patrick.net

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!

I do like bean sprout and anything with oxtail. :)

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.

http://tinyurl.com/ysxvxn

"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.

Koreans are also hyper-competitive. They lead high-stress lives.

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.

Headset,

Love to take credit for that gem but it's all... *skibum!

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…

Thanks FAB for (inadvertently?) answering my question.

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.

>> 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.

This is not paranoia ... this is normal thinking in an insane economy ... savers are losers unless you are rich (and hence saving is a winning strategy)

Economic stimulus money should not go to people who read this board anyway; it's counter to the goal of the government. The goal of stimulus is to give money to people who will immediately waste it in stupid stuff, creating economic "stimulus"; that means poor and dumb people. If any stimulus money finds its way into the hands of people who are financially non-retarded and/or remotely responsible, it's either a distribution failure or a side-effect of some republican's seemingly-outdated notions of fairness, equality, capitalism, and/or financial responsibility, all of which are shunned by all the stimulus plans.

Furthermore, as several people said, this is only the beginning. I'd be shocked if the government is not literally printing money to pay off home loans for morons with no business buying the home being paid off by the time this is done. This is an election year, and the democrats couldn't even spell financial responsibility, much less comprehend the long-term effects of printing money to appease their supporters.

I for one support our new socialist government (at least while I live in the US).

Saving is a winning strategy if you save so much that most of your income comes from passive investment and therefore is only subject to meagre capital gains tax. Then if you make more than a million a year, you are subject to even lower cap gains tax than someone making $300K a year.

If you are rich, congrats, you will get richer by design. If you are just a upper middle class, swim harder and make sure you become rich, cos else the IRS will come right after your ass.

If you are middle class, the odds are, your future is doomed (unless you hit a jackpot of course), you will descend to the working class. If you are working class, oh well, shit happens, try again next life.

If you make no income at all and cannot fit into any classification stated above, congrats again, that may be a sweet spot to be in.

Conclusion: either become rich or nothing matters.

This is not incompatible with my anti-401k stance. It is not possible to get rich from contributing to 401k. However, contributing to 401k takes away current opportunities. Hence 401k is useless.

Not investment advice.

Economic stimulus money should not go to people who read this board anyway; it’s counter to the goal of the government. The goal of stimulus is to give money to people who will immediately waste it in stupid stuff, creating economic “stimulus”; that means poor and dumb people. If any stimulus money finds its way into the hands of people who are financially non-retarded and/or remotely responsible, it’s either a distribution failure or a side-effect of some republican’s seemingly-outdated notions of fairness, equality, capitalism, and/or financial responsibility, all of which are shunned by all the stimulus plans.

Furthermore, as several people said, this is only the beginning. I’d be shocked if the government is not literally printing money to pay off home loans for morons with no business buying the home being paid off by the time this is done. This is an election year, and the democrats couldn’t even spell financial responsibility, much less comprehend the long-term effects of printing money to appease their supporters.

“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.

This is the key point. Therefore raising the limit - just by itself - will have a very low impact. If they start changing the guidelines - that is allow higher LTV and/or DTI then it's bad.

People, please realize this. Very very few folks would qualify for a 600K loan on the agency guidelines. Only dual income techie kinds.

Of course the next step might be to relax the guidelines. That does scare me.

It has become crystal clear that our government wants only to continue to push the day of reckoning off as long as possible. This is exactly what they are doing with entitlements (SS and Medicaire), and now they want to do this with the much-needed swift kick in the arse the consumer-based debt economy needs.

Maybe these kinds of measures will push the problem off enough so it won't come home to roost in our lifetimes, but to be sure, there will be a day of reckoning. The longer it gets pushed off, the bigger the likely crash and burn. We really don't give a shit about our kids, do we? It's pathetic.