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Real estate is saved!!!
http://www.latimes.com/business/la-fi-stimulus25jan25,1,2503104.story?track=rss
The package also includes a provision to make refinancing mortgages easier by raising the limit to $625,500 for government-backed loans. That is expected to make more funds available to homeowners in expensive real estate markets such as Southern California who want to get out of their adjustable rate mortgages.
Mountain View condos median to be $625,500 immediately after the 4th quarter of the SuperBowl. (Go Pats!)
The legislation would temporarily raise that limit to $625,500...
Nothing is more eternal than a "temporary" government program.
They charged two bits to cross the Golden Gate bridge "temporarily" until the construction bonds were paid off. The bonds were paid off 50 years ago. Do they still charge tolls?
The more I think about it, the more I like my plan: tax cap gains as ordinary income BUT increase the basis figure year-by-year with an inflation multiplier. I think this is the thinking behind the current system but it's much too crude.
So here we are having a discussion about being altogether too generous toward 'real estates' and they raise the Jumbo limit to 6 and a quarter.
Yea Team....
What do they mean by "temporary"? Is this going to go on just long enough for FB's to re-fi out of their loan-from-hell or is this (obviously) intended for new purchase loans as well? That we could get the NAR some much needed commissions.
And I wonder what the definition of a “high cost area†will be.
Wherever people will vote for democrats.
am not a fan of Korean food but we must respect the civil liberties of those who like kimchee.
My grandmother was born in Korea in 1893, so to me kimchee is soul food. Hey, it's just Korean saurkraut!
Bad news for those who love kimchee. Seoul University published a paper linking kimchee consumption to the very high incidence of stomach cancer among Koreans (Koreans have the highest rate of stomach cancer in the world). Interestingly, statistics show that even Korean Americans have the highest and earliest incidence of stomach cancer among all Asian Americans.
The Seoul University paper was released at a time when Korean government was trying to promote Kimchee as a health food to the world. So the researchers were silenced by denied further grants for their research.
DinOR, about the "super-outrageously-generous-beyond-belief tax treatment 2nd homes get", I'm with you. I don't believe the tax code should encourage or discourage home ownership. Not even for 1 house. Imagine that, buyers assessing the actual cost of ownership instead of deluding themselves that mortgage debt is actually "wealth"?
So where were the Dems on this one? Instead of insisting on addressing the very issues we're discussing Pelosi wants to make sure even people that don't make enough to PAY taxes get a "rebate" check?
Why didn't they at least demand we enforce our current tax code? Are things really this bad?
This is actually not paranoia, I know quite a few Koreans who started having stomach cancer in their 40s.
"Stomach Cancer a Concern Among Koreans
Stomach cancer is much more common among people of Korean ancestry than other Asian groups, and death rates from this disease are highest among Koreans. The typical Korean diet, which includes many foods that are high in salt and nitrates/nitrites, may be part of the reason stomach cancer rates are so high."
Be happy, at least it is not $700K.
Now HelloKitty can stay in the US instead of moving to France.
LSR,
Can you believe this? Well... we often joked about "where was the bail-out for daytraders" and I guess we got our answer.
Hank looks a mess btw, necktie askew, shirt looks like he slept in it. Must have pulled a lot of all-nighters to come up w/ this "great steaming turd". If they're THAT concerned about shriveling tax bases from foreclosed subdivisions why don't we just enforce the tax code we have now?
Like Randy said, can't we have a little... faith in free markets? This is totally embarrassing.
I am thinking about one that allows people to worship themselves. It is about feeling good about oneself.
It already exists. It's called Boomerism.
When can we expect to get the increased conforming loan limit in effect? This will probably boost house prices, at least in the short term.
Actually, if you read some of the news articles regarding this mateer closely (i.e., CNBC) , the increase in the comforming limit is only temporary - one year.
Don't worry, the one-year temp limit will stick.
We are already on this track of "fuck the dollar, fuck the USD bagholders". If housing price starts coming down drastically, this limit will be extended for another year, another year...
So the researchers were silenced by denied further grants for their research.
Triumph of food!!!
Cancer is caused by stress, not food.
Where's the market heading? I thought we started a BEAR market. Microsoft just had a blow out Quarter. I know some of you predicted market last year as per as where DOW would end at the end of 2007. What do you think this time?
Like Randy said, can’t we have a little… faith in free markets?
Faith? Liberals are anti-faith.
If housing price starts coming down drastically, this limit will be extended for another year, another year…
Not just extended, the limits may be raised.
As long as the attitute is "how can we finance high prices" and not "how can we bring prices down to affordable levels" we will see even more creative ways to prop up prices.
A month ago, did anyone really see the "rebate" trick? Some saw a possible raise in "conforming" loans limits, but did any expect what happened? My point is, be prepared for new surprises.
OO,
Agreed. By that time it will be "given the current inflationary environment..." and become a real knee-slapper inside the Beltway.
Yuck, yuck :)
Headset,
As a matter of fact if you had tried to tell me that... even a month ago, I would have told you to curtail your "heady credit-toking ways"!
DinOR,
Nice phrase! Lots of big guns pulling for the "credit tokers." Seems Washington wants to keeep current tokers supplied and create new addicts.
People should wake up and realize that increasing conforming loan limit is a free gift to California.
The current limit for conforming loans certainly hasn't kept prices down in California. Our median price is well over the limit already. Not sure where the connection is between conforming loan limit and prices. Is there one?
I was not very clear and wrote:
> Since you can only write off $1mm of debt
Then ptiemann Says:
> What does that mean?
> writing off INTEREST ON $1mm of debt (very strict)
Yes, you can only write off the interest payments on $1mm of debt for your primary home and any vacation homes. If you have a home in Atherton with a $3mm loan at 6% and a vacation home in Tahoe with a $1mm loan at 6% you only get to write off $60K in interest payments for the year even though you paid $240K in interest just like the guy with a $500K loan on his home and a $500K loan on his vacation home.
One could argue that the AMT helps hold down home prices in CA since it excludes property tax from being a deduction. Maybe dropping the MID only for the AMT would be a palatable compromise to get the reform through congress.
Peter P Says:
> People should wake up and realize that increasing
> conforming loan limit is a free gift to California.
It is a gift to the big banks, but it was not free. The banks have had to pay millions to the politicians, but in the end it will be a great “investment†when they can unload Billions of crappy jumbo loans on to Fannie Mae…
Supposedly, it is far harder to get a jumbo (non-conforming) loan in the SF bay area these days, because investors just are not buying mortgage backed bonds at all. Thus the sudden and still unreported sudden lurch downward in Craigslist asking prices:
Call me paranoid, but I'm starting to think that the very low savings rate in America is not a "problem" but part of the master plan. Only the rich are supposed to have savings, and the rest of us are supposed to stay as close to bankruptcy as possible without going over the line, to keep us dependent on lending.
The ultimate goal being to keep extracting work from workers, forever. Thus the bailouts for debtors, to get them back working for the man rather than just giving up. And thus the emergency props for asset prices, so people don't just walk away from that monster mortgage.
In this system, to save money and refuse to borrow is treason. So of course the laws will be constantly changed to punish savers, and anyone else who tries to escape a lifetime of servitude.
DennisN :
One could argue that the AMT helps hold down home prices in CA since it excludes property tax from being a deduction.
That would be true if people actually knew about it. I have met people who have owned a mortgage for a number of years and still were not aware of this. Believe me, almost all people are financially illiterate. They do not even know what their ARM is indexed to. I am talking about the smart engineer dual income techies.
Worst case is people who bought in Windemere, San Ramon. Not only the property taxes are not deductible for them sue to AMT, but they are much higher due to melaroos.
Patrick,
I... tend to agree or rather that "was" the plan. From the changing of the BK Laws right down to the Neg. Am's etc. but now we've reached "Peak Debt". All the time WE were "one paycheck from the street" (everything was hunky dory) now that they're one marginal call/default from the street... we need swift intervention! IMHO
Tentative Stimulus Package Includes Boon to Higher-Priced Housing Markets
WASHINGTON (AP) -- A component of the government's tentative economic stimulus package announced Thursday would give an immediate lift to buyers and sellers in higher-priced housing markets.
The package agreed upon by Democratic and Republican members of the House would allow government-sponsored Fannie Mae and Freddie Mac to buy mortgages up to 75 percent more expensive than the current $417,000 limit. The Senate and White House still must sign off on the proposed stimulus plan, which also includes tax rebates for Americans.
Raising the limit on so-called conforming loans will allow a larger pool of borrowers to find lower rates when buying a new home or refinancing an existing mortgage.
"It's good for homebuyers who have prime credit, have some money to put down and can meet tougher underwriting standards that are in place now," said Guy Cecala, publisher of Inside Mortgage Finance, a trade publication. For homeowners with blemished credit who are struggling to pay their mortgage bills, the change offers little benefit, he added.
House Speaker Nancy Pelosi and Republican Leader John Boehner of Ohio announced the deal in a press conference Thursday.
The higher cap, to be effective until the end of December, would breathe life into housing markets in New York, California and other pricey areas because lenders would feel more comfortable knowing Fannie and Freddie can buy and package the loans into securities that investors consider to be relatively safe.
Fannie and Freddie would be allowed to purchase loans up to $730,000, though that limit would differ based on the median home price in a particular metropolitan area.
The same limits would also apply for loans backed by the Federal Housing Administration, which insures loans made to borrowers with poor credit, though the change would be permanent for FHA-backed loans, which had been capped at $367,000.
The Bush administration has long been critical of how Fannie and Freddie operate, and officials have pointed to the companies' multibillion-dollar accounting scandals in recent years to bolster their case that Fannie's and Freddie's massive mortgage holdings are improperly managed and pose risks to the financial system.
But as the mortgage-market crisis that began last spring has deepened, Democrats have stepped up calls for Fannie and Freddie to back larger loans and hold more of them in their portfolios.
Treasury Secretary Henry Paulson, speaking to reporters after the deal was announced, said he did not support raising Fannie and Freddie's loan without strengthening government power over the companies.
"I got run down by a bipartisan steamroller," on the issue, Paulson said, adding that he believes lawmakers would still pursue a broad overhaul of government regulation for the two companies.
James B. Lockhart, director of the Office of Federal Housing Enterprise Oversight -- which oversees the two companies -- said in a statement that raising the limits for Fannie and Freddie without providing stronger government oversight "would be a mistake."
Michael Cosgrove, a spokesman for McLean, Va.-based Freddie Mac, said the change "would be in the best interest of the economy and consumers," but noted that extra capital the company is required to hold on its books "creates a significant challenge for Freddie Mac as we continue to operate under severe capital constraints."
Amy Bonitatibus, a spokeswoman for Washington-based Fannie Mae, said: "If policymakers choose to raise the loan limit, we are supportive and committed to doing what we can to help."
Groups representing Realtors, bankers and home builders, which have been hit hard by the mortgage market downturn, have been lobbying for such changes for months.
The National Association of Realtors has been pushing for a permanent expansion of the Fannie and Freddie limits. The trade group calculates that borrowers could save $3,000 to $5,000 per year in reduced interest costs as a result and projects up to 210,000 foreclosures could be prevented since refinancing into lower-rate loans would be easier.
Dale Stinton, the group's chief executive, said in a statement Thursday that increasing the loan limits "is a truly meaningful economic stimulus and should be enacted quickly."
Shares of Fannie Mae fell 59 cents to close at $34.19, while shares of Freddie Mac fell 52 cents to close at $32.
Patrick Says:
"Call me paranoid, but I’m starting to think that the very low savings rate in America is not a “problem†but part of the master plan. Only the rich are supposed to have savings, and the rest of us are supposed to stay as close to bankruptcy as possible without going over the line, to keep us dependent on lending."
You're not paranoid. I don't know if it is by design, conspiracy, or just a coincidence but the system is skewed to keep people working. Ironically it is the boomer/liberal mindset that causes this. Unfortunately it is a prevalent mindset here that fuels it. How can someone complain about the problem when wanting to stick it to everyone else who they think has it easy just further adds to the problem. Things like prop 13 and interest deductions are there to make it easier for people to get ahead but when those are seen as subsidies, then everything else becomes one. If you follow the rules without a home run in your life you will NEVER get ahead. You can't get ahead when the government takes half of your meager wages from a job. I don't know why most people even get up in the morning.
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How about some legislation with the express intent to LOWER house prices, unlike the crap legislation we're getting from Pelosi and Barney Frank designed to make housing less affordable?
We should completely eliminate Fannie Mae, and after that, the mortgage interest income deduction.
Here are some more ideas from Steve, a patrick.net reader:
#housing