Bits Bucket for February 26, 2012
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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The wife and I are getting set to move into a new rental on Oahu. We toured houses for almost a year before finally finding something we both love (and that’s cheaper than our current rent). We had some fun times touring recently sold houses that were being put up for rent for well under the mortgage payment. This included many properties well above our price range.
One house was sold by a doctor to his good friend for $1.2million. Their plan was to rent it out immediately. They were asking $3,600/month. I asked the Realtor how this made sense and she said she didn’t know a single person on the island who could cover their mortgage with their rental payment. She looked at me askance, as if I should know such a thing was just not “investing” in Hawaii. When I said I would hope that, especially now, people were buying rental properties expecting a decent return of 8% or more, she did the normal thing and agreed with me… so I had to drop the subject.
I don’t know how Realtors can hold so many conflicting opinions in their heads.
Anyhoo, we ended up signing a lease for a beautiful property that’s been in the same family for six decades and has no mortgage. No foreclosure notices for this family.
They are not paid to think. They are paid to move product.
If you had said that your best friend just got released from jail for decapitating his children and some puppies, the first question would be, “Does he want to buy a house?”
It’s all about the 6%.
And they don’t get their 6% unless they move the product. Plus many have brokerage desk fees to pay every month.
Of course that actually selling realtor only gets about 1.5%. 3% goes to the buying agent’s brokerage (where it gets carved up) and the other 1.5% ends up in the selling brokerage owner’s coffers. Everyone gets their cut. It’s the American way.
Being a broker (as opposed to a mere realtor) is the real way to go. I’ve met a few brokerage owners. They are usually millionaires. One guy I know sold his brokerage at the peak of the bubble and retired in luxury.
It’s all about the 6%.
My ex was all about the 50%.
“…been in the same family for six decades and has no mortgage.”
The Descendants
Keeping the property in the family can save a bundle. Especially if the family is a company:
http://www.nytimes.com/2012/02/24/us/california-property-taxes-can-vary-wildly-in-silicon-valley.htm
For example, a 38-acre tract that includes the Santa Clara headquarters of Intel is assessed at $7.5 million, producing an estimated tax rate of 5 cents a square foot, while 70 acres occupied by Hewlett-Packard at the Stanford Research Park in Palo Alto are assessed at $53.4 million, producing an estimated tax rate of 15 cents a square foot.
In South San Jose, a tract of more than 200 acres owned for decades by I.B.M. is assessed at $4 million, or less than half a cent a square foot.
In NJ I have noticed that on Realtor’s web sites they do not list the tax amount and or the monthly fees like they used to. Some towns [Plainfield] have out of control Utility Authority [sewer, garbage] costs that never get mentioned even during sales pitches. But I must admit this has been a best winter to save money on heating in a long time, which they will probably take credit for soon.
Yeah, nice winter my LL raised the rent $50 in anticpation of higher ConEd bills…oh well..I still get a nice view of the new WTC going up from my picture window
The tri-state area of NY-NJ-CT is going to be a bad investment for many years. Because of the long foreclosure process ( 24 months in NY), and low interest rates, property has not corrected fully and is doing so very slowly. Property taxes are the highest in the country and budget problems are only going to make them higher.
Eventually, we’ll get rising interest rates. Then we’ll have rising property taxes and rising interest rates, making prices that are already unaffordable even more so. Between the mortgage, property taxes, and maintenance, and depreciation in value, properties in this area are going to be money pits for several years.
I still rent for substantially less than owning, putting the difference in my savings each month.
I find it interesting that housing prices in commutable distance to NYC are slipping and sliding slowly. Why has this gone unreported? Why are reaItors telling the public housing prices “have stabilized” when they’re sliding?
I couldn’t care less about this area. We want out and the only reason we’re based near NYC is my company is in mid-town. CT/NJ and downstate NY isn’t my idea of living. The only thing I like about the area is the food and the wages. When the employment goes away, so do we. And it will happen. Nothing is forever. This my friends is a fact so few are willing to accept. Not even Mrs. Someone stated here on the HBB that “people are unwilling to accept that all isn’t sunny, bright and positive and that the phenomenon is uniquely American”. I’m paraphrasing but you get the idea. It’s not a matter of doom or sunny optimism. It’s reality. Is dramatically more affordable housing “doom”? No…. it’s a positive. Inflated prices of anything is a major economic bottleneck. Is working at Walmart doom? Hardly true when there is no other income.
The house we live in is in a trust. At the peak it, there were buyers for it at $280-310k. The trust executor stated yesterday that it might fetch $150k. Privately I maintain there isn’t $150k worth of house here but whatever. I’m indifferent. Then again, I’ve become indifferent to alot of things over the years I’ve written here. I’ve never abandoned what I believe is just. But what is just and what is reality are two different things. Things like a living wage, SS, effective education systems are things I think are equitable and just. Reality is something different.
Didn’t mean to write all that but whatever.
what area RAL? I lived in 9 states but this area is my home ..born southern CT
Nothing is forever. This my friends is a fact so few are willing to accept. Not even Mrs. Someone stated here on the HBB that “people are unwilling to accept that all isn’t sunny, bright and positive and that the phenomenon is uniquely American”. I’m paraphrasing but you get the idea. It’s not a matter of doom or sunny optimism. It’s reality.
From the peeps at Zillow…
Moses Lake, WA 98837
Median Income = $36,467
Median Home Price = $140,000
San Luis Obispo, CA 93401
Median Income = $31,926
Median Home Price = $450,000
If I toss these data on the table at Thanksgiving while visiting family in California I’m being negative. Reality is not a digestible thing these days; hasn’t been for at least a decade, maybe more. Deep down, though, they know you’re right.
“Why are reaItors telling the public housing prices “have stabilized” when they’re sliding?”
Because every industry lies to its customers.
Just like everyone gets their cut of a large transaction and outperforming the competition usually means changing the laws, it’s the American Way!
It got difficult for them to list the taxes toward the end of the boom, when houses were selling for multiples of the assessment. The buyer was in for a nasty surprise. Here some of those bubble houses are selling for a fraction of the assessment, so also difficult. You can probably look up the milage by municipality and make a good guess.
Yes Blue my LL gets a vet, city worker, senior discounts to his RE taxes so a new buyer will probably pay at least 1/3 if not 50% more then the 6k it is now…
I know someone who just recieved an received an unsolicited letter from one of the big banks who has her mortgage in SE Florida. This person has about $45k left to pay the mortgage off, did not do any cash out refi during the boom and has never had a late payment. It basically said Congratulations as a valued customer and as part of the Home Affordable Refinance Program, or HARP we are pleased to be able to offer you… Then a choice of a 10 or 15 year 3.75% no closing cost or any cost loan. So they are taking care of people who owe $45k and have never missed a payment. That should fix it.
It’s like Mark Twain said, a Banker is someone who lets you borrow an umbrella when it’s sunny, but wants it back as soon as it starts to rain.
From Wonkblog on the Washington Post:
Mitt Romney’s budget in about 150 words
By Ezra Klein
Let’s try to make this as simple as possible. Money comes into the federal government through taxes and bonds. The vast majority of it is then spent on old-people programs, poor-people programs, and defense.
Mitt Romney is promising that taxes will go down, defense spending will go up, and old-people programs won’t change for this generation of retirees. So three of his four options for deficit reduction — taxes, old-people programs, and defense — are now either contributing to the deficit or are off-limits for the next decade.
Romney is also promising that he will pay for his tax cuts, pay for his defense spending, and reduce total federal spending by more than $6 trillion over the next 10 years. But the only big pot of money left to him is poor-people programs. So, by simple process of elimination, poor-people programs will have to be cut dramatically. There’s no other way to make those numbers work.
He says that he want \s to transfer medicaid and foodstamp costs to the states.
So, either those programs will die a fiery death as the states don’t have any revenue to fund them OR local taxes will have to increase to cover them.
Then Colorado the states may finally have the balllz to force people to read, write and speak English in order to obtain said benefits….
Then the state wont be blamed for the big drop in recipients.
They can force education all they want (an idea I favor) but it’s JOBS that people really need.
Eco:
One of the biggest problems to re-employment is the demeaning make work statues of the welfare to work programs. they just don’t work for anyone who actually had a real job.
And the rules stating you cannot do an interns or low pay job in your field to keep up your skills up to date,and still collect unemployment until the economy gets better…
So now you have people who are behind the tech curve because they have no money to buy the latest mac air, blackberry iphone i-pad and software which is now in the job requirements to work for FREE.
Companies always let the interns or newbie employees use the old company computers but not anymore.
Since we live in the free market the programs will disappear or corporations will leave those states. States that hang on the longest will loose because the poor from other states will flock to them.
The states are broke. How can this be a plan??
I think the real plan is tat the states will receive the huge, unfunded mandate and make the case that they can’t fund it. The feds will then remove the mandate and the programs will be dismantled.
I can’t wait to see the churches pick up the slack, feed the poor and pay for their medical care.
There’s no other way to make those numbers work.
No growth in spending would cut $7T. Your definition of cuts ( cuts from baseline budget really means increase ) is not an honest one.
Actually Romney is on record in wanting to transfer Medicaid, foodstamp and other po’ folk programs costs from the fed gov to the states.
That would cut a decent amount from the federal budget, probably enough to fund a few more wars and tax cuts for the rich (but not enough to balance the budget).
“…wanting to transfer Medicaid, foodstamp and other po’ folk programs costs from the fed gov to the states.”
I guess since the states aren’t broke enough already, why not make them a little broker?
If that were to actually, it would be time to emigrate.
The federal has a lot of power over states these days for several reason, not the least of which is their unbroken record of civil rights, labor and safety abuses.
Damn. It dyslecix day!
to actually happen
federal government
No growth in spending would cut $7T. Your definition of cuts ( cuts from baseline budget really means increase ) is not an honest one.
That’s only true in a stricly literal sense. As you may have heard, the number of senior citizens is gorwing rapidly in this country because baby boomers started turning 65 last year. Keeping Medicare spending constant, for example, would have to result in a cut in the level of benefits that seniors are currently receiving.
Taxes? Here’s why we have a budget problem:
http://www.reuters.com/article/idUSTRE68R40I20100928
http://online.wsj.com/article/SB10001424052970204662204577199492233215330.html?mod=WSJ_article_forsub
“Romney is also promising that he will…..”
That is really where the thoughtful person should stop engaging.
“CHEYENNE — State representatives on Friday advanced legislation to launch a study into what Wyoming should do in the event of a complete economic or political collapse in the United States.
House Bill 85 passed on first reading by a voice vote. It would create a state-run government continuity task force, which would study and prepare Wyoming for potential catastrophes, from disruptions in food and energy supplies to a complete meltdown of the federal government.
The task force would look at the feasibility of Wyoming issuing its own alternative currency, if needed.”
Read more: http://trib.com/news/state-and-regional/govt-and-politics/wyoming-house-advances-doomsday-bill/article_af6e1b2b-0ca4-553f-85e9-92c0f58c00bd.html#ixzz1nVCWzPo5
http://trib.com/news/state-and-regional/govt-and-politics/wyoming-house-advances-doomsday-bill/article_af6e1b2b-0ca4-553f-85e9-92c0f58c00bd.html
Forget a house, I am saving up for one of these:
http://en.wikipedia.org/wiki/File:07._Mad_Max_Car_at_Silverton_Hotel,_Silverton,_NSW,_07.07.2007.jpg
“The task force would look at the feasibility of Wyoming issuing its own alternative currency, if needed.”
I thought only the Feds could issue currency. Isn’t that a piece of the Constitution somewhere?
I think that’s what they mean by “looking at the feasibility.”
They’re asking themselves, at what point is the country, and thus its constitution, dead, and how do we prepare for that?
It will be interesting to see if Wyoming issues some metrics for this scenario, and then, if it happens, stick to them.
Constitution dead, yes, That would be a serious doomsday scenario. Of course the argument is made that a large piece of it is already dead.
Being that Wyoming is perhaps the perhaps most laissez faire and libertarian state in the union I’m surprised that they don’t just allow the “invisible hand” to handle the situation, should it arise.
Oh, yeah! The invisible hand of the free market!!
http://www.youtube.com/watch?v=n4ZwfokaoOs
Not clear what that jackass segment has to do with the (almost nonexistent) free market?
I thought “THE GIANT HAND THAT SMACKS THE GUY IN THE FACE” part was fairly clear.
I thought “THE GIANT HAND THAT SMACKS THE GUY IN THE FACE” part was fairly clear.
Esp since said hand was hidden out-of-sight around the corner… E.g. he was smacked by the invisible hand.
THAT TOO.
Lol…
Newspaper articles are reporting both German soldiers and tax collectors have entered Greece to um….help make sure the German investment in the Euro is not undermined by the usual issues. I wonder if the Wyoming leadership is taking that possibility into their planning.
Source? This is VERY bad news.
Sure, in 1940.
The reports I’ve seen are that Germany has offered tax collectors to help Greece fix its tax collection system, which the Greeks ‘politely’ refused.
If the Germans were to send in troops, then the rest of NATO would have to declare war on Germany. Which would be interesting.
Wyoming can only do this because they have oil/gas/shale.
Stopped by another open house yesterday, 375K for a 1400 sqft old house with some new paint and floors, drained pool w no other info. Average area of SF Valley and on a busy street. The realtor had Not Even A Flyer. Whats more, she was not the realtor on the sign out front. Does this mean she is not the listing broker? I have seen that a lot, absolutely no matchup between the name on the sign and the realtor passing out cards at the open house. Am I being too snipey by allowing this to irritate me?
That happens at most open houses I’m at. I just assume the listing realtor is at the open house of the home worth twice as much around the block. They have other realtors sub at the homes worth a little less, at stale listings, or one less likely to move, etc. Also, my realtor goes away a lot. Her income hasn’t been so hot the last few years but her husband is still doing ok. Any open houses on those weeks they’re away she’ll have a sub.
In the olden days a seasoned realtor would “farm out” an open house to a newbie in the office, who was grateful for the chance to latch onto a potential buyer, even if the buyer didn’t like that particular house.
In the 4th largest city in the nation, a 1400sqft house with pool would sell for around 200k in the NICEST of neighborhoods. (if it was still standing and not torn down for townhouses or a McMansion)
In the burbs? $150k or less depending on condition.
Why should mortgage debt relief income be taxed any differently than any other form of income? Is it because homeowners are in some kind of special privileged class, akin to 1%ers who take their income in the form of capital gains?
KENNETH HARNEY Nation’s Housing
EXTENSION OF DEBT RELIEF TAX LEGISLATION IS IN JEOPARDY
By Union-Tribune
12:01 a.m., Feb. 26, 2012
Updated 4:20 p.m. , Feb. 24, 2012
Given the huge public and private resources now being devoted to helping financially distressed homeowners — including the recently announced $25 billion national mortgage settlement with five major banks — you might assume that a key federal tax law benefit underpinning these efforts would be a shoo-in for renewal.
But it’s not. The Mortgage Forgiveness Debt Relief Act is set to expire in 10 months, and there are early indications on Capitol Hill that it might not make the cut. The law, first enacted in 2007, allows homeowners who have received principal reductions on their mortgages as the result of loan modifications, short sales or foreclosures to avoid income taxation on the amounts forgiven.
Loss of that tax help would endanger huge numbers of distressed mortgage arrangements in the months ahead. For example, the $25 billion mortgage settlement with 50 state attorneys general requires the banks to provide more than $10 billion in principal reductions to borrowers. Meanwhile, other lenders and mortgage servicers who are not parties to the settlement already provide principal reductions to troubled borrowers. Many of these owners would face hefty and ill-timed taxable income hits in the event the law is not extended.
Yet election-year politics and a contentious lame-duck, year-end congressional session loaded down with tax and budget issues could doom renewal of the debt relief tax legislation and put large numbers of loan modification participants deeply in the hole. Republican strategists say the cost of continuing the program — $2.7 billion for two years — is substantial enough to catch the eyes of budget-deficit hawks. Beyond that, they add, some members of Congress may be opposed to what they see as still another targeted federal benefit for people who didn’t pay their mortgages — subsidized by taxpayers who did the right thing and stayed current on their loans, even while underwater or facing severe financial distress.
…
You see the pattern here. Just like any other once strong nation that was doomed to eventual failure, once you’ve allowed someone a pay-out even if it is set up with the understanding it should only be temporary, it is never politically prudent to eliminate that cashflow, subsidy, or tax break. Hence, the hole just gets dug deeper and deeper as the citizens seem incapable of accepting that windfall for what it is….temporary. Without exception, voters can only see something meant to be a temporarily goose to the system as a situation that now and forever will be their inalienable right as Americans.
It’s true across all age groups, every political party, all consituencies. Have we even seen anything that resembles individual sacrifice for the good of the nation since WWII? I’m not sure buying a Prius is gonna cut it. (snark)
Have we even seen anything that resembles individual sacrifice for the good of the nation since WWII?
Does a Lucky Ducky working 3 minimum wage jobs to stay off welfare count?
Is it too late to jump on the “derisking” bandwagon, by dumping all your U.S. stock holdings?
Is ‘Derisking’ Even Riskier?
By JASON ZWEIG
When you “derisk,” be sure you understand whether you are eradicating risk—or just replacing old risks with new ones.
You have heard ad nauseam that investors have spent the past few years dumping U.S. stocks en masse for the presumed safety of bonds. Like many beliefs on Wall Street, it isn’t exactly wrong, but it does miss the point.
“We don’t think investors are derisking,” warns Fran Kinniry, an investment strategist at Vanguard Group. “We think they are rerisking. Mainly, they’re chasing recent past performance”—in stocks and bonds alike.
Since the end of 2008, when the financial crisis was near its worst, investors have taken $105 billion more out of U.S. stock mutual funds and exchange-traded funds than they put in, according to Kevin McDevitt, a fund-flow analyst at Morningstar. (When more money goes out than comes in, that is a net outflow; when more comes in than goes out, that is a net inflow.)
Last year, investors ditched a net $34 billion in funds holding the biggest U.S. growth stocks, like those in the Standard & Poor’s 500 index. In 2011 they also got rid of more than $15 billion in funds that hold midsize stocks. Funds in both categories tend to be highly diversified, typically with 100 or more stocks across at least 10 industries.
Meanwhile, investors have been buying sector funds, which usually hold only a couple of dozen stocks in a single industry and thus are riskier. Since the end of 2008, investors have added more than $55 billion to sector funds—including $12 billion in real estate and $8 billion in utilities.
Last month, real-estate funds took in $1.7 billion, or 16% of all the net inflows into U.S. stock funds. Utilities and real estate were up 11% and 8%, respectively, last year, versus 2% for the S&P 500.
Also in January, emerging-markets mutual funds and ETFs took in a net $7.9 billion—versus $11 billion for all U.S. stock funds combined. Over the past 10 years, emerging markets have returned 15% annually, versus just 3.5% for the S&P 500.
While there are plenty of reasons to be bullish on emerging markets, lowering risk isn’t one of them. “There is much more to worry about, from the economic-stability point of view, in emerging markets than in developed markets,” says George Greig, who oversees $15 billion in international stocks at William Blair & Co. in Chicago. Those worries include inflation, arbitrary or corrupt governments, and the risk of slowing growth in China.
The bond funds taking in new money are hardly low-risk, either. In January, corporate and high-yield, or “junk,” bond funds took in $23 billion, and emerging-markets bond funds raked in $2 billion. That’s 77% of the total taken in by all taxable bond funds.
These types of bonds substantially out-yield Treasurys—but, compared to U.S. government bonds, they run a higher risk of doing poorly when U.S. stocks suffer.
Individual investors aren’t alone in replacing the familiar risk of holding U.S. stocks with a bunch of new risks.
Between 2006 and 2011, college and university endowments cut their holdings in U.S. stocks to 16% from 25% of their assets, according to the Nacubo-Commonfund Study of Endowments.
Meanwhile, these institutions raised their positions in “alternative strategies” such as hedge funds, private equity, real estate and commodities to 53% from 40%. Those alternatives carry their own risks—foremost among them the inability to trade at will.
…
They are chasing returns, thinking that somehow if they invest in the asset class that made so much money for Harvard and Yale back in the day, that they will get those returns now. Please guess for yourself how well that will go.
As for risks? Not being able to trade at will is the least of it. Yes, redemptions can be suspended. Also the fund can decide it isn’t a good idea to pay out returns in any given year (harder for places that have to pay taxes on those returns and can’t any money with which to pay), and they can demand additonal capital contributions (yeah, that means you hav to cough up more cash) whenever they feel like it. Talk about risk.
Stocks are up right now so it’s time to at least reduce your equity holdings. Will it go up or down from here? Who knows.
From the WSJ a few years ago: There is a small god on the trading floor who allows each trader to accurately call the top once and accurately call the bottom once, and to be wrong as many times as he or she likes.
Does that count for me, having bought at the top once and sold at the bottom once? I haven’t wanted to enjoy being wrong any more since then.
Short sales, bank-owned homes aren’t for the faint of heart
12:21 AM, Feb. 26, 2012
Written by Mike Perrault
The Desert Sun
About half of the homes sold in the Coachella Valley in January were bank-owned and short sales — an indication that distressed homes are still very attractive to bargain hunters.
The deals aren’t without risk, however, especially as inventories of quality, low-end distressed properties in the desert continue to decline, local real estate brokers and agents say.
The upside is there can be tremendous value among foreclosures. The downside is many foreclosures or short sales have a back story that can translate into hidden debt, substantial maintenance costs and other problems.
“Especially now, investigate the whole thing and find out what’s going on,” said Jim Franklin, broker associate with Prudential California Realty in Palm Springs.
Take homeowners association dues, for instance.
The road to foreclosure typically involves a steep financial loss for homeowners, many of whom fall behind on HOA dues.
Buyers of distressed properties must then pick up the tab when closing on a short sale, Franklin said.
“More and more, you see that issue,” he said. “I have a listing now where there is about $3,000 in back HOA fees.”
Franklin advises buyers to factor HOA fees into any offer when purchasing a distressed property.
Buyers of foreclosed homes should also understand nuances of the sales transactions.
Banks typically present an addendum that supersedes any previous agreement or contract, said Mike Duncan, a La Quinta-based real estate broker who heads The Duncan Group, which closed 400-plus distressed property deals during the past three years.
“That bank addendum will sometimes tell you what they’re going to pay for, what they’re not going to pay for,” Duncan said. “It may say, ‘Property sold as is.’”
…
Any legal eagles out there? If a HOA is owed fees for the time the prior owner and then the bank held title, can they force the new owner to pay for that without having filed a lien on the property?
Whatever became of talk to reduce or eliminate the federal MID? Did NAR lobbyists manage to kill it?
February 23, 2012
Mortgage interest deduction should be allowed to stand
I am writing to voice our association’s concerns about Gov. Martin O’Malley’s proposal to reduce Maryland’s state income deductions — specifically the mortgage interest deduction-for all taxpayers earning more than $100,000.
While Maryland’s real estate market is beginning to show signs of stabilization, it is a long way from being considered healthy.
Approximately 70 percent of all Marylanders own their own homes, many of whom owe much more than their current house values.
These same homeowners are stakeholders in their communities, adding stability and commerce to our counties, cities and neighborhoods.
Many of these same homeowners have chosen to make the effort to pay their mortgages, even when their investments have been losing value, and simple economics would tempt them to default and cut their losses. On top of that, many are also facing job cutbacks, furloughs and job losses.
That said, is it appropriate now to limit their state income tax deduction and give them even more economic reasons to pull up stakes and default?
Supporting a strong housing market is not only a good thing for homeowners who make for strong communities and not only a good thing for those who directly support the housing industry such as Realtors, home builders and those of us who provide financing, but it is a good thing for a very broad section of our entire state economy.
…
” those who directly support the housing industry such as Realtors, home builders and those of us who provide financing”
Classic doublespeak.
These are the feeders, not the supporters.
With the massive spending the FIRE sector brings to the political arena, there is a vanishingly small chance that the MID will be eliminated in Maryland.
Instead, O’Malley must NOT be getting the necessary contributions from his friends in the aforementioned sector. As a result, this action will boost his contributions from the sector and the issue will quietly go away.
Actually, I look forward to other governors trying the same maneuver with the same result - more contributions, issue goes away.
for those of you who think the slightest mention of de-regulation means i am for poison air, water and food and killing and starving old people…charles hugh smith has a great blog today.
http://www.oftwominds.com/blog.html
FWIW: regulations don’t hold us back, they hold us up.
LOL. Only if you are a little fish.
Regulations are loved by big business!
$11k to get the water turned on? Thats nothing for a corporate giant like McDonalds.
$20k for a permit? Again, its chicken feed for Micky D’s.
Anything to keep away a competitor like small mom-n-pop store from opening with better food.
Crony capitalism at its best!
Flat permit fee = regressive tax on business
Seems the regulations we already have don’t make any difference as it is.
How would less be better?
Did I read the article. Oh course not. I’ve lived through 30 years of de-regulation. It is is an unequivocal failure. Period.
FYI, the worst regulations are usually at the LOCAL level. Much like the problem with education.
There regulations originated to protect people, regulations to fluff up bureaucrats, and there’s regulations originated to protect the big players. It’s hard sometimes to tell them apart.
Regulations are certainly necessary, as we’ve seen from the meltdown of the financial sector and their subsequent refloatation on a sea of public money.
However, they can also be used punitively and as a shakedown tactic by money-hungry local politicians.
But it’s important not to throw out the baby with the bathwater.
Voting Republican leads to impoverishment.
Better credit scores in ‘blue’ states or ‘red’?
But blue state borrowers have higher debts, data suggest
Written by Dean Calbreath
1 p.m., Feb. 22, 2012
Updated 2:09 p.m.
Borrowers in “blue states” tend to have better credit scores than borrowers in “red states,” even though they borrow more, according to data from CreditKarma, which monitors credit activity across the nation.
In January, “blue states” - which typically vote Democratic in national elections - had an average nationwide credit score of 667, compared to 651 for “red states,” which lean Republican.
Borrowers typically need a score of at least 660 to get a mortgage from a non-government lender. The top ratings range from 740 to 850.
CreditKarma - which based its report on a sampling of 320,000 borrowers nationwide and more than 3,000 in San Diego - calculates that San Diego’s average score was 685 in January.
One reason for the difference in credit scores is that the states lowest on the list also have relatively high poverty rates.
…
Best and worst credit scores
Borrowers in blue states had better average credit scores than borrowers in red states, according to data from CreditKarma. Here are the top five and bottom five states, with their affiliation based on the last four presidential elections.
Highest credit scores
New Jersey, blue, 681
Massachusetts, blue, 680
California, blue, 679
Minnesota, blue, 676
Washington, blue, 675
Worst credit scores
Mississippi, red, 622
Arkansas, red, 634
Louisiana, red, 635
West Virginia, red, 635
South Carolina, red, 636
Why not followup with the genetic/brain capacity deficiency studies on Republicans?
You really love that study, don’t you? Here ya go, by popular request…
Brain structure differs in liberals, conservatives: study
(AFP) – Apr 7, 2011
WASHINGTON — Everyone knows that liberals and conservatives butt heads when it comes to world views, but scientists have now shown that their brains are actually built differently.
Liberals have more gray matter in a part of the brain associated with understanding complexity, while the conservative brain is bigger in the section related to processing fear, said the study on Thursday in Current Biology.
“We found that greater liberalism was associated with increased gray matter volume in the anterior cingulate cortex, whereas greater conservatism was associated with increased volume of the right amygdala,” the study said.
Other research has shown greater brain activity in those areas, according to which political views a person holds, but this is the first study to show a physical difference in size in the same regions.
People with a large amygdala are “more sensitive to disgust” and tend to “respond to threatening situations with more aggression than do liberals and are more sensitive to threatening facial expressions,” the study said.
Liberals are linked to larger anterior cingulate cortexes, a region that “monitor(s) uncertainty and conflicts,” it said.
“Thus, it is conceivable that individuals with a larger ACC have a higher capacity to tolerate uncertainty and conflicts, allowing them to accept more liberal views.”
It remains unclear whether the structural differences cause the divergence in political views, or are the effect of them.
But the central issue in determining political views appears to revolve around fear and how it affects a person.
“Our findings are consistent with the proposal that political orientation is associated with psychological processes for managing fear and uncertainty,” the study said.
http://www.google.com/hostednews/afp/article/ALeqM5iISI7ifh-AjUE3ejyC1wQmwFrMFw?docId=CNG.61c886c438708471a9f4ea23070fa70c.3a1
I do so. It reminds me of the arguments of the inferiority of a race of people I saw a generation ago, and of those about another race, probably now long removed from the historical account. Hate, rationalized. Kind of strikes a chord. Sometimes the blog here turns into a dark smelly alley, but the faces are familiar.
It reminds me of the arguments of the inferiority of a race of people I saw a generation ago
The arguments made by conservatives, which the liberals opposed?
Hate, rationalized.
Like the hatred of gays and non-Christians, held by today’s conservatives?
but the faces are familiar.
Yes, the same faces of conservatism, always opposed to expanding rights to anyone but themselves. The kind who think the black president must be a Kenyan Muslim, because he’s clearly ‘not one of us’.
It’s actually exculpatory- and explanatory- to realize they are just the victims of their own fearful, paranoid minds.
Those labels do not parade well in political garb. I do nkow that one can be conservative in approach to life and liberal to one’s fellows, yet the labels do not apply to the farcical political circus. Were you liberal yourself, you would not mock so strangers and condemn them on the slightest of disagreements, nor express vitriolic hatred and call it their speciality. JMO.
I don’t mock them. I pity them their fear-driven psyches.
And I try to point them in the right direction: towards reason, and freedom from instinctive fear of the other, and nudge them along evolution’s trail- upon which they are dawdling- as gently as I can. That’s what makes me a liberal.
However studies show modern liberals as retarded versus classic liberals.
Got a link?
“One reason for the difference in credit scores is that the states lowest on the list also have relatively high poverty rates.”
So poverty and poor credit are correlated. Who knew?
Those Americans who think the Republican austerity plan offers any kind of solution ought to closely watch the fiscally austere Greek economy’s life in the toilet for a while before deciding for sure.
U-T EconoMeter
EconoMeter: Greek bailout right strategy in Europe?
The economic impact is at issue
Protesters, one with a Greek flag, struggles to hold umbrellas in a storm, in front of the Greek parliament during a Wednesday protest in Athens over a batch of emergency laws that will further cut incomes and state spending.
Protesters, one with a Greek flag, struggles to hold umbrellas in a storm, in front of the Greek parliament during a Wednesday protest in Athens over a batch of emergency laws that will further cut incomes and state spending. AP Photo/Petros Giannakouris — AP
Written by Roger Showley
3:39 p.m., Feb. 24, 2012
Q: Does the Greek debt solution provide a good model for handling other European countries’ financial problems and getting the European economy growing again?
Panel’s answer: Yes 2 No 5
Marney Cox, San Diego Association of Governments
ANSWER: NO
The trouble with the “solution” is that Greece is being asked to follow a path of austerity—simultaneously cutting government expenditures (reducing debt) and employee wages–without an end in sight. Greece is entering its fifth year of recession, which should have been sufficient time to lower private-sector wages sharply, making the Greek economy more competitive, boosting exports and creating jobs in export sectors. But austerity has increased unemployment and reduced incomes, shrinking the economy further. Some suggest that Greek private-sector wages have further to fall before this model can work. Maybe; but before adopting this model it needs to be clear that it works.
…
Screw austerity. We’ll be able to finance additional debt for ever and ever, and never have to pay it back. Party on!
“Party on!”
Would you recommend instead the Republican version of Greek fiscal austerity? Or what?
Ah yes, socialism bailouts for us, austerity, er, capitalism for the rest of you.
Um guys, your sarcasm detector may need to be adjusted.
PB, you came to the PNW and didn’t even let us buy you a beverage of your choice??
Tsk, tsk…
Next time!
I had my hands full w/ three teenagers in my care, so drinking was not an option, though it certainly was a powerful temptation!
Next time I am likely to be unencumbered, and will make a point of seeking out HBBers who might want to join me for a libation…
Next time I am likely to be unencumbered, and will make a point of seeking out HBBers who might want to join me for a libation…
Excellent! I look forward to it…
Past foreclosure means waiting years for new loan
By ALEX VEIGA
Sunday, February 26, 2012
AP photo In this March 8, 2011, file photo, a foreclosed house with sale pending sign is shown in Tigard, Ore.
LOS ANGELES — Next to filing for bankruptcy protection, nothing wrecks your chances of qualifying for a home loan like a foreclosure.
And if you got out from under an oppressive mortgage through a short sale — when the bank agrees to accept less than what the homeowner owes — lenders can look upon you just as unfavorably.
It’s a reality that the former owners of the more than 4 million homes lost to foreclosure in the six years since the housing bubble burst will have to confront if they want to own again. But the passage of time makes all the difference.
That’s because mortgage-lending guidelines that most banks follow prohibit them from making loans to people with foreclosure or a short sale in their credit history, often for years. Never mind the hit that one’s credit score takes.
Still, some of the homeowners who were foreclosed upon when the market first started to skid are now looking to buy and getting loans.
“They’re probably going to pay a little higher interest rate, but with rates so low, a higher interest rate of 4 percent is not a big deal,” said Rosa Herwick, a broker and owner of Century 21 JR Realty in Henderson, Nev.
So how likely are banks to approve your mortgage application if you have a real estate-related blemish on your record? And can you do anything to spring yourself from the mortgage penalty box?
It depends on several factors, but largely on whether you had a foreclosure or a short sale.
FORECLOSURE
Generally, borrowers who have a foreclosure in their credit history can expect to wait between two to seven years before a lender will even accept their loan application.
The waiting periods stem from guidelines most banks must follow in order to be able to sell their home loans. That’s because potential purchasers, such as Fannie Mae and Freddie Mac, each have a different set of guidelines for the loans they will buy and criteria for whom they deem a qualified borrower.
The fact is, a person’s credit score, employment history and other factors that make up one’s creditworthiness will take a back seat to these resale guidelines.
…
If you have been foreclosed, why in the world would you EVEN WANT to buy another house?
Time to rent an apt and let someone else pay for the worries.
Because Suzanne kicked the clown who approved the liarloan in the U
NO watzzz
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.
.
.
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And now shes Pregananto!
Short Sales and Principal Mods Could Soon be Subject to Large Taxes
By Michael Kraus on February 24, 2012
Did you know that forgiven mortgage debt could be subject to taxes? Prior to 2007, any forgiven debt was treated as regular income. In 2007, the Mortgage Forgiveness Debt Relief Act was passed in order to give people a reprieve from taxes on forgiven mortgage debt. The Act is scheduled to expire at the end of the year. This could be a big problem for plans to increase debt forgiveness under the new proposed mortgage settlement.
I learned of this from an article on ProPublica by Lois Beckett as well as an article by syndicated Real Estate columnist Kenneth Harney. According to the Harney article, an extension for the Mortgage Forgiveness Act will have difficulty passing through Congress.
…
…but let’s not tax Wall St’s securiies fraud, eh?
“Securities” dammit
A divorce and a worth-less underwater house that can’t be sold to help cover the settlement: How common is this scenario? I’m guessing pretty common, given that I have one such case in my immediate family.
A Divorce And A House Worth Less Than The Mortgage
posted by Alex Ferreras on February 23, 2012 in Mortgage News Daily | Mortgage Rate News - LoanSafe.org
(Source: Kevin Hunt The Hartford Courant, Conn. (MCT) — Here’s one of the most difficult modern-day dilemmas: a couple in divorce proceedings who owe more on their house than it’s worth. What to do?
…
Very common. Hard times equal divorce.
However, this works out very well for the person forced to give the house to the other party.
To paraphrase Rodney Dangerfield, “Take my house… please!”
I thought it was Jack Benny who said that.
And the last people to find out that the house is worth less than what is owned?
The borrowers.
I can hear her now…… “I want half of everything”.
Me: Ok. You can have all of it.
Mortgage deduction doesn’t increase home ownership
BY DAVID NICKLAUS • dnicklaus@post-dispatch.com > 314-340-8213 | Posted: Thursday, February 16, 2012 2:51 pm
To hear the National Association of Realtors talk about it, the income-tax deduction for mortgage interest is the cornerstone of home affordability in the U.S. The group’s chief economist, Lawrence Yun, asserted last year:
The authors of a new Swiss Finance Institute study beg to differ. After comparing tax codes and housing markets across several countries, they say that the mortgage deduction generally does not increase home ownership rates. Home ownership rates around the world range from 34.6 percent in Switzerland, which has a mortgage deduction, to 87.2 percent in Singapore, which does not. (Singapore does, however, subsidize owner-occupied housing in other ways.
The authors, led by Steven Bourassa of the University of Louisville, say the subsidy gets built into house prices. In other words, the tax break makes houses more affordable, but it also makes them more expensive, and thus less affordable. The two effects roughly offset each other, but of course that isn’t true for each individual homeowner. When you think about who benefits most, the paper says, you can see why abolishing the interest deduction shouldn’t erode home ownership:
So, Democrats should hate this deduction because it favors the wealthy, and Republicans should disapprove because it is economically inefficient. Yet, when the Bowles-Simpson commission suggested reducing or eliminating it, the idea was dismissed out of hand. Why?
“The loss of deductions would be greater among high-income households, but such households are likely to be
ownersvoters in any case.”“…but such households are likely to be OWED POLITICAL FAVORS in any case.”
There. Fixed it.
Still better!
Yet, when the Bowles-Simpson commission suggested reducing or eliminating it, the idea was dismissed out of hand. Why?
Perhaps because Realtors are Liars?
“Why?”
I’ll tell you why. Our God damned congressman are bought and paid for by NAR/NAHB and MBA…. That’s why.
Why aren’t congressman facing corruption charges for these bribery schemes?
Agree. However, it’s a long way from “reducing” to “eliminating.” I see no harm in reducing MID to some certain ceiling amount on primary homes only.
Why aren’t congressman facing corruption charges for these bribery schemes?
The bribery scheme that is our campaign finance/lobbying system?
Because corporations are people, and money = speech. So it’s all perfectly legal.
Not all top Fed officials are lining up behind Bernanke’s housing bubble reflation scheme:
Fed’s Bullard, Plosser Oppose Further Round of Mortgage-Security Purchases
By Caroline Salas Gage and Joshua Zumbrun - Feb 24, 2012 9:00 PM PT
Two Federal Reserve officials opposed additional mortgage-bond purchases by the Fed, saying the measure isn’t needed and that the U.S. central bank shouldn’t interfere in credit markets.
James Bullard, president of the Federal Reserve Bank of St. Louis, said he doesn’t favor additional debt buying as inflation risks are “to the upside” and a damaged housing market limits the effectiveness of monetary policy. Philadelphia Fed President Charles Plosser said targeting a specific industry such as housing should be left to the U.S. Treasury.
“I am worried that if you try to push so hard on monetary policy even when the mechanism isn’t really working, the whole thing blows up on you,” Bullard, who doesn’t vote on Federal Open Market Committee this year, told reporters after a speech yesterday in New York. He also said that the FOMC would need to mark down its economic forecasts to warrant another program of large-scale asset purchases, known as quantitative easing.
Fed officials are keeping open the option of a third round of bond purchases in case the economy weakens or inflation stays low. “A few” members of the FOMC said economic conditions could warrant buying assets “before long,” and others indicated that action would become necessary if the “economy lost momentum” or price gains seemed likely to remain lower than the Fed’s 2 percent goal, according to minutes of their Jan. 24-25 meeting released last week.
…
Not all top Fed officials are lining up behind Bernanke’s housing bubble reflation scheme:
The few who oppose seem to be non-voting members at the moment…
Also note that they may be talking down the likelihood so that it is more effective when it actually occurs, rather than already being priced in.
Feb. 24, 2012, 4:29 p.m. EST
Swiss watchmakers fear Asia slowdown
State of the China luxury market emerges as a key concern
By Agnese Smith
Reuters
A man walks past a Longines showcase at the jewelry fair Baselworld last March.
ZURICH (MarketWatch) — The Swiss watch industry, world leader in the production of luxury timepieces, is unlikely to continue enjoying the phenomenal growth it has witnessed over the past couple of years, say analysts and watchmakers. Demand will probably slow from China and Hong Kong, which now account for more than a quarter of all watch exports from the Alpine country.
…
I’ve never understood the appeal of an expensive Rolex or other Swiss status symbol. Then again, I’ve read here about how the noveau ruch in China leave the labels on their clothes for others to see.
“phenomenal growth it has witnessed over the past couple of years”
Sounds like a bubble.
Depends what the condo docs say. You are only buying whatnthe previous owner has. Prudence would dictate that the hoa file in the chain of title though. Again, it depends on what the condo docs say.
Feb. 27, 2012, 1:00 a.m. EST
Asia stocks mixed, with Hong Kong, Tokyo gaining
By Virginia Harrison, MarketWatch
SYDNEY (MarketWatch) — Asia stocks traded mixed on Monday, with Japanese exporters helped by a weaker yen and Hong Kong also gaining, but with sentiment bruised by fears high oil prices would hurt the global economic recovery.
Hong Kong’s Hang Seng Index (HK:HSI -1.40%) added 0.3%, while the Shanghai Composite (CN:000001 +0.31%) surged 1%, and Japan’s Nikkei Stock Average (JP:NIK -0.14%) edged up 0.1%.
But South Korea’s Kospi (KR:0100 -1.42%) lost 1.6%, and Australia’s S&P/ASX 200 index (AU:XJO -0.92%) finished down 0.9%.
“Momentum is slowing down — there is some caution in the air as the market refocuses attention on higher oil prices,” said Tom Kaan, director of equity sales at Louis Capital Markets in Hong Kong.
…
What happens next in the global economy?
Hint to dummies: Oil price spikes often prove to be the harbingers of recessions.
And you can bet that when it happens, many will be shocked and dump their stock holdings on the news.