Importance of a Complementary Educational Agenda for DR-CAFTA
LAYING THE GROUNDWORKIn September 2000, the member states of the United Nations unanimously adopted the Millennium Declaration. That document served as the launching pad for the public declaration of eight Millennium Development Goals (MDGs) – which include everything from goal one of halving extreme poverty to goal two of providing universal primary education; all to be accomplished before the year 2015. Progress towards the first seven goals are dependent upon the success of goal eight – which emphasizes the need for rich countries to commit to assisting with the development of “an open, rule-based trading and financial system, more generous aid to countries committed to poverty reduction, and relief for the debt problems of developing countries.”1At first glance, the recent actions of Central American countries and the United States to liberalize trade seem to support, at least partially, successful realization of MDG Eight. However, upon closer examination, the picture blurs and the outcome seems uncertain.Following only a year of negotiations, the Central America Free Trade Agreement (CAFTA) or DR-CAFTA (as a result of its recent inclusion of the Dominican Republic), was signed by the governments of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and the United States in 2004. The agreement, committing each country to reduce its trade barriers with the other DR-CAFTA countries, was ratified by the United States Congress on July 28, 2005.2Rather than attempting to analyze all of the specific economic and social intricacies associated with liberalizing trade in Central America, this brief aims solely to cast light upon the overlap between countries’ efforts to implement the Millennium Development Goal Two/Education for All and their need to implement a complementary CAFTA agenda.Specifically, this document highlights the importance of educational priorities if economic development efforts are to be successful. The premise of the argument elaborated here is that without sufficient prioritized emphasis by Central American countries, multilateral organizations and targeted donor countries on a complementary agenda that directs resources towards education infrastructure, CAFTA will never succeed in assisting these countries in reaching an ever elusive state of “economic prosperity.” In fact, it may deter them from fully accomplishing the MDGs as well.CURRENT STATE OF EDUCATIONWith the need for collaboration between economic and educational efforts in mind, let us examine the current status of MDG Two implementation and broader educational reform in Central America:Over the past fifteen years, most Central American countries have implemented at least basic forms of educational reform. As a result, more children are entering school and spending more days and years enrolled than ever before. On an aggregate level, the larger Latin American and Caribbean region has made considerable progress toward the goal of universal primary education enrollment and according to the most recent UN Millennium Development Goals report, “Net enrollment rates at the primary level rose from 86 percent in 1990 to 93 percent in 2001. The region’s pace of progress in this indicator has been faster than the developing world average (which rose from 80 percent to 83 percent between 1990 and 2001). Net enrollment rates in 23 countries of the region (12 in Latin America and 11 in the Caribbean) surpass 90 percent.” 3 The reality is that, large scale disaster or other unforeseen event aside, all six countries are on target to reach the MDG enrollment targets.Unfortunately, progress towards the target of completing five years of primary education has been slower and few countries in the region can boast success in this arena. The lack of progress towards completion of this target is most directly related to inefficiencies in the education system and the socioeconomic conditions of poor children – both situations that result in high repetition and desertion rates and both situations that must be ameliorated if CAFTA is to succeed. Furthermore, while the number of children initially enrolling in school has increased, the poor quality of education throughout Central America is also certainly a factor in children’s failure to complete their primary education. Quality must therefore also be taken into account when considering educational infrastructure needs.While not necessarily relevant to MDG Two but quite possibly relevant from the CAFTA perspective of needing a skilled workforce, Central America’s educational woes most definitely extend beyond the primary school environment. In response to the recent Millennium Development Goals Report 2005, an Inter-American Development Bank representative wrote “It is difficult to avoid the impression that the countries of Latin America and the Caribbean are falling behind with regard to secondary education. Although this is not included in the MDGs, it is the single most important educational indicator separating upper and lower income groups in the region.” 4
When less than one third of a country’s urban workforce has completed the twelve years of schooling that your or I take for granted, how can they hope to compete in today’s technology-dense free trade environment?HISTORY LESSON -HAPPENING AGAIN?Upon an examination of the Mexico of today as compared to pre-North American Free Trade Agreement (NAFTA) times, a rise in the Mexican poverty rate over the last decade or so is apparent. Rather than being directly due to the implementation of NAFTA, it is more likely that this increase in the poverty rate is attributable to Mexico’s failure to simultaneously implement a complementary agenda; specifically, the inability of Mexico’s poorer southern States to improve their poorly trained workforce, infrastructural deficiencies and weak institutions in order to participate meaningfully in a liberalized trade environment. Rather than gain, the southern Mexican states lost even as the northern states benefited from the liberalized trade environment created by NAFTA.Dr. Daniel Lederman, co-author of the World Bank report entitled “NAFTA is Not Enough” (and issued ten years after NAFTA was originally enacted) explained in an National Public Radio (NPR) interview in 2003 that Mexico’s financial crisis in the 1990s was bound to deepen poverty there with or without NAFTA. Dr. Lederman said:Mexican income dropped in one year, 1995, by six percent. Wages across the board for all Mexican workers, on average, fell by 25 percent in less than a year…Still, NAFTA helped Mexico limit the damage, lifting per capita income at least 4 percentage points above where it would have been otherwise. The bottom line is, Mexico would be poorer without NAFTA today. Clearly trade alone won’t alleviate poverty. But if Mexico makes the right investments, especially in education, the next decade should be better. 5POTENTIAL FOR ECONOMIC SUCCESSAs was the case in Mexico, it is likely that the majority of households in Central American countries stand to ultimately gain from the price changes associated with removing trade barriers for sensitive agricultural commodities and other goods. However, in order for this to happen, as Dr. Lederman suggests above, each country must now make appropriate investments in development efforts (most especially in education) in order to guarantee an equitable distribution of the benefits of these efforts in the future.Simultaneously, it is of critical importance that each country provides for the needs of their most at-risk citizens. In order to guarantee that the children of these families are given the opportunity to be counted among those in school, countries must identify resources, both internally and externally, to provide incentives for families “to invest in the human capital of their children.” 6Examples of such incentives have been implemented through funding from the Inter-American Development Bank and several other organizations in Costa Rica (Superemonos), the Dominican Republic (Tarjeta de Asistencia Escolar), Honduras (PRAF), and Nicaragua (Red de Protección Social). Most immediately, these incentives (often in the form of conditional cash transfers) serve to increase food consumption, school attendance and use of preventive health care among the extremely poor. In the long run they are intended to assist with poverty and malnutrition reduction and to improve schooling completion rates. As reported by the IDB, “results are proving that it is possible to increase a family’s accumulation of human capital (measured by increased educational attainment and reduced mortality and morbidity) and, as a result, also raise potential labor market returns for the beneficiaries, as well as overall productivity. The programs have had a substantial positive long-term impact on the education, nutrition and health of its beneficiaries, especially children.” 7In the World Bank’s expansive document analyzing CAFTA’s potential impact on Central America, entitled “DR-CAFTA – Challenges and Opportunities for Central America” the authors repeatedly reference technology and emphasize the importance of a complementary educational agenda that is tied to each country’s stage of development and innovation. For example, “for those countries farthest away from the technological frontier -such as Honduras and Nicaragua– the best technology policy is likely to be simply sound education policy… in the more advanced settings of Costa Rica and El Salvador, where adaptation and creation of new technologies is more important, issues of education quality and completion of secondary schooling are more important.” 8 In fact, without ever making specific reference to the MDGs, the authors recommend that the former countries focus on the goal of achieving universal primary education while the latter countries focus their energy on expanding and improving secondary level education. Failing to do so is choosing failure in the open market.Ultimately, rather than seeing CAFTA as a first class ticket to a better economic end – with no strings attached, countries must acknowledge the critical importance of first implementing MDG Two – target three. This target, which says “by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling” 9 is a critically important step towards guaranteeing the emergence of a workforce that can respond to increased marketplace demand and evolving technologies. Without immediate investment in that future workforce via the education system, CAFTA will surely flounder and drag MDG Two along with it.Furthermore, as mentioned above, educational infrastructure must be put into place now that will not only guarantee a higher quality education but will also be made accessible and desirable to Central America’s most at-risk citizens. After all, based on Mexico’s experience, the likelihood of a positive outcome for both CAFTA and MPG Two is slim. Yet the possibility of economic success does exist if we agree to truly choose “Education For All.”CITATIONS1) Millennium Development Goals, Goal Eight, http://www.un.org2) At the time this brief was written (Dec 2005), the agreement still hadn’t been ratified by the Parliaments of Costa Rica, Dominican Republic and Nicaragua.3) The Millennium Development Goals Report 2005, http://unstats.un.org/unsd/mi/pdf/MDG%20Book.pdf4) The Millennium Development Goals in Latin America and the Caribbean: Progress, Priorities, and IDB Support for their Implementation, Inter-American Development Bank, Washington, DC, Aug 05, http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=5910885) National Public Radio, All Things Considered, Interview with Daniel Lederman, Monday, December 8, 2003 http://web.lexis-nexis.com/6) The Millennium Development Goals in Latin America and the Caribbean: Progress, Priorities, and IDB Support for their Implementation, ibid7) The Millennium Development Goals in Latin America and the Caribbean: Progress, Priorities, and IDB Support for their Implementation, Inter-American Development Bank, Washington, DC, August 2005, p. 568) DR-CAFTA – Challenges and Opportunities for Central America, Chapter VII: Obtaining the Pay-off From DR-CAFTA, p199.9) Millennium Development Goals, Goal Two, http://www.un.org
Jumbo Refinance Mortgage Loans Can Be Approved If You’re Prepared
You are thinking of a jumbo loan for a home refinance while rates are low but you’ve been told, “Do not to waste your time applying. Not now, because the banks aren’t lending!” Most banks aren’t too keen on approving jumbo loans. The jumbo loans are considered a higher risk loan, especially in a stagnant economy. Some banks may offer jumbo loans but their underwriting process is so strict that getting the jumbo loan to the closing table is impossible. There are a few banks that handle jumbo loan efficiently and will hold these loans in their portfolio. Finding this type of bank may be the first step in your quest to have your jumbo loan refinanced. The right bank will have the widest array of terms and have the most flexible underwriting guidelines. There are other points that should be considered in choosing the right bank.Despite the inherent risks posed by higher loan amounts, the basics of mortgage loan underwriting still apply. Like mortgage loans with amounts below $417,000, the 5 Cs of lending remain intact, (capacity, credit, capital, collateral, character.) So what’s different with jumbo loan underwriting?A residential jumbo loan is any home mortgage loan where the loan size exceeds GSE’s (Government Sponsored Enterprise such as Fannie Mae and Freddie Mac) limits. Currently, the GSE’s loan limits are capped at $417,000.00 or $625,500 in Alaska or Hawaii. Any mortgage loan exceeding these limits is considered a jumbo loan. This is of course the first obvious difference between a standard home mortgage and the jumbo loan. With higher loan amounts comes a lower LTV (loan to value) Expect to have at least a 20% equity position on a rate/term refinance.The loan terms will vary from lender to lender and it’s always prudent to look for a lender that has a variety of options that can be tailored for your specific needs, whether you need a 30 year fixed rate, a 15 year fixed rate or a 5/1, 7/1 or 10/1 hybrid ARM or interest only. The interest rates on these higher loan amounts are not as high as some borrowers think they would be. They generally are a little bit higher than conventional mortgage rates and in some cases they may be lower than some conventional loans after their rate adjustments.Many borrowers have unique situations and the bank that you should turn to is one that has a clear understanding of the uniqueness of the higher loan borrower. For example, although many borrowers have a standard salary and W2 income, there are a disproportionate number when compared to lower loan amount applicants that have a W2 income that include bonuses or commissions. With the higher loan values, there are also a larger number of self employed borrowers and professionals. Different calculations should be used for this type of borrower to allow for depreciation, depletion, bonuses and commissions. For a borrower’s best shot at loan approval and efficiency, the higher loan amounts require a bank that has a staff of underwriters and originators who have a higher skill set and proper training for this type of loan origination and underwriting.In order to be approved for a jumbo loan, you must be prepared with support documentation. Income documentation, documentation of reserves, letters of explanation, tax documents, etc. In short, you will need two years tax returns with all schedules, one month’s most recent pay stubs, two months most recent bank statements, schedule of real estate owned, most recent statements of stocks, bonds 401k and IRA accounts. A professional loan originator who is accustomed to this type of loan will give you insight on what documents you need for your application.
Owner Financing – How to Finance Older Mobile Homes
Have you have ever tried to finance a mobile home manufactured before 1976? You probably felt like it would be easier to sell snow cones in Antarctica! Fortunately owner financing and private mortgages offer creative alternatives for hard to finance mobile homes.
When purchasing a new mobile home financing is often offered through the dealer or retailers. Approved Federal Housing Administration (FHA) lenders are an option for mobile homes that meet the guidelines, including the age restriction of built on or after June 1976.
Manufactured homes permanently attached to a foundation also have access to financing as a mobile and land package, provided credit and equity are acceptable.
But the question still remains, “Where can older manufactured homes, single wide mobiles, and buyers with less than perfect credit look for financing?”
Private InvestorsA private investor, independent bank, or credit union may provide alternative financing options. These are generally local investors or in-house portfolio lenders that are familiar with the area and comfortable with the risk at a lower investment exposure in exchange for a higher rate of return.
Owner FinancingAsking the seller to carry back a note is a common way to finance the purchase of a mobile home. The owner acts as the bank by accepting payments from the buyer over time. This avoids meeting the more restrictive bank mortgage requirements.
While interest rates are likely higher with owner financing it can provide a viable solution allowing the buyer to take advantage of the affordable housing mobile homes offer.
Some sellers prefer a lump sum of cash today and are reluctant to collect payments over time with owner financing. If a seller prefers cash now they can consider temporary seller financing and then sell all or part of the payments for cash to a note investor on the secondary market.
Manufactured homes make up an average of 8% of all home sales according to the US Census Bureau. There are some states, like North and South Carolina, where that percentage nears 18%. Many of the states with mobile home sales over 10% are also the same states that rank higher for overall owner financing.
This just proves what most note buyers and note brokers have known for years. When there are properties or buyers that are hard to finance people turn to owner financing.