ve been laying awake at night worrying about our credit status. I’m not talking about my own ability to borrow. I mean, ours—all of us— President Barack Obama’s, mine, yours, our children, the whole country.

With all the talk of the Obama administration’s coming stimulus package, there’s been very little discussion of how, exactly, we’re going to pay for the $800 billion program.

What I’m getting at is this: In order to finance the plan, the U.S. government will have to borrow from, among other sources, our creditors around the world by issuing IOUs in the way of U.S. Treasury bonds and notes. As those IOUs come due in the future, Washington will repay bond buyers—plus interest—with our (and our children’s) tax dollars.

In recent decades, the chief buyers of U.S. Treasuries have been foreign governments who have confidence in the U.S.’s ability to repay. Two of the top financiers of our debt are China and Japan. Lately, I’m concerned about how those countries view us now. Is the United States beginning to look like a bad credit risk? What incentive do the Chinese and Japanese have to continue financing our debt—especially when their own economies are under siege?

Furthermore, if as a nation, we were assigned a collective credit score, what would it be right now? Think about it: How would MasterCard, Visa, or your bank’s loan officer react if you were faced with a financial crisis of your own and after borrowing to the hilt, you tell them you need an enormous sum of money to get back on your feet. To me, that’s the fix we’re in.

Now, of course, the U.S. has a few things going for it. For starters, we’re the world’s largest economy. We’re good for it, right? Then, there’s the fact that the U.S. has never defaulted on debt—unlike, say, Argentina. Another point many economists make: The Chinese and other nations must finance our debt in order to preserve their own economies. Remember, we’re the biggest buyers of goods produced in those countries.

All of that made me feel somewhat reassured—until I read a recent blog post by economist Vinod Dar, who believes the Obama administration’s stimulus efforts will fail for a host of reasons.

Chief among those reasons, Dar writes, is the notion that “foreigners will not bail us out.” Other nations, Dar insists, face the same major economic problems as the U.S., “which are a squeeze on exports accompanied by contracting home markets. The problem is acute for Russia and Japan, becoming more serious for Germany and Taiwan and an increasing challenge for China … The response of each nation will be similar, which is to turn inward, use their financial surpluses to subsidize internal consumption and failing companies.” Dar’s conclusion as it relates to our heretofore loyal creditors overseas: “Foreigners… now have much less capacity to buy U.S. treasuries than they did a year ago even as the U.S. Treasury plans to issue vast amounts of new paper.”

Okay, now I’m really worried. Shouldn’t we all be pulling together to get through the recession, and not relying on outside creditors? Years ago, in a college econ class, I remember learning that during World War II, Americans were the principle holders of public debt, as they bought war bonds and the like to do their patriotic duty. By the 1970s and 80s, foreigners held an average of 19% of U.S. public debt. By the 1990s, that had changed as foreigners steadily increased their purchases of Treasury securities. By 1997, 38% of U.S. debt was held overseas. And today, of the debt that is available to be financed by the public, more than half is held by foreign and international holders, according to the Treasury Department.

What’s wrong with foreigners holding so much of our public debt? Here’s what economist Dorothy Meadow Sobol had to say in a 1998 report to the New York Federal Reserve Bank: “In deciding whether to hold, add to, or sell their Treasury assets, both official and private investors will consider, among other issues, the political and economic climate in the United States and their own need for dollar-denominated assets. Uncertainty about the outlook for U.S. interest rates or the exchange rate of the dollar as well as any major shock to the U.S., global, or home-country economy could prompt any of these investors to sell their Treasury holdings and shift their dollar assets into another currency.  If these sales were to take place in a substantial amount, they could drive up U.S. interest rates and have wide-ranging effects on U.S. financial markets.”

In one indication that the Chinese are getting nervous our ability to pay them back, former adviser to the Chinese central bank, Yu Yongding, recommended earlier this week that China seek assurances from the U.S. that the $682 billion they hold in U.S. debt won’t be eroded by “reckless policies.” A guarantee is something the U.S. can’t and won’t do. But if the Chinese government actually takes up Yu’s suggestion, it would be akin to your bank asking for additional collateral to back a loan you’ve had for years.

Bernard Anderson, an economist and professor of management at the University of Pennsylvania’s Wharton School, told me to stop all the hand-wringing.

“Look at the alternatives available to the bond purchasers overseas. Who else’s bonds are out there with a higher yield? There aren’t very many other countries that can compete,” Anderson points out. “Would the Chinese rather buy Russian bonds? There’s no safer haven in the bond markets around the world. For anyone who buys U.S. paper it’s likely the paper will appreciate in value when the American economy turns around.”

Anderson, who is also a member of Black Enterprise’s Board of Economists, believes it’s a good thing that foreigners hold as much U.S. debt as they do. It’s an affirmation that, in our new global economy, we’re all in this together, he says.

So, what do you think? Are you worried about how the stimulus will be financed? Do you think it’ll work?

John Simons is the senior personal finance editor at Black Enterprise magazine.

As is common during appearances, Obama signed copies of his book for attendees. (Photo source: White House)