patrick.net

Oh, I am sure those details will be taken care of.

I will settle for indentured servants. :)

This article in the Atlantic has been making the rounds on housing sites (patrick has a link on the main page) and seems relevant to our discussion now.
If anything, our government policies should encourage renting, not buying. Homeownership occupies a central place in the American Dream primarily because decades of policy have put it there. A recent study by Grace Wong, an economist at the Wharton School of Business, shows that, controlling for income and demographics, homeowners are no happier than renters, nor do they report lower levels of stress or higher levels of self-esteem.

As homeownership rates have risen, our society has become less nimble: in the 1950s and 1960s, Americans were nearly twice as likely to move in a given year as they are today. Last year fewer Americans moved, as a percentage of the population, than in any year since the Census Bureau started tracking address changes, in the late 1940s. This sort of creeping rigidity in the labor market is a bad sign for the economy, particularly in a time when businesses, industries, and regions are rising and falling quickly.

Good article!

As said earlier, the MID has been around for a very long time. Much much longer than capital gains distortions.

Also MID doesn't affect the extreme upper-end at all because those taxpayers lose all MID under AMT. Even people in the $2mm-ish home range are probably right at the point where they are losing some to AMT.

Finally, you can only (under 2008 rules) take a deduction on a first up to $1mm and a second up to $100K. So your max is $1.1mm. Yes this has affected home prices in places like S. Marin where $1.1mm "coincidentally" became the median home price for a while.

But, when you see someone's title records and they're carrying $2.6mm in 3 or 4 mortgages on a $2mm home, they are only deducting the first $1-$1.1mm.

--where I agree MID is a big problem is more on the tax fraud side. Two main forms:

1. People taking [full] MIDs on investment properties that they are renting out but claiming as primary residences (also with liar loans).

2. People taking the $100K-max loan MID on a home equity loan even though they didn't use the money for purchase or improvements. ie., It's tax fraud if you take a HELOC and use the $ to buy a Hummer, then take the MID on that amount of debt.

Patrick,

I understand your frustration because i am going through it as well.
We cannot win this battle.We have been held hostage to mass stupidity.
There is nothing right and wrong in a democracy except what the majority believes in.Unfortunately , we are paying for others mistakes.
No body can stop whats going on with we sharing the burden.
Lets be realistic and ask for this :

Take whatever you want but PAY IT BACK. when the economy starts buzzing again, all the folks who got paid (low interest, loan modifications..etc) should pay it back. I am OK even if they pay it back after 10 years. Why not create a account on every person who screwed up and link it to their SSN. They need to repay after 2015..how about that ? any issues ?

There is nothing right and wrong in a democracy except what the majority believes in.

Tyranny of the majority? This is why capitalism should override democracy. But again, this too is not going to happen.

I have cash, no assets and generate my investment income by shorting speculative asset bubbles.

So, there's your answer.

I have cash, no assets and generate my investment income by shorting speculative asset bubbles.

Excellent!!! Have you read The Zurich Axioms by Max Gunther?

At least medieval minstrels always knew where their lute was kept.

And they dress in funny clothes. They are more colorful then an iPod nano.

Will Obama's mortgage plan help Silicon Valley homeowners?

.....

But it's unclear how many in Silicon Valley will benefit since so many homeowners have big mortgages that may not qualify for one of the programs announced Wednesday.

....

The plan could bring some help to the roughly 19 percent of homeowners in the San Jose area who were "underwater" on their mortgages in the fourth quarter of 2008, according to figures compiled by Zillow, a real estate research service. (Being "underwater" means you owe more than your home is worth.) Homes in the area lost $58.5 billion in value during the year, the company reported.

Experts said the refinancing plan will help lower-middle-income borrowers in California, but may not do much for those with the large home loans

Economic crisis
Full coverage of the economic crisis, including special reports and databases
Databases
See if your California company is planning layoffs in 2009
Unemployment rate by county
typical in parts of the state, including Silicon Valley. That's because the refinancings will be only for mortgages held or securitized by Fannie Mae and Freddie Mac, which only made loans under $417,000 in recent years.

Slightly more than 60 percent of the home loans made in the state in 2006 and 2007 were over those loan limits, according to estimates by the California Association of Realtors, although in 2008, because of falling home prices, only 33 percent fell into that category. Also in 2008, the limit was raised to $729,750.

Bargain-minded buyers snapped up deals on foreclosed properties in Santa Clara County in January, even as some high-priced Silicon Valley cities saw record-low numbers during the same period.

The number of homes sold in the county rose by more than one-third last month compared with January 2008. But with home values still generally sliding and foreclosure properties accounting for about half of all sales, the median price fell precipitously from last year.

The median price of resale, single-family homes sold last month in the county was $420,000, down 39 percent from January 2008 and down 8 percent from December 2008, according to a report MDA DataQuick released Thursday. The last time the county's median price was lower was in February 2000, when the figure was $417,500. The median price of condos sold in January was $262,000, down 43 percent from a year earlier, and 13 percent from December.

Sales Volume Median Price
All homes Jan-08 Jan-09 %Chng Jan-08 Jan-09 %Chng
Alameda 780 994 27.4% $487,750 $300,000 -38.50%
Contra Costa 667 1,333 99.9% $463,000 $220,000 -52.50%
Marin 122 122 0.0% $845,000 $525,000 -37.90%
Napa 44 78 77.3% $532,500 $370,000 -30.50%
Santa Clara 869 1,037 19.3% $639,000 $400,000 -37.40%
San Francisco 293 229 -21.8% $744,000 $562,000 -24.50%
San Mateo 295 273 -7.5% $675,000 $489,500 -27.50%
Solano 247 560 126.7% $347,500 $192,500 -44.60%
Sonoma 269 424 57.6% $425,000 $299,750 -29.50%
Bay Area 3,586 5,050 40.8% $550,000 $300,000 -45.50%

I'VE BEEN READING THIS SITE FOR YEARS BUT AM USUALLY WORKING TOO HARD TO COMMENT. NOW IS THE TIME FOR ACTION, NOT CHATTING. IF WE CAN HELP MOBILIZE ENOUGH DISCONTENT, THIS MORTGAGE BAILOUT PROGRAM WILL NOT GET OFF THE GROUND. CALL YOUR SENATOR, CONGRESSPERSON, THE WHITE HOUSE. LET THEM KNOW WHY RESPONSIBLE SAVERS SHOULD NOT HAVE TO PAY THEIR NEIGHBORS DEBTS. LET'S TRUST THAT IF ENOUGH VOICES PROTEST, THE PLAN WILL BE FOUGHT DOWN.

I AGRE TAHT DEBT IS ENSLAVEMANT AND...

(why is the rum gone? ... but why is the rum gone?!?)

Debt is a tool. Assets are a means to production. There is no such thing as willing "enslavement", only addiction. And nothing is more addictive than Easy. Taking credit for anything aside from long term benefit or profit is stupid. Let it burn. I am more Hank Rearden than James Taggart. I still remember how to build stuff, and this country will too.

It would be tyrrany of the majority only if they knew what to value. Give the boomers some happy pills and Miller Lite, and this will all be over quietly.

Peter, I think you see that water finds its level. So do grit, sludge and cream. I don't share your desire for an easy life. I just want to spare my capital until I can build something again, without too many parasites sucking its lifeblood.

And mideval lords had horrible bathrooms. My iPod toting plebian ass has a jetted tub.

Er, medieval...

We all work for the banks.

I don’t share your desire for an easy life.

Who says speculation is easy? Or being a medieval warlord is worry-free?

They needed dungeons for a reason. :)

TOB, trust your instincts.

There are no experts in economics. It is an art.

"All government “affordability” programs drive up prices and increase debt:"

And all the greedy idiots who bought homes that they couldn't afford took in the bait. It's in the government's best interest to sell the American dream and drive up home prices, and that is exactly what happened. However, when a bubble is created, EVERYONE has to pay. I have also lived frugally and responsibly waiting patiently to buy a home that I could afford. I never saw a good time to buy because prices were super inflated and I knew that these prices could not keep going up. I watched on the sideline as idiots without any common sense were buying homes way beyond their means, taking out equity to buy fancy cars and lavish vacations. I did not reap any of their rewards, but now we ALL have to pay to keep them in their homes?

I do understand that losing a home is rough, but before this whole bailout mess, unfortunate folks who could not keep up with their payments due to unforeseen events lost their home, plain and simple. Why are we wasting precious tax money to bail out these "homeowners" who never should have been allowed to purchase a home in the first place? There are much better uses for our tax dollars... cleaning up the environment, improving education, research for alternate sources of energy, health care, etc. There are much bigger things out there than people losing their homes. It happens, we can move on. Contributing to our national debt so that on our dime and our future generations dime is NOT okay. It's a tragedy that I am not surprised that our government fails to see any of this.

On today's news page there's a story from the SD paper on commercial real estate....

It looks like the down payment requirement is going up dramatically, from maybe 20% up to 50%.

Where landlords may have been able to get a loan for 80 percent of a building's value during the boom, lenders now are limiting loan amounts to as little as 50 percent of value.

One of the commenters in that story stated that typical CRE loans were due in 3 to 7 years. Is this really true?

When I walk out of my house and look up and down the street at the other houses, I'm compelled to define each house as bought by greedy f@ck ups or not. It strikes me as a strange way to view my surroundings. 10 years ago I would have defined each house by the persons occupation and if they were a good neighbor or not. Currently, about 75% are owned by greedy f@ck ups.

It's going to be interesting to sit back and watch the results of these Obama plans unfold. He has instilled a sense of hope for the middle and lower class folks, at least for now. This could have a positive effect. Typically, drug abuse and the crime rate go up during bad times. He may be able to curtail those problems to some extent. All of the would be criminals are scrambling to figure out how to get some free government money. Single people with no children will be able to get food stamps.

disclosure:I voted for Ron Paul

Like fore example, they will cut the principal amount.

I was listening to Jamie Dimon from JPM on CNBC and he clearly said, they are not going to reduce principle, just interest rate. Many of them will be disappointed about the plan if they do understand. Low Interest rates are only for 5 years and it goes back up. At least that's the plan.

Let me emphasize this strongly: no one is to suggest doing anything illegal here. Protest all you want but please respect the law.

(I am referring to mickrussom's comment regarding "linchpins")

The banks will NEVER cut the principal amount.

The whole government effort was NOT meant for the J6Ps, it was meant for preserving the banking system upon which the government presides. Any disruption of the banking system as it is means question mark on the existing form of government as a going concern.

The government is by elites, for government and when it comes to the choice between the survival of the government vs survival of the people, the government will always ensure the survival of itself regardless of the cost to others.

what do you do when the law is made by criminals?

If the criminals have a bigger gun, obey it and try to become a part of the criminals.

If the criminals have a smaller gun, ignore it.

When the government clearly knows how to discourage "bad" behavior through targeted taxation (sin taxes on cigarettes, alcohol, etc), why do they discourage good behavior as well (saving, avoiding debt, living within your means)???

what do you do when the law is made by criminals?

I am SOL.

The lawsuit on behalf of renters is a great idea.

A class action will get lots of press and even if it stands no chance of winning, its a great way to let people see the hypocracy of making people who waited out the bubble, pay for the bubble and receive no benefit.

I bet lots of attorneys would take the case just for the publicity.

I'm onboard!

Protest all you want but please respect the law.

I may not respect the law, but at least I obey the law.

I may not respect the law, but at least I obey the law.

That is what I meant. :)

Damn fucking $@^%$% AMT!!!

I am feeling better.

DOW was down by over 200 points today. Suddenly it shot up to be down only about 50.

Wonder who gave the "buy" order.

Wonder who gave the “buy” order.

Market can do amazing things all by itself. A down day can also trigger buy programs in black boxes.

It is also Feb options expiration tomorrow. Day-traders and swing-traders are out in full force.

HeadSet Says:

> DOW was down by over 200 points today. Suddenly
> it shot up to be down only about 50.
> Wonder who gave the “buy” order.

There are a lot of people that don't want weekend headlines to say the "Stock Market in the Tank Lowest Close in 12 Years" (we were back to 1997 a little while ago...

I have been thinking about the lawsuit angle for quite some time and think its a great way to go, even if it gets nowhere. We can't just sit by and take this crap without going down fighting, we need to make as much noise as possible because as of now, our voices are not being heard and no one is representing us.

Another GREAT idea, if nothing more than symbolism, came from TheHousingBubbleBlog.com bits bucket today courtesy of Darrell_in_PHX

Comment by Darrell_in_PHX
2009-02-20 04:48:12

Time for an “Amercan Key Party”.

Like the Boston Tea Party sent a message that they weren’t going to pay for the tea, it is time to send government a message that we aren’t going to pay for the bailouts that are targeted at only those who were the most stupid.

If we’re going to focus a bailout only on those that can’t afford their house, and let those that did the right thing pay for it, then as someone that did the right thing, I fully intend to not pay back my debt either.

Time to gather at our state capitols and build a pile of discarded keys as symbols of our intention of walking away from our debt unless the bailout is based on merit, NOT on need.

_________________________________________________________
Comment by pressboardbox
2009-02-20 09:28:11

Darryl, you are so right. The responsible (working/bill paying) people have ALL of the power - they just don’t know it! If WE all got together on this one and collectively stopped paying all bills, taxes, and mortgages the whole financial (and hence, government) world would be held hostage to meet our demands. We could write a whole new constitution - and refuse to pay anyone anything until all of the doucebags currently running our government step down. What could they do - put us all in prison? How would they pay the light bill? Raise your hand if you want to partake in the FInancial Revolution and take America back.

Suing or protesting are better than doing nothing but the best way to get their attention is to stop paying taxes...

1) Get a job that pays you off the books (for at least part if not all of your pay). Quit your current job if you have to.

2) Pay cash for everything and negotiate not to pay the sales tax... (it's easier than you think)

3) Buy a safe or use safe deposit boxes to store your cash. Close all bank accounts (they're not paying much interest anyway)

To make up for some of your lost income...

1) Apply for food stamps, welfare, child health care, unemployment benefits etc. Obama is the man to help you here.

2) Deflation is on your side

Disclaimer: This is mostly wishful thinking on my part thus far, but every bailout pushes me closer to actually doing this.

someone should shut that bitch up.

Oh my god, someone get me her address and a gun.

Just kidding of course, but oh my god.

All this constant thrashing around trying to save one major financial institution after another is getting VERY OLD!

It's pretty obvious that the system is seriously screwed up and constantly slapping more band aids on it is not going to stop the bleeding OR fix the underlying problems.

It seems as if Bush and now Obama are just chasing after a non-existent magic bullet that will fix the economy without anyone suffering any further pain. They seem scared to death that the Dow will fall each day or banks will fail - even if that is obviously what needs to happen to start to move forward again.

Ron Paul said a long time ago that all these ridiculous machinations to keep the current system alive will just make it worse when it dies. He was right.

This is incredibly harmful to the country. EVERY DAY we hear about another plan or another crisis or a new major effort to control the economy. IT NEVER WORKS!

This crap has been going on for a year now and it just keeps getting worse. We need to decide if we're going to be a free market economy and let the chips fall or if we want a Constitutional Convention where we can convert to something like socialism.

The current half-a$$ed solutions are a disaster.

Rick Santelli was right. We need a new Tea Party!