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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
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Which of the three doors will be chosen to resolve the fiscal cliff crisis?
1. Full sequestration?
2. Compromise solution?
3. Postpone the resolution deadline?
Obama convenes leaders for huddle on ‘fiscal cliff’
President and congressional leaders gather to talk about averting the fiscal cliff, as White House officials are reportedly in talks to replace “sequestration” with a palatable package of targeted spending cuts.
They do not want to go home for the Holidays having voted for anything their constituents don’t like or alternatively doing nothing and letting the SHTF…So;
#3…
Eliminate funding for food stamps, Obama phones, disability, school lunches, Medicaid, and shut down the public labor union goons, and the budget will be balanced. It’s that easy.
2.5 A compromise mini-solution that doesn’t solve the debt/deficit long term, but incrementally improves the situation enough to kick the can a couple more years before true reform and solutions are talked about again.
Markets will crater if fiscal cliff talks fail: Greenspan
November 16, 2012, 12:02 PM
Financial markets are already shaky and “will crater” if there is any sign that Washington can’t get its arms around solving the fiscal cliff, former Federal Reserve Board Chairman Alan Greenspan said Friday.
“I think the markets are getting very shaky. And they are getting shaky because I think fiscal policy is out of control,” Greenspan said in an interview with Bloomberg Television.
“And I think the markets will crater if we run into any evidence that we cannot solve this problem,” he said.
…
“Greenspan Says Recession Cheap Price to Fix Fiscal Policy” - Source Bloomberg
I agree with Greenspan. I could use a vacation and good 5 - 10% drop in GDP would give me time for the vacation I so richly deserve.
Strawberry Daiquiri anyone?
‘Financial markets are already shaky and “will crater” if there is any sign that Washington can’t get its arms around solving the fiscal cliff,…’
What’s to stop the Fed from supplying sufficient liquidity to the market (QE4?) to prevent the dreaded cratering?
Whether ‘Fiscal Cliff’ or Debtpocalypse, by Any Name, It Spells Austerity
By ANNIE LOWREY
Published: November 16, 2012
WASHINGTON — Come January, the United States might careen off the fiscal cliff. Or start rolling down the fiscal slope. Or, in a worst-case scenario, find itself staggering amid the hot ashes of a debtpocalypse.
One thing is certain. Absent Congressional action, the country faces more than half a trillion dollars in tax increases and spending cuts next year. Workers would have less take-home pay. Financial markets might panic. Eventually, the country could fall back into a recession.
Many politicians and pundits in Washington are terrified of it, and President Obama and Congressional leaders met Friday to publicly kick off a series of negotiations to avoid it. But that does not mean that anyone can quite agree on what to call it.
Indeed, in Washington, vigorous semantic debate has sprung up alongside the heated policy debate. And a thousand tortured metaphors have bloomed.
The left-of-center Economic Policy Institute here has termed it the “fiscal obstacle course.” The commentator Derek Thompson at The Atlantic has described it as weights in a runner’s backpack.
BlackRock, the world’s largest asset manager, has poetically advised that getting past the cliff may result in a sky dive, a bungee jump or a hard stop. The conservative economist Glenn Hubbard, the dean of the business school at Columbia University, likened it to a rocky shore where he used to summer in Maine.
The MSNBC commentator Chris Hayes got angry, taking to Twitter to complain “#itsnotacliff #itsnotacliff #itsnotacliff.” Peter Suderman of the libertarian magazine Reason got silly, ruminating, “Fiscal Clifford the Big Red Dog.” The Columbia Journalism Review got defeatist, calling it the “fiscal whatchamacallit.”
It is worrying Washington, and evidently driving its pundits mad. But what is wrong with the plain old name “fiscal cliff”? And where did it come from, anyway?
…
Any thoughts on this analysis?
One thought: Isn’t it natural for the Republicans to use the MID as a cudgel in the fiscal cliff debate, since it is primarily Democrat-leaning states that have the highest average mortgage interest deductions?
Jed Kolko
Chief Economist, Trulia
What Obama’s Re-Election Means for Housing
Posted: 11/14/2012 2:06 pm
Throughout the 2012 presidential campaign, both candidates were short on specifics about their housing policy, to put it very kindly. They ignored housing in the debates and acted as if the housing crisis were over. Neither their actions nor their policy statements gave a clear idea of what they might do about housing. But what the candidates didn’t do or say helps draw out the differences between what housing policy will look like during Obama’s second term and what housing policy would have looked like with a Romney administration. Here’s what Obama’s re-election means for housing:
1. The refinancing push continues.
…
2. New mortgage regulations are coming.
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3. The mortgage interest deduction lives to fight another day. … The ten states that benefit most from the mortgage-interest-deduction ALL voted for Obama on Tuesday (see table below). The average household in an Obama-voting state claims 66% more for the mortgage interest deduction than the average household in a Romney-voting state. If Obama takes a swing at the mortgage interest deduction, he’ll be hurting his supporters and putting his fellow Democrats in a tough political spot.
States with the Most Mortgage Interest Deducted Per Household
# State Average Amount Deducted, $*
1 Maryland $5,920
2 California $5,718
3 Virginia $5,100
4 Hawaii $5,009
5 New Jersey $4,890
6 Connecticut $4,739
7 Colorado $4,625
8 Washington $4,610
9 District Of Columbia $4,581
10 Massachusetts $4,490
* Average amount of mortgage interest deduction claimed per household. Includes households who do not itemize. National average = $3,343.
4. A chance for principal reductions may have been lost.
‘The refinancing push continues’
Have you seen this?
‘United Wholesale Mortgage (UWM), a national wholesale mortgage lender operating in 47 states, announced that it has successfully implemented Fannie Mae’s HARP 2.0 program requirements with Unlimited LTV/CLTV. UWM was one of the first lenders to implement the government’s adjustments to HARP 2.0 when it went into effect December 1, 2011, and now they have effectively implemented the expansion of HARP 2.0 into their EASE (Easiest Application System Ever) broker portal.’
“With the heavy volume of HARP 2.0 submissions that we are receiving, UWM has not faltered in providing superior customer service, communication and consistency,” said Mat Ishbia, president at UWM. “Our swift implementation of HARP 2.0 is proof that UWM’s exceptional staff can meet and exceed broker expectations in all areas of operations and with every product offering. At UWM, we want to make it as easy as possible to do business with us; investing in resources to quickly implement HARP 2.0 for our brokers was atop the priority list. This high level of service and speed to market holds true to our companywide mantra of ‘Lending Made Easy.’”
Some details of UWM’s HARP 2.0 offering include:
Unlimited LTV/Unlimited CLTV
Property inspection waivers (PIW’s) are acceptable
No DTI restrictions
With approve/eligible findings
High balance loans are eligible
Condos are acceptable
LLPA caps are in effect
In addition to HARP 2.0, UWM recently rolled out The Big & Easy, a True Jumbo loan up to $2.5 million’
http://www.uwm.com/news-and-events/uwm-news/united-wholesale-mortgage-rolls-out-harp-2-0-unlimited-ltvcltv-implementation-with-du/
“Some details of UWM’s HARP 2.0 offering include:
Unlimited LTV/Unlimited CLTV
Property inspection waivers (PIW’s) are acceptable
No DTI restrictions
With approve/eligible findings
High balance loans are eligible
Condos are acceptable
LLPA caps are in effect”
How is this stuff funded?
(And no, it isn’t cost free, so don’t bother going there…)
OK so we pay for this by placing a 2nd or third mortgage on every house in the country that still has equity - cash that out - fund the program and leave the new mortgage in the home debtors name. Only this time we make it non-dischargeable so if you default you lose S.S. and medicare. Done! Now everyone will be underwater! Now everyone is equal! Equality! Finally! I knew we had the money to take care of everyone!
‘Lending Made Easy.’
No double entendre intended…
JPMorgan Chase and Credit Suisse agreed to pay $417 million in a settlement with the Securities and Exchange Commission over their handling of subprime mortgages.
Well there it is again, commit fraud, get caught, pay a token fine (probably tax deducible) with money borrowed at .00% from the FED. Missing in this settlement as in every settlement so far, no jail time. To the rest of us this is just a big FU from the SEC and the banker class.
And what about the actual freaking houses attached to those worthless rolls of paper?
Crazy idea. The MID is a political third rail. HOWEVER, what if there was a different idea related to housing tax breaks?
1. Lose the $500,000 capital gain tax exclusion; however
2. Index the purchase price of the home (the initial basis) to inflation.
OR
1. Lose the MID; however
2. Index the purchase price of the home (the initial basis) to inflation
I think losing the MID is political hot lava, but getting rid of the capital gain exclusion might be doable, since it’s a controllable and event you can plan.
In the past, you only got a capital gains exclusion if you used the money to purchase (within a certain number of months, 18 maybe?) another property (maybe primary residence, maybe not that limited) with the ability to exclude gains without the reinvestment just one time when over the age of 55 (for downsizing).
I would be in favor of that too. Sounds an awful lot like a 1031 exchange. You don’t pay gains on the portion that is traded into another property.
The capital gain exclusion always bothered me and is ripe for abuse. A left leaning relative owns a bunch of rental homes…his plan (before they changed the rules to limit this abuse) was to live in each of his rentals for 2 years before selling to avoid the capital gain tax.
I note that they’re left leaning just to note that avoidance of tax using the current code is not limited to the crazy Republicans in the room. It is pretty much everyone.
Again…we need massive tax reform to take these kinds of loopholes out of existence.
” Index the purchase price of the home (the initial basis) to inflation.”
Can’t be done - it makes too much sense. Can you imagine how insane it would be if a capital gains tax was only applied to the actual *real* (inflation adjusted) capital gain and *not* the inflated portion??? People that is almost hard money! Next thing you know you’ll have a gold backed currency! It’s absolute heresy!
Don’t get too excited. Government published CPI numbers are fraudulent.
“The MID is a political third rail.”
Politicians must be growing some cojones, then: Check it out!
Whither the mortgage interest tax deduction?
Christopher Furlong/Getty Images
Tweaks to homeowner deduction — seen as cornerstone of American Dream — could be part of ‘cliff’ deal.
by Nancy Marshall-Genzer
Marketplace for Friday, November 16, 2012
There is still much negotiating to do before there’s any kind of deal on the fiscal cliff. But by most accounts virtually everything is on the table, including the mortgage interest tax deduction. The much loved and very expensive to the federal Treasury mortgage interest tax deduction.
…
How are Sandy damage costs shaping up?
$50 bn is a popular figure. Too low or too high?
Your money: Avoid making a bigger mess with a post-Sandy cleanup
By Lou Carlozo
NEW YORK | Fri Nov 16, 2012 12:15pm EST
(Reuters) - With superstorm Sandy causing an estimated $50 billion in damages, residents of the U.S. Northeast region face untold months of home repair and rebuilding. Even home improvement experts like Tom Kraeutler were affected, although the New Jersey shore resident fared much better than his neighbors.
“Thankfully, we had installed a natural gas-powered standby generator years ago,” says Kraeutler, an author and co-host of “The Money Pit” radio program. “It ran for seven days straight and kept most of the home’s essential circuits going.”
…