Thursday, March 31, 2011

5-Part Series, Digging Out of America's Foreclosure Mess; Part 4, Socially Conscious Private Investment

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Many Americans believe there is an ideological war brewing in our nation that pits socialism against capitalism and social justice policy making against constitutional policy making.

Many see government policies that are socially conscious as the government having picked winners and losers in the private business sector.

This extends now even to individual families with newly proposed programs that bail out some troubled homeowners with mortgage write downs making them winners, while other underwater mortgage holders, those who have not had financial hardships making payments and are not in foreclosure, are made losers with this policy by not being eligible for write downs.

It is reasonable to view greedy financial industry capitalists as the original cause of the housing bubble burst which set the Great Recession in motion. They are seen as the politically connected group who were bailed out by taxpayers which then afforded them no real consequences for their sins.

Most financial institutions are now in better shape as millions of taxpayers are now in worse shape due to the devastated economy and record breaking high unemployment. These capitalists are seen as evil and are not necessarily seen as capable of being socially conscious in resolving the foreclosure mess.

Many blame Congress for implementing policy years ago that interfered, in the ideology of social justice, with sound financial industry qualifying standards for housing credit.

Many believe the government’s continued interference into the private sector with the failed Home Affordable Modification Program (HAMP), and now even more proposed new government programs, will not be the answer to digging out of the foreclosure mess.

HAMP was recently acknowledged as having been ineffective and poorly conceived, executed, and managed by the Congressional Oversight Panel.

What if government policy created an environment that put the private sector front and center in solving the problem instead of government and taxpayers in the center?

What if policy rewarded socially conscious private sector solutions instead of presuming only government should and will be socially conscious or must be directly involved to solve problems?

Are there capitalists that will fulfill this role for society as a whole? What if there already are? Is it possible to learn from such an example?

Lender and asset manager Bryan Ganz, CEO of Scudder Bay Capital, LLC is a socially conscious capitalist. Over the last few weeks he has been meeting with several Massachusetts congressmen and staffers including Representative Barney Frank and both Senators Brown and Kerry.

Bryan explains, “We are bringing to their attention the risks we see with the manner in which the government is currently dealing with the foreclosure crisis. In addition, we presented several proposals that we believe would help us work through our current problems.”

The following are excerpts from the white paper Bryan Ganz is presenting.

“The foreclosure crisis is the number one economic issue facing America today. While some may argue job creation should be our top priority, and others may believe stimulating the economy should job one, the simple fact is there can be no meaningful economic recovery as long as the housing market remains dead in the water. Unless and until we deal with the foreclosure crisis, there can be no improvement in the housing market and no sustainable economic recovery.”

“Since the 1950’s, the housing industry has been America’s single most important engine for economic growth. Historically, the housing industry has directly or indirectly accounted for roughly one-fifth of all American jobs and 17% to 18% of GDP.”

“Today, however, the housing market is on life support. Since the peak in 2006, home prices have fallen 27%, wiping out $9.0 trillion in wealth as millions of homes have been lost to foreclosure. Today, with many of these foreclosed homes languishing on the market, the supply of unsold homes in America has ballooned to 3.4 million, representing more than eight months of supply.”

“With plummeting prices and an enormous glut of unsold homes clogging the market, builders are simply not building. New home sales in December fell to a seasonally adjusted rate of just 284,000 which is the lowest level in 47 years. This means that no one is buying the concrete, lumber, glass and steel that goes into building our homes."

"Nor are we buying the sinks and stoves, the pools and patio furniture, or the toilets and TVs that go into filling our homes. We are not hiring the carpenters, electricians, masons, and plumbers needed to build our homes or the brokers, bankers, lawyers, and accountants needed to sell our homes.”

“While it may be tempting to view the foreclosure crisis on a micro level, seeing it as a problem only for those few irresponsible homeowners that foolishly got in over their heads, this is simply not the case. The reality is the foreclosure crisis is a societal problem that keenly affects all of us.”

“The homeowner facing foreclosure has already lost the equity in their home. In reality, they have little left to lose. The rest of us, however, stand to lose substantially more if an additional 10 million foreclosed homes are dumped on an already saturated housing market. Not only would this surely quash the nascent economic recovery now in place, it would destroy trillions of dollars in market value on top of the losses already sustained.”

“While we can argue about the root causes of this crisis, there can be no argument about its potential impact. If another 10 million homes are lost to foreclosure, the effect on the overall economy will be catastrophic. Robert Schiller (of the Case Schiller Index) recently estimated that housing prices could fall as much as another 25%. If this were to happen, Americans would lose another $6.0 trillion of asset value.”

“We all remember from Economics 101 that prices are a function of supply and demand. Due to the insidious nature of foreclosures, when a home is lost to foreclosure it affects both sides of the equation. Not only do the foreclosed homes come on the market, adding to supply, but, based on current lending practices, the foreclosed upon homeowners are effectively barred from the housing market for up to seven years.”

“This reduces the pool of potential buyers and hence reduces demand. With increased supply and reduced demand, housing prices have nowhere to go but down. If we add 5 to 10 million homes to the supply side of the equation, and we remove 5 to 10 million potential buyers from the demand side of the equation, housing prices would remain under extreme pressure for many years.”

“If a homeowner has the financial wherewithal to remain in their home (if their loan were modified to reflect today’s lower value of their home), we must do everything possible to keep these people in their homes and to keep these homes off the market.”

“Conversely, if a homeowner does not have the financial wherewithal to remain in their home (even if their mortgage were to be modified), we must do everything possible to transition these homeowners to more appropriate housing. Only in this way can these homeowners get back on their feet financially, and we can work through the glut of non-performing loans.”

“What is “everything possible? First, the solution does not require an additional dime of taxpayer money beyond what has already been committed. Nor does it require new and complicated federal programs. Rather it requires only common sense and a little arm twisting in order to get the various federal agencies to do their jobs and to work in concert to resolve the current crisis.”

“I formed Scudder Bay Capital, LLC 2 years ago with my wife (a consummate do-gooder) to help resolve the mortgage crisis in New England. We wanted to be a part of the solution. Our strategy was simple.”

“We would buy non-performing loans and then work closely with homeowners in a socially responsible manner to help them stay in their home when possible. Or we would work with homeowners to transition to more appropriate housing, and to get back on their feet financially, when it was not possible for them to stay in their home.”

“The first order of business would be to determine which homeowners could afford to make their mortgage payments if their loan were modified or refinanced to reflect the current value of their homes and which homeowners could not.”

“For those homeowners that could afford to stay in their homes, our plan was to either modify their loan or allow them to refinance at a significant discount to the unpaid principal balance and arrearages on their existing loan.”

“By reducing the principal balance and forgiving the arrearages, we hoped to create at least 5% equity value in their home. This helps the homeowner get back on their feet financially and provides them with an incentive to remain current on their mortgage.”

“For those homeowners that could not afford to stay in their home, our plan was to provide financial assistance to allow these homeowners to transition to more affordable housing which is often a rental property. The deficiency balance would be forgiven, and all past due payments would be waived. This allows them to get out from under their crushing debt load and to move on with their lives.”

“In addition, we would provide cash assistance, relocation services, and credit counseling services to ensure a smooth transition. Once the family was relocated, we would sell the home on the open market to a more qualified buyer that could afford the payments. In this way, not only could we help the homeowner start over, we could turn a non-productive asset into a productive asset.”

Bryan and Susan Ganz of Scudder Bay Capital, LLC are working within the American private sector capitalist system to help Americans who are facing the loss of their homes. Their work is also helping Americans who are facing further home value loss due to more foreclosures causing downward pricing pressure on the real estate market as a whole.

They are sound private sector investors who are willing to look at each homeowner individually with compassion while maintaining financial realism. They are an example that capitalists are not all void of social conscious.

In Part 5, we conclude the series with Bryan Ganz’ personal experience as a lender and asset manager in working directly with and helping homeowners in foreclosure.

Bryan knows what government regulations hinder progress and what changes need to be made to allow the private sector to be an asset in digging out of America’s foreclosure mess. He is talking to Washington politicians, and hopefully they are listening.

Visit tomorrow for Part 5, Working Investor Solution.

Part 1 - Prolonged Pain

Part 2 - Failed Government Intervention

Part 3 – New Government Programs

Part 5 – Working Investor Solution

Follow Brenda Krueger Huffman on Twitter and join her on Facebook.

Wednesday, March 30, 2011

5-Part Series, Digging Out of America's Foreclosure Mess; Part 3, New Government Programs

Photo Credit - Flickr Common
Loan modifications have failed. The federal government put together an ineffective and grossly mismanaged Home Affordability Modification Program (HAMP). The lenders did not really want to modify loans.

In reality, the federal program pushed temporary modification trial programs that had little incentive to move them to permanent modification status.

The homeowners submitted the same paperwork over and over again in the approval process, and then they were denied the loan modification most often anyway. Those few homeowners that were approved many times ended up defaulting on the lower payments.

The HAMP was designed for a lower payment on the primary mortgage or the first lien on the home. Very few servicers of second liens have agreed to participate, and no second liens have been modified. For homeowners with second liens, the lower payment on just the first lien may not be enough to get them back on track in keeping up with payments.

The HAMP also did not take into account the ability of a lender to modify loans based on government regulation and financial rules already in place. The first lien holder may give up a first position to other lien holders if the second (or third) lien holder did not participate in an agreement to modify the first lien. The lender must also take losses once a loan is modified. This could result in significant financial and regulatory capital reserve problems for several financial institutions.

Another reality is when homeowners have no job or employment stability, they cannot make a mortgage payment no matter how much they may want to or how low the payment. Five dollars is a lot of money if one needs it and doesn’t have it. Adding to the mix is an already strained homeowner paying the contracted $5 for something they know is only worth $3 now.

The lenders have been their own worst enemies in the foreclosure mess. Their bad behavior in not working with loan modifications in good faith, dragging their feet on modification approval to extend penalty fee revenue, robo-signing foreclosure paperwork, and the lingering sentiment that they caused the housing mess to begin with has left them in a position for maximum public outrage and more government intervention.

The Obama administration and Treasury may or may not have learned from the HAMP disaster, but they are already planning on new government intervention programs aimed at the loan servicers. They are looking at forcing loan balance reductions for underwater mortgages with loan servicers developing their own mortgage modification programs.

Further, they want to specify the cost of reducing loan principle be paid by the loan servicers themselves and not by public or private investors that bought mortgage-backed securities.

How easy it is to ignore one of the main reasons the HAMP failed so miserably was because loan servicers did not really want to modify loans and had a financial incentive not to in reality.

Perhaps the average loan servicer has had a change of heart. Perhaps they will jump at the change to not only modify loans to ensure lower payments but reduce the principle to reflect value loss too. And this time the cost would not be government paid but loan servicer paid.

That won’t cause any problems for a new government program or new regulation, will it? The average consumer will be helped not hurt, right?

Perhaps Treasury has in fact learned from their mistakes in the HAMP experiment - or maybe not.

This new program would have the loan servicers write down loans they serviced on behalf of Fannie Mae and Freddie Mac. Perhaps the inherent conflict-of-interest the Congressional Oversight Panel (COP) noted in their report “A Review of Treasury’s Foreclosure Prevention Programs” has been solved. You remember:

“Treasury has essentially outsourced the responsibility for overseeing servicers to Fannie Mae and Freddie Mac, but both companies have critical business relationships with the very same servicers, calling into question their willingness to conduct stringent oversight.”

“Freddie Mac in particular has hesitated to enforce some of its contractual rights related to the foreclosure process, arguing that doing so “may negatively impact our relationships with these seller/servicers, some of which are among our largest sources of mortgage loans.” Treasury bears the ultimate responsibility for preventing such conflicts of interest, and it should ensure that loan servicers are penalized when they fail to complete loan modifications appropriately.”

In addition to the federal government looking to impose new programs on loan servicers, several states are looking at new ways to impose principle write down programs for underwater mortgages.

Some are also looking at funding local loan modification programs with civil fines in excess of $20 billion being levied on loan servicers for their misdeeds. The fines could come as a requirement to write down loans. Democrat Tom Miller, Iowa Attorney General, is leading a national effort for all 50 states.

States have been hurting for a while. They know the unrelenting high unemployment has their citizens hurting too. Four of the hardest hit (Arizona, California, Florida, and Michigan) have been looking for ways to make mortgage payment easier for some for a while.

According to a article last May, “States have radical ideas to stop foreclosure.”

In all honesty, isn’t it government intervention with unsound mortgage practices and housing regulation a big part of what led to the financial crash and housing bubble burst to begin with? Will new government programs, to replace the already failed first government try the HAMP, lead to salvation now or just more problems in the free market system?

Will new government programs now pick winners and losers among citizens as well as the financial sector? Do these new government programs make sense? Will lenders work around them as they did HAMP?

Our real world real estate professionals want to see America dig out of the foreclosure mess with sound investment strategy and socially conscious innovation. Massachusetts real estate attorney Elliott Topkins of Topkins & Bevans and lender and asset manager Bryan Ganz, CEO of ScudderLLC Bay Capital, share their expertise.

Do they believe the state and/or federal government intervention in imposing underwater mortgage principle write downs will work?

Realtors Resource Blog author Elliott is optimistic on the proposal. “Yes, and it will get the real estate market moving again, because sales can be made without getting lender consent.”

Bryan advises, “I do not believe it is necessary for the government to cover the banks’ losses. The banks have already reserved against their nonperforming loans. They have plenty of incentive to get these loans re-performing, even if they have to write down the principal amount of the loan.”

He continues, “What the government needs to do is to stop taxing institutions on ‘phantom income’ when they modify a loan. This is an absurd provision of the tax code and needs to be corrected.”

Bryan notes, “In addition, the single most important thing the government could do is to create a secondary market for these modified or refinanced loans by having Fannie and Freddie to buy the loans. This would be significantly more impactful than using taxpayer dollars to pay down underwater loans.”

How can fairness to “all homeowners” be assured in any principle write down government plan. Should it be?

Elliott comments, “Fairness to all consumers in general involves proper lender accountability. They have been and continue to run amok as far as I can see.”

Bryan pulls directly from his current lending and investing experience, “My company only works with deserving homeowners. While this is the majority of homeowners, there is definitely a group that is trying to take advantage of the crisis in order to live in their home payment free.”

“The first thing is to figure out which homeowners are willing and able to make their mortgage payments if their mortgage were modified to reflect the current value of their home. We must then do everything to encourage the modification or refinancing of these loans at a principal amount that reflects the current value of the home.”

Bryan offers, “The modification could certainly contain a claw-back provision, so the bank could recover some of their loss if real estate prices recover. For those homeowners that cannot afford to stay in their home, even at today’s reduced value, everything must be done to help these people transition to more affordable housing. This would include banks providing financial assistance, so these homeowners could afford to move and put down first and last month’s rent as well as a security deposit.”

“The federal government should also consider allowing a rental deduction similar to a mortgage interest deduction. We have long encouraged home ownership. We now need to be encouraging people to give up their home if they can no longer afford the payments and move to a rental property they can afford.”

Bryan concludes, “While modifying mortgages for people that stop paying may seem unfair to those homeowners that continued to make their payments, in the end these homeowners will benefit indirectly as the value of their home will not continue to decline. The economy as a whole will recover more quickly. Also, those homeowners that receive a modification will have to deal with damaged credit for years to come.”

How can fairness to “all taxpayers” be assured in any principle write-down government plan. Should it be?

Elliott considers the bigger picture view for the stabilization of the real estate market and asset wealth in mind. “That is a hard one. This needs to be marketed as no less important than the credit crunch of 2008. Everyone must understand we are in danger of prolonged free fall.”

Bryan’s view comes from his company Scudder Bay already having thought out these questions. “The programs I am proposing should not cost the taxpayer anything. Banks have already reserved against these nonperforming loans as I mentioned. Banks should not need any funds from the taxpayer to have an incentive to modify these loans."

Bryan knows, "Realistically, the banks really don’t want the homes. They simply need to find a solution. They cannot sit with a nonperforming loan on their books indefinitely.”

Should homeowners and taxpayers that do not have any housing payment or mortgage value ratio problems care about those Americans that are having problems?

Elliott sees this question as a question of humanity first in opinion formation. “I am concerned both as a human being and a citizen that we need to address this problem in a way that does not give the lenders all the cards to play. I was encouraged by what I read of Elizabeth Warren’s recent testimony before the House. She has some brains, and she is courageous.”

Bryan believes being socially conscience and of sound business practice are not exclusive. “This is a problem that will affect everyone and everything. If millions of additional homes are lost to foreclosure, the real estate market will remain depressed for years. Not only will this negatively impact housing prices nationally, it will hamper any meaningful economic recovery for all people, business, and government.”

Visit tomorrow for Part 4, Socially Conscious Private Investment

Part 1 - Prolonged Pain

Part 2 - Failed Government Intervention

Part 4 – Socially Conscious Private Investment

Part 5 – Working Investor Solution

Follow Brenda Krueger Huffman on Twitter and join her on Facebook.

Tuesday, March 29, 2011

5-Part Series, Digging Out of America's Foreclosure Mess; Part 2, Failed Government Intervention

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In March 2009, the Obama administration launched the Home Affordable Modification Program (HAMP) promising it would keep 3-4 million struggling families in their home. To date, the HAMP program actually helped about half a million. Treasury Secretary Timothy Geithner has acquiesced the program will not meet the numbers promised.

On March 16, 2011, the Congressional Oversight Panel (COP) released its final report.

Within the specific report “A Review of Treasury’s Foreclosure Prevention Programs” released December 14, 2010, the COP reported, “In April 2010, in its most recent report on Treasury’s foreclosure prevention programs, the Panel raised serious concerns about the timeliness, accountability, and sustainability of Treasury’s efforts. As the Panel noted at the time, “It now seems clear that Treasury’s programs, even when they are fully operational, will not reach the overwhelming majority of homeowners in trouble…. Treasury is still struggling to get its foreclosure programs off the ground as the crisis continues unabated.”

The report’s conclusion of the success of the HAMP was brutal yet honest. “The Panel now estimates that, if current trends hold, HAMP will prevent only 700,000 to 800,000 foreclosures – far fewer than the 3 to 4 million foreclosures that Treasury initially aimed to stop, and vastly fewer than the 8 to 13 million foreclosures expected by 2012.”

The COP puts the blame squarely on the shoulders of the Treasury even though they noted the economic logic may have initially been strong. The HAMP issues the COP cites include:

*Insufficient initial understanding of the real world financial incentives of lenders and servicers

* Ineffective program design with no requirement of lender participation

*Inadequate management of Fannie Mae and Freddie Mac conflict of interest element

*Poor communication to homeowners of availability

*Limited process for homeowner application

*Deficient program data collection and analysis

*Deficient monitoring of program execution.

In detail from the COP report, “In particular, banks typically hire loan servicers to handle the day-to-day management of a mortgage loan, and the servicer’s interests may at times sharply conflict with those of lenders and borrowers.”

“For example, although lenders suffer significant losses in foreclosures, servicers can turn a substantial profit from foreclosure-related fees. As such, it may be in the servicer’s interest to move a delinquent loan to foreclosure as soon as possible.”

It continues, “HAMP attempted to correct this market distortion by offering incentive payments to loan servicers, but the effort appears to have fallen short, in part because servicers were not required to participate.”

“Another major obstacle is that many borrowers have second mortgages from lenders who may stand to profit by blocking the modification of a first mortgage. For these reasons among many others, HAMP’s straightforward plan to encourage modifications has proven ineffective in practice.”

The report provides an answer to why most HAMP applicants could testify to having the same paperwork requested several times by the same lender during their loan modification approval process without reasonable explanation.

These applicants may now realize what perhaps the real problem may have been with their HAMP approval process with this conclusion from the COP report. “Treasury has also failed to hold loan servicers accountable when they have repeatedly lost borrower paperwork or refused to perform loan modifications.”

“Treasury has essentially outsourced the responsibility for overseeing servicers to Fannie Mae and Freddie Mac, but both companies have critical business relationships with the very same servicers, calling into question their willingness to conduct stringent oversight.”

“Freddie Mac in particular has hesitated to enforce some of its contractual rights related to the foreclosure process, arguing that doing so ‘may negatively impact our relationships with these seller/servicers, some of which are among our largest sources of mortgage loans.’ Treasury bears the ultimate responsibility for preventing such conflicts of interest, and it should ensure that loan servicers are penalized when they fail to complete loan modifications appropriately.”

The COP communicated several concerns and made many suggestions to the Treasury during its oversight tenure for improvements. This feedback was ignored. COP concluded, “Absent a dramatic and unexpected increase in HAMP enrollment, many billions of dollars set aside for foreclosure mitigation may well be left unused. As a result, an untold number of borrowers may go without help – all because Treasury failed to acknowledge HAMP’s shortcomings in time.”

The COP offers now that at least there should be learning from mistakes in developing any further programs. “Future policymakers should be mindful that the incentives of mortgage servicers are different from those of the government, and design any foreclosure mitigation program with that reality in mind.”

Truer words could not have been spoken by the COP. Those that work in housing related industries do understand the problem from the perspective of real world everyday business workings unlike those with layers of insulation making policy in meetings in the buildings in Washington D.C.

Our series working experts are Massachusetts professionals Elliott Topkins, a real estate attorney with Topkins & Bevans and author of the Realtors Resource Blog and lender and asset manager Bryan Ganz, CEO of Scudder Bay Capital, LLC.

Elliott believes the HAMP has not worked, because “It was poorly envisioned. There were not enough incentives for the lenders. I would like to have seen write-downs of mortgages to the current fair market value of the home in hardship situations. Lenders should have been given tax credits for the markdowns.”

Bryan details, “While the federal government has made much of the moral imperative that financial institutions have to modify loans, the fact is the federal government penalizes any institution that actually agrees to reduce a borrower’s principal amount or even lower their interest rate.”

He explains further, “It used to be the case that when a financial institution purchased a mortgage on the secondary market and modified the loan, the homeowner was taxed on the debt that was forgiven, and the financial institution was taxed on the difference between the purchase price of the loan and the new modified face amount. As a result, mortgages were rarely, if ever, modified.”

Bryan notes, “In response to the housing crisis, the tax on homeowners was eliminated, but the tax on the financial institution was left untouched. Since almost all nonperforming loans have been sold at a discount on the secondary market, these taxes on ‘phantom income’ serves as a very real deterrent to modification, particularly as almost half of all mortgages modified since 2005 have re-defaulted within a year of modification.”

He offers, “It is asking much of these institutions to pay an upfront tax on a 30 year stream of future payments when these payments so often cease within a year of the modification. It only stands to reason that if this tax is eliminated, the number of modifications will increase, and the number of foreclosures will decrease. Moreover, this change to the tax code would be revenue neutral over time as the tax would still be due when the lender actually receives the payments.”

Looking at the bigger picture of the real estate industry as a whole, what do our experts believe are the largest mistakes being made by the real estate professionals and industry as a whole in this crisis period?

Elliott answers with questions of his own. “A big mistake has been accepting the status quo and making “short sales” a new flavor of choice. What happens to the people who have an approved short sale? Where are they going? Why can’t we figure out a way to keep these people in their homes? Of course, I mean the worthy ones. I mean the ones who are looking for a fresh start.”

Bryan answers, “I think the most serious and egregious errors were made in the loan origination process with loans being made with no regard for the borrower’s ability to pay. The mistakes being made now, such as robo-signing and filing foreclosure proceedings before loans have been “assigned”, are more technical in nature. Frankly, I believe they are being overstated by the media.”

He notes, “These problems are simply due to the enormous quantity of bad loans the banks and servicers must deal with now. At Scudder Bay, we handle only a few dozen loans a year, so we can take a hands-on, personal approach. In fact, we meet with every homeowner face-to-face. This is simply not possible for the large banks and servicers. Consequently, the biggest mistake being made today is not devoting adequate resources to the problem.”

What do our industry experts believe are the best efforts being made by the real estate professionals and industry as whole in this crisis period?

Elliott shares his personal feelings. “Other than the isolated Bryan Ganz’s, I cannot see much. The industry needs to take some kind of a stand to prevent suffering and pain for families who are stuck. I want to see modifications which permit people to grow equity in their homes. I want to see people stop worrying about being thrown out of their homes.”

Bryan speaks to the bigger picture, “Once again, due to the enormous scope of the problem, it will be hard for the large servicers to really take the hands-on approach needed to resolve the current crisis in a manner that is best for both their shareholders and society as a whole.”

Bryan wants Washington and homeowners to understand, “The truth is the banks and servicers really don’t want to take title to the homes. They already have a glut of unsold homes. They would vastly prefer to figure out a way to keep people in their homes and get the loan performing again. This takes a lot of time and personal attention however.”

He laments, “Unlike past financial problems, the mortgage crisis cannot be dealt with wholesale. It must be dealt with retail – one borrower at a time. This is what makes this problem so difficult to deal with. The banks simply don’t have the resources. If there is one thing that the large banks and servicers should do, it is to devote more resources to resolve their problem loans.”

Bryan advises, “The current proposal from the Obama administration to have the banks commit $20 billion to loan modification misses the point. It is not a question of money. These loans are already underwater by many hundreds of billions of dollars, for the value of the collateral supporting these loans is far below the unpaid principal amount of the loans.”

“The issue is that the banks and servicers simply don’t have the resources to meet with each homeowner and evaluate their ability (and willingness) to pay. The answer is for the banks to devote sufficient resources to this effort or to sell the loans to firms that are willing and able to deal with the problem one loan at a time. This is what my company specializes in.”

Bryan summarizes, “There are things that can be done. We first need to change the way we approach the problem. The federal government’s “one size fits all” approach to the problem is not only wrongheaded, it is ineffective. It is not necessary to over complicate the matter.”

“The truth is two sizes will fit all. By that I mean, in order to come up with a workable plan for resolving today’s foreclosure crisis, we must first distinguish between those homeowners that can actually afford to stay in their homes and those that cannot. While this may seem obvious, it is a distinction that seems to have been lost upon policymakers in Washington.”

Visit tomorrow for Part 3, New Government Programs

Part 1 - Prolonged Pain

Part 3 - New Government Programs

Part 4 – Socially Conscious Private Investment

Part 5 – Working Investor Solution

Follow Brenda Krueger Huffman on Twitter and join her on Facebook.

Monday, March 28, 2011

5-Part Series, Digging Out of America's Foreclosure Mess; Part 1, Prolonged Pain

Photo Credit - Flickr Common
Have you weathered the Great Recession fairly well? Has your income and credit rating remained untouched? Are you still paying your mortgage on time just fine?

Has the high rate of business failures or record job losses not affected your household directly? Has the record number of foreclosures not affected your family directly?

If you answered “yes” to these questions, you are fortunate in America today. You may feel you have been smarter than those in trouble or lived within your means unlike them. This may be true.

You may have little if any compassion for those in foreclosure. Yet, as the ramifications of a prolonged recession and real estate market meltdown continue, it may also be true that for the grace of God go you.

As we all know, the housing market came crashing down around America in 2008. It’s still in a smoldering heap of trouble in reality no matter the political spin. The result is deep pain that will leave lasting scars mainly on the non-political and non-connected class of Americans.

There is plenty of blame to go around – Congress, Wall Street, banks, mortgage lenders, and even some home buyers. The sub-prime loans caused the first collapse along with the sub-prime adjustable rate mortgages (ARM). With 80% of Option ARM, including interest only, loans allowing for homes to be negatively amortized, top-tier borrowers can also end up in real trouble when the loan resets.

As more ARM loans reset, many homeowners will see their house payments double and even triple. Add in the continued high unemployment going into 2011, and things could get a whole lot worse again before it gets better with the already record foreclosure reality of 2008-2010

The first cause of record foreclosures may very well be written off with little collective sympathy by many as a result of “those who lived above their means and should never have gotten the mortgages they did.”

The recession is moving into its third year, and the recovery has been the worst since the Great Depression. The official unemployment rate has remained at or above 9% for a record setting 21 months. The official rate only counts those that are collecting unemployment benefits.

On December 8, 2010, the Labor Department released its 2009 work report. In 2009, there was an increase of 2.7M long-term unemployed Americans looking for jobs in 2009 over the 2008 total. There were 5.8M job seeking Americans that had no work at all in 2009.

In 2008 and 2009, there was a net loss of approximately 8 million jobs. In 2010, it was first estimated 1.1 million jobs were created. The Labor Department’s January 2011 report revised this figure down to report 950,000 jobs were actually created in 2010. So far in 2011, the monthly net job growth has not kept up with population growth.

On March 4, 2011, the Labor Department reported the unemployment rate dropped to 8.9% in February 2011. They reported a loss of 36,000 jobs in February. Was this lower job creation number really due to “snow storms” as presented by the White House – no. Is this .1% unemployment rate decrease great news as spun politically – not really.

Did you know the Labor Department’s February payroll employment figures counts people as employed if they receive only one hour of pay for the period? Do you consider yourself employed if you worked one hour in February? Can you make your mortgage payment on one hour of pay for the month?

Most experts agree the estimated reality unemployment rate, which takes into account those that want jobs that do not qualify for unemployment benefits or have exhausted the 2 years of benefit eligibility, is between 15-20%.

The second cause of record foreclosures is a result of prolonged unemployment that has exhausted the assets, savings, and even retirement accounts of many trying to hold on to their home. Some have just walked away and maybe some who have not should. Others have become squatters in their homes waiting for the final foreclosure eviction notice. Some are so cash strapped they simply can’t afford to move.

There is a lot of prolonged pain in America in 2011. Digging out of the foreclosure mess may take 2-5 more years, but it must be done. It must be well thought out and socially conscience while maintaining fairness and reality. It can be done, and it must be done.

Massachusetts real estate attorney Elliott Topkins of Topkins & Bevans and lender and asset manager Bryan Ganz, CEO of Scudder Bay Capital, LLC are working together to help others dig out of the foreclosure mess with sound investment strategy and socially conscious innovation.

Bryan sums up the seriousness of the situation. “The statistics surrounding this crisis are staggering. Since 2007, over 3.2 million Americans have lost their homes to foreclosure, causing housing prices to fall 27%. However, this is just the tip of the iceberg. An additional 2.2 million homeowners are currently in foreclosure.”

He continues, “A further 4.7 million borrowers are at least 90 days delinquent on their mortgage, and it is only a matter of time before foreclosure proceedings are initiated against these homeowners. This means that we are potentially not even one-third of the way through the foreclosure process.”

He concludes, “Moreover, if housing prices stagnate or fall further, we could see many more defaults as more than one-quarter of all homeowners in America, about 15.7 million people, have no equity in their homes. As a result, if we do nothing, as many as 12.5 million more homes could potentially be lost to foreclosure. It is impossible to overestimate the impact this would have on the economy as a whole.”

Bryan and his wife Susan Ganz felt a personal calling to act for their community. “Scudder Bay was formed by me and Susan in late 2009 to help resolve the mortgage crisis in New England in a socially responsible manner. Scudder Bay purchases nonperforming loans in New England from banks and other financial institutions and works with deserving and cooperative homeowners to make the best out of a bad situation.”

Bryan works with a philosophy to decrease the pain. “At Scudder Bay we believe working with homeowners in a socially responsible manner, rather than in an adversarial manner, we can reach the best solution for both the homeowner and our investors. We can shorten the time it takes to come to a resolution and avoid unnecessary legal fees.”

“In addition, by working constructively with the homeowner, in those cases where we have to take title to the home, it is generally in much better condition than it would be if we had to foreclose and evict the homeowner.”

In early 2009, Elliott began writing his Realtors Resource Blog to share his insights with his community. He is now the number one real estate attorney by points in America writing on the leading real estate industry online site Active Rain.

Elliott has seen a divide in attitude toward helping homeowners facing the pain of foreclosure, even within the professional real estate community. “I was shocked at the split on Active Rain. Many people were sympathetic, and some were downright angry when I wrote about my failure in being able to assist borrowers in trouble who wanted to climb back on the bus and start paying.”

He explains, “About 75% shared their own stories with me, and they were touching. The other 25% were rude and unfeeling. They responded I didn’t understand the workings of capitalism. Some noted I was naïve in understanding the restrictive terms the banks are operating under.”

Elliott also notes, “Some asked why I was defending people who signed a contract and now want to get out of it. These were the timbre of their responses. I admit it was scary for me to hear so much anger.”

Bryan details opinions are mixed in his talking with friends and acquaintances on the subject too. “Some people believe a contract is a contract and that those in foreclosure should be forcibly removed from their homes as quickly as possible”.

He notes, “Others believe that the lending institutions are to blame, and they should be forced to modify loans to keep homeowners in their homes. As with most issues, the majority of people seem to be on the extreme ends of the spectrum with few people occupying the middle.”

Bryan concludes, “If our work at Scudder Bay has shown us anything, it is there is plenty of blame to go around. There are bad actors on both sides of the issue, from shady lending institutions that made outrageous loans with no consideration for the borrower’s ability to pay to unscrupulous borrowers who refinanced their homes and then never made a single payment.”

One thing is for sure. Not effectively addressing America’s foreclosure mess will only prolong the pain for everyone – people, business, and government. A recovery plan must be realistic. It must not create a whole new set of problems to deal with in digging out of the original mess.

Real solutions must also reflect the problem involves real homes, real people, real lives, and real pain. As a part of the working solution, “shared sacrifice” will have to include true compassion in understanding the tragedy – even if you were spared directly.

Capitalism is not evil. Not all profit is evil. Not all politicians understand or care about the benefits only capitalism can bring to a situation. This situation does call on capitalists to be leaders in creating lasting resolution.

We will explore these truths further in the coming articles in the series with the working insights of experts Elliott Topkins and Bryan Ganz. Our 5-part series on the “Digging out of America’s Foreclosure Mess” will include:
Part 1 - Prolonged Pain
Part 2 - Failed Government Intervention
Part 3 - New Government Programs
Part 4 – Socially Conscious Private Investment
Part 5 – Working Investor Solution

Visit tomorrow for Part 2, Failed Government Intervention

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Thursday, March 17, 2011

Special 4-Part Series on the Temple University Purpose Group – Part 4, Upholding Intent & Moving Forward

The Temple University Purpose student group has withstood efforts to smear them, defund them, intimidate them, and silence them. The group was bullied pure and simple for standing up for promoting free speech outside of only accepted political correctness and for fostering the critical thinking of students in forming their social and political opinions.

Purpose’s opponents made up the rules as they went along to throw wrenches into its mission. Purpose members often stood alone as many who understood the wrongs did not speak out, for they did not want to chance becoming the next victims of public character assassination. Deliberate public damage to Purpose President Alvaro Watson’s good reputation, and to the truth of the group’s goals, were seen as simply collateral damage by those advancing their political agenda.

If you have ever been in the eye of a storm, you know there is often calm from within that carries you. In this calm you find your strength to withstand the storm, for you know who you are. You define yourself, and you do not take in others falsely defining you as a part of their strategy. Alvaro and many members of Purpose have displayed this strength.

How does Alvaro reflect on his experience? “I am surprised at how I have handled what I now realize is a Leftist Liberal Tsunami. I actually smile as I reflect on this question, because what I feel which best addresses this question is I feel I have realized I was born to be in the middle of and handle heated, high-pressured situations with super high-running emotions involved.”

“I understand being attacked, because I know the attacks are a response to amazingly great events that are intended to advance discourse past the perpetually barren status quo. Purpose made me realize that we tapped into an unfortunately neglected area of our collegiate experience and education.”

“Purpose has brought attention to the fact Temple, like many colleges do in America today, displayed itself to be an extremely biased school through their response to and actions toward Purpose. What else can you surmise when a school will do whatever possible through whatever means to attempt to silence and eliminate a student group that challenges their shameless indoctrinating curricula.”

Alvaro describes the affect on Purpose. “The main lasting backlash is our group membership has been difficult to maintain. While most of our members want to remain informed about everything we are doing, many are so concerned with the high level of controversy around our events, they are reluctant to participate in the events – and I don’t blame them. I wouldn’t want them to go through anything I’ve had to deal with.”

“I am very grateful to all of the members that have chosen to stay on board, because it takes a lot of guts to be part of Purpose. We have also attracted very strong new members who have become leaders on the eBoard. These members, now group officers, were attracted to our bold, fearless, politically incorrect approach.”

Alvaro summarized the student interest and engagement of politics and current topics on campus. “General interest is very high. Political discussions are generally monopolized by very few groups that seem to set the stage for what is important on campus. The Muslim Student Association and Students for Justice in Palestine are committed to supporting all matters favoring Palestine and both subtly and aggressively discrediting Israel. The Republicans and Libertarians are very active discussing Government and matters of the deficit and the economy as well as unemployment.”

“College tuition has recently become a campus-wide conversation through the Student Senate and our University President. There are organizations that are active on matters of jobs and unemployment; however, most have a Marxist and Social Justice spin.”

“Though it is highly likely that Planned Parenthood has been invited to campus at least once, I am personally unaware of any such events. Gay and same-sex rights topics have been discussed on a small scale by the LGBTQ and Pride in Social Work organizations. The Campus Socialists are the loudest advocates of ObamaCare on campus.”

Alvaro recounts Purpose upholding its original intent in their selections for event guests. “In the short year and a half life of Purpose, we have covered a varied range of events: Geert Wilders spoke on militant Islam; the Confederation of Iranian Students (CIS) spoke on a free, secular Iran; the President of Free Individual Rights in Education (FIRE) spoke on the dangers of Political Correctness; the Silent No More Campaign spoke about women who suffer in silence in the aftermath of abortion and how to heal from that; and Robert Spencer and Pamela Geller spoke on the nature and implications of the Ground Zero Mosque.”

Alvaro answers how guests are chosen by Purpose. “We select speakers based on them being relevant and able to speak to urgent debates that are important to have and understand all sides. If not for Purpose, many of their views would be omitted for student consideration due to a political correctness standard appeasement imposed on college campuses.”

He notes, “What strikes me the most is how the progressive left on campus picks and chooses whose human rights are more important to fight for. Do the feminists, Human Rights groups, or Islamic student organizations ever dare bring the rights of women, gays. or Infidels under Islam to the fore? No. Who does? Purpose does.”

Alvaro addresses the charge he is anti-Muslim, “I am not anti-Muslim. I am, however, against the intentions of and supplications from Muslims to establish Sharia Law in the United States. This is whether it is the most extreme claims of replacing the U.S. Constitution with it, or the smaller of ways like giving legal authority to Muslims to implement Sharia Judicial Courts within their own Muslims communities. I think it is important that we all be equal under the U.S. Constitutions and that no exceptions are given to any one factor whether ethnic, political, religious, or social group over another.

He also speaks to the criticism he is anti-Socialist, “I am not anti-Socialists, but I am adamantly anti-Socialism. The accessibility to the evidence of its reckless nature and aftermath is there for everyone to see. In a Socialist system dissent is not tolerated. Real Socialists accept that under Socialism a significant amount of personal freedoms are given up, so that all can be equal.”

“While the latter may be considered noble, when considering the beauty behind the Utopian society, the former affects every aspect of life, that is, other than the life of someone with no aspirations or hopes for something better. I don’t want the Government to be Big Brother in everything my family, friends, or I choose to do. Socialism is, simply, fools’ gold. It does eventually lower the standard of living and hope in the lives of all.”

Moving forward, “On April 12, Purpose is hosting Nonie Darwish who is an Egyptian-born American human rights activist, and founder of Arabs For Israel, and is Director of Former Muslims United. We have invited her to speak on, among several other items, women’s right under Sharia. March 23, we are co-hosting and screening Hiding. It is a documentary that sheds light unto the life-threatening hardships that North Korean refugees in China must undergo as they live in hiding within a modern day underground.”

“To close out our semester, Purpose is hosting Tigre Hill and screening his film The Barrel of a Gun, which offers a comprehensive examination of the murder of white Philadelphia police officer Daniel Faulkner and the conviction of black journalist turned cabdriver Mumia Abu-Jamal. The case has ignited worldwide controversy, with Abu-Jamal’s arrest and trial becoming a cause célèbre for celebrities, foreign dignitaries and human rights campaigners. For Faulkner supporters, however, the controversy serves as smoke and mirrors to obscure the truth behind a heinous crime. “

Alvaro offers, “It’s exciting to think about the future of Purpose. Several other students from other universities want there to be a Purpose Chapter at their school. The next step is finding help on how to go about establishing a parent Purpose establishment, so that it can operate as a national organization that is open to every campus in the country.”

“I believe Purpose is more than a student organization; it is a movement. It is a movement for all liberty-minded students who reject the notion of political correctness, yet embrace the reality that in order to advance progress, the difficult, sometimes controversial issues have to be faced head on.”

“While it takes brave students to perpetuate our unique mission, if a movement like Purpose is to take to flight, financial donors and business partners must also take the initiative to reach out to us at or directly to me at

Alvaro shares his hope for America going forward. “Often we become overwhelmed when we think of what we hope for America, but it’s usually not complicated. My hope is simple. Just as I hope for the members, friends and - more importantly - opponents of Purpose, I hope that America is willing to discover how easy it is to inform itself with information not stemming solely from the playbook of the Progressive Agenda or the Ultra Right.”

“I hope America explores all views simply to be informed, though I personally don’t recommend either political extreme. I suggest a comfortable middle ground not too close to the center so that you can no longer see where you stand; but just close enough so that you still know where you are, but you can also see what the ground looks like on the other side.”

He reflects on his personal American Dream. “I lost my first country but gained the most exceptional country as my home. My ‘American Dream’ honestly is to continue the fight for this country in whatever intellectual way that I can so that no American ever has to feel what it’s like to lose his or her country.”

Alvaro Watson concludes, “Dreams are associated with a sense of a grand fulfillment of something great. Well, that is what I get from contributing as I do now at school, whether academically or through Purpose, because this was something I never got to do in El Salvador. I’m grateful for this. If I can help students and non-students find purpose, in some way, through Purpose, then what an American Dream that would be for me.”

Part 1 – Free Speech & Critical Thinking
Part 2 – Being Labeled Racist
Part 3 – Socialist & Muslim Student Outrage

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Wednesday, March 16, 2011

Special 4-Part Series on the Temple University Purpose Group – Part 3, Socialists & Muslim Student Outrage

If the “free speech” of another disagrees with your opinion or agenda, do you automatically deem it “hate speech”? The Supreme Court of the United States does not as evidenced by the recent hard core decision on the Westboro Church case.

Do you insist on the right for those interested in listening to a differing political opinion from yours be shouted down and shut down? Do you ridicule and smear as forms of intimidation to expression of an opposing view? Do you insist behavior rules be applied to a group you disagree with which you don’t apply to your own?

In many ways, this is what is being modeled by the grown ups to college students. The traditional media’s bias fans the flame of all free speech not being equal or in essence of all political ideology not being worthy of unbiased coverage.

The President of the United States, as well as other politicians, has labeled Americans protesting his policies with derogatory names. Unions in Wisconsin have tried to shut down the democratic process, because their side did not have the votes to ensure a legislative outcome they favored.

Joy Behar and Whoopie walked off The View during an appearance by Bill O’Reilly, because they did not agree with his language in a heated discussion about Muslim terrorism. Barbara Walters immediately voiced her colleagues were wrong in handling the discourse in this way.

Wisconsin Senate Democrats run away to Illinois to avoid a vote. Wisconsin Senate Republicans receive death threat emails and protests at their homes, because they voted.

Is this what has become of handling differing opinions in America – name calling, running away, death threats, shouting down, or playing the oppressed card? These are the tactics being modeled as the strategy to force what you want outside of defending your position in good faith debate and negotiations.

Most college campuses have become a hotbed of welcoming some controversial speakers, usually on the left, and shouting down other controversial speakers, usually on the right, for the most part with a few exceptions.

College students regularly protest invited speakers whose views they do not agree with, and speakers know protests may be a normal element in their presentation experience. This is free speech. Shouting down a speaker, so they are shut down and can not speak, is exercising your right of free speech to only disallow another their right of free speech.

As detailed by TU Purpose President Alvaro Watson in Part 2, “Many liberal student groups - TU and Philadelphia International Socialists and Democratic Socialists, TU Muslim Student Association, TU Students for Justice in Palestine, TU Feminist Majority, TU All Sides, TU Student Government Senate - loudly protested our decision to host Wilders labeling us racists.”

Socialist and Muslim student groups accused Purpose of “supporting and perpetuating hate and racism” and labeled Purpose “bigots for singling out an underrepresented population.” They tried to force Purpose to rescind the Wilders invitation and to have the event shut down by a resolution before it took place. The Muslim Student Association claimed they had received a death threat but could produce no evidence of such on investigation.

Alvaro was personally attacked as being a hypocrite, because his study area is social work. He received hate emails like this one from a member of the Students for Justice in Palestine group: “How exactly did I end up on the list serve of some reactionary-ass racist group who can't even pretend to have any interest in the betterment of humanity? Your rhetoric is apologetic to genocide and you're all pathetic. Genocide-loving racist clowns!”

The Temple University Wilders event brought an attendance of approximately 500 students to hear him speak. The event became hostile when members of the Students for Justice in Palestine used the Q&A period to call Wilders names and give speeches. This shut down the event and had Wilders escorted out by security.

Alvaro recounts, “After the event, the newly formed Religious Studies Club invited me to their lounge so that they could talk with me about the division Purpose had caused on campus.”

“I was excited, because I thought finally people want to talk about it instead of just perpetuating rumors about the Wilders event and Purpose. In reality, the Religious Studies Club turned out to be only members of the Muslim Students Association, Students for Justice in Palestine, and the Democratic Socialist.”

“The meeting turned out to be an ambush by them to interrogate me and accuse me of bad things like formulating a calculated attack on the Muslims on campus. They asked me had I not thought about how this event would turn out. And, honestly, I would never have imagined that holding an event on free speech and radical Islam would create such outrage. These are timely and important topics in America today.”

Alvaro detailed the continued fight for his Purpose group, “After Wilders left, Temple Student Government Allocations refused to fund us for events, even those unrelated to Islam. In other words, the funding obstacles they threw at us, which made it impossible to apply, were their attempt to make us invisible and stop us from having any events.”

He extended, “All of the events we had afterward were possible in three ways. The speakers were kind enough to still come knowing they would not be paid. They did this because they believed in what we were doing. Second, during the spring of 2010, I used a large lump of my own money to pay for the hotel and security costs.”

“Allocations strung me along until the last minute making me think they were going to help. This was over several weeks, and the speakers were already invited. The speakers had prepared presentation materials just for our events, and it was too late for me to cancel. I paid about $800 out of pocket.”

“And last, when I could no longer afford to pay myself, I emailed and called numerous organizations in Philadelphia and in New Jersey to seek (beg, really) private donors.”

Alvaro recalls, “It was not until a year later, the fall of 2010, after Wilders that we were granted funding for our event on the Ground Zero Mosque on October 7, 2010. That was another fight. At the beginning of that semester, the Allocations Chair made a "rule" stating that any event that offends a large number of persons would not be funded. What was defined as offensive would be determined by a committee made up of students and the Allocations Chair. He noted this rule was made in response to and specifically for Purpose.”

Alvaro took this ruling to the Foundation of Individual Rights in Education (FIRE) and filed a complaint against Temple University. FIRE fought the case with Purpose.

Alvaro notes, “This TU rule was dissolved because we fought it. The honorariums for the speakers were funded for the first time but not fully until four months later in January 2011. This 2011spring semester was the first semester that all of the funds Purpose requested were successfully allocated without any friction at all from anyone.”

In total, FIRE has filed four cases against Temple University. Two cases involved freedom of speech. Two cases directly concentrated on violations of the rights of the Temple University Purpose group.

One Purpose case defended by FIRE concluded, “February 11, 2010: Temple University has withdrawn an unconstitutional, after-the-fact security fee levied by the university on a student group for hosting a presentation last October by Dutch politician Geert Wilders, who is on trial in his native country for his controversial remarks about terrorism and Islam. Temple dropped its demand for an extra security fee under pressure from FIRE. Temple's policy for controversial events, however, remains ambiguous and unacceptably arbitrary.”

The second direct Purpose case argued by FIRE was in regard to Purpose being put on probation by Temple University. They were taken off probation.

Alvaro notes other controversial speakers have come to TU, “The Muslim Student Association hosted a representative of the Philadelphia Council on American-Islamic Relations (CAIR). Students for Justice in Palestine are hosting Dr. Finkelstein on April 7 during Palestine Awareness Week, otherwise known as the Israel Apartheid Week. Purpose will host Nonie Darwish on April 12.”

Alvaro continues, “Purpose hosted Amir Fahkravar whom is the President of the Confederation of Iranian Students. We have hosted Robert Spencer whom is Director of Jihad Watch and Pamela Geller. They co-founded the Freedom Defense Initiative and Stop Islamization of America. They were invited to speak on the nature and implication of the Ground Zero Mosque. The Muslim Student Association was invited to invite a speaker for a join event with us. They declined our invitation, because they disapproved of our speakers.”

Alvaro believes there is a difference in the way pro-Israel and anti-Israel speakers have been treated at TU events he has attended. “I attended an event held by the Students for Israel in which a speaker from the Philadelphia Israel Consulate was invited. A couple of members from the Students for Justice in Palestine showed up only to insult and mock the speaker.”

“A few weeks ago, the Students for Justice in Palestine hosted two Muslim journalists. I felt they presented very biased accounts of their experiences in the West Bank and Gaza. During the Q&A portion, everyone who asked questions was treated with respect until the President of the Philadelphia Zionists of America asked a question. He was continually interrupted by the SJP President and rushed to ask his question. Before posing his question, he attempted to make a point, but the SJP President pressured him to ask the question. Others who were anti-Israel persons had made longer speeches and were not interrupted.”

Alvaro reflects, “It’s unfortunate that Purpose, an organization that promotes a willingness to understand by gaining information through discussion, is unable to sit down and talk with other groups, because their sole aim is to consistently disrupt and terrorize Purpose’s constant effort to create an inclusive dialogue.”

He feels, “The shamelessly aggressive students of political correctness at TU are concerned only with perpetuating the anger and falsehoods that so conveniently support their biased Marxist agendas. The only option with which we are left to respond to such groups is to compose letters that both refute and rebuke their outlandish, overly subjective, and emotional statements.”

Refusing to render his free speech rights and critical thinking goals to political correctness, Alvaro finds the alliance of socialist and Muslim students about one thing in reality. “There isn’t a natural alliance in many ways, for most socialists are not Muslim, and most Muslim are not socialists. The alliance is forged by there being a strong mutual hate for capitalism and the American or western culture in general. Both groups want to see the end of capitalism and the transformation of America into their ideological views of society.”

“My experience at Purpose leads me to believe many want this done with questioning dismissed, negative attention suppressed, negative truths unexamined, differing ideological opposition attacked, open debate disallowed, and public objection misrepresented and silenced.”

Part 1 – Free Speech & Critical Thinking
Part 2 – Being Labeled Racist
Part 4 - Upholding Intent & Moving Forward
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