patrick.net

I remember John & Robert Kennedy, which is why I can actually hope.

It seems that responsible sellers now have another thing to compete with thanks to this administration. Here is a link to the housing bailout plan. In it there is a $7,000 tax credit for buying a foreclosed home. Again I have to restate that this is a bank bailout, not a home debtor bailout. Someone selling a house competing with a comprable bank owned house now has to drop their price $7,000 below the bank's asking price.

http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:@@@D&summ2=m&

Reading one of the news links today, I saw that the estimate now is 25 million homeowners are potentially upside down. Basically this means that suddenly the problem has just multiplied 10 fold because originally there were only 2 million homeowners at risk. I might add that pretty much all 2 million eventually did go into foreclosure.

Sorry, I look forward to peace and prosperity, respect by the world and financial discipline that involves more than making sure that wages decline. With all due respect, if you don't like it, tough shit.

Someone selling a house competing with a comprable bank owned house now has to drop their price $7,000 below the bank’s asking price.

At least there is the silver lining of a $7k downward pressure on houses, adding to the real affordability.

So, does that mean a first time buyer who is buying a forclosed house gets $14,000 in tax credit?

It's $7500.00 max and they have to pay it back to the tune of about $500.00 a year added to their income tax if I understand it right. It ain't no gift.

I see, more like an interest free loan.

Something like that, I tried to find the article that I read so I could link it, but it's long gone and I can't seem to find it. I'll keep looking.

For the 1st time buyer of a forclosed home, it seems:

$7,000 tax credit for the forclosed home part

Up to $7,500 15 year interest free loan (principle delivered as a tax credit) for the 1st time buyer part.

To actually use a tax credit of $14,500 would require a Federal Taxable Income of around $90k, assuming no MID or medical deductions.

I am interested in that credit. I see the dollar going to hell fast. If I can make use of the money now and pay it back with depreciated dollars, this could play to my advantage. I see America being looted all around me and feel now I may be stupid and regret it latter for not grabing what I could when I had the chance.

I have been saving money up for the last 4 years for a down payment and have enough now to get about a 150k home with 20% down. With the crap in this bill I could get 20% "down" on a 200k home.

This money was not easy to save. It is amazes me how people are so cavalier about money when they would have no hope of ever saving that much on their own. They have no problem barrowing and spending it however.

I live in Ohio and meet the above in Headset's post. I have to run the numbers on my discounted cash flow spreadsheet, but under the inflation rate of 10% a year (realistic amount), I could come out ahead.

Neutron,

That just might work. Neat idea. I like it. The one problem is the equity give - back. Any equity you earn, should you sell or re-fi, is split with Gummy Man.

100%, 0 to1 yr.
90%, 1 to 2 yr etc. until you get to 50% and it stays there.

To actually use a tax credit of $14,500 would require a Federal Taxable Income of around $90k

That's OK, President Obama will push up the poverty threshold to about that figure.

Some days I just don't understand finance.....

Jean-Pierre Buttplug is in bankruptcy, so he figures out the way to recover is to sell $670 Million in bonds to shrewd investors.

www.idahostatesman.com/newsupdates/story/454155.html

Why would anyone want to buy his bonds? :?

IIT student commits suicideAds By Google

A fourth year engineering student at the Indian Institute of Technology in Kanpur committed suicide by hanging herself in her hostel room, the police said on Saturday.

Toya Chatterjee, 23, was a student of biological science and biotechnical engineering department. She was found dead in her room late on Friday night.

The police recovered a suicide note from the room written in Bengali. The note, addressed to her father, said: "I will not be able to get B Tech degree this year. I am ashamed of it. So I am ending my life. Take care of my mother after my death."

Director of the institute Sanjay G. Dhande said that Chatterjee was a brilliant student and had recently cleared the Common Admission Test (CAT) for admission to the Indian Institutes of Management.

But she was not keeping well for the past one year and was under the treatment of a private doctor. Due to her illness, she was not attending her classes regularly, he said.

Dhande said the counsellors at the institute had informed her father thrice about her physical health and her state of depression.

Her friends also said that she was upset over her inability to submit her project work.

This is the second suicide at the institute in the last two months. On April 8, a first year engineering student had committed suicide by hanging himself.

Richmond,

I have to give any gains to gubermint if I sell? I was planning on a long 7-10 occupancy of the home and then waiting for the dallar to inflate its way up to the current levels while I save in non-dollar denominated assets.

Why would they get 50%? After paying the credit back $500 over the next few years, I should have it free and clear of them.

Republicans are also all about change.

It is the stuff that you get back when they take your piles of cash.

Well maybe someone will really win the election this fall, instead of stealing it as was the case in 2000 and 2004.
I really don't know if anyone has any ideas which will help save us. McCain strikes me as an elitist who wouldn't know a poor person unless they bit him.
Obama is a Christian. You may not like him, but don't repeat the lie about "learning the Koran in Indonesia", what crap.
Atheism is the answer, if you want to avoid wars

Trying to pick sides between Obama and McCain is like choosing between Hulk Hogan and Ric Rude. It is mostly theatrics, and who actually wins is irrelevant.

While you debate the pointless distinction between a slug and a flea, the people behind the show get paid no matter who wins.

Case Shiller is out.

SFO index now at 162.7, down 1.17% MOM and down 22.85% YOY.
From peak we have -25.5%. Peak was May 2006.

SFO is still 40% above nominal trend-line, if 4.25% is used to match historic appreciation (Inflation plus a little) since the index was fixed to 100 Jan of 2000.

We are still on pace to return to 100% index Feb of 2010. At that time we will be 43% off peak. Since nominal anticpated loss is still near 20% down (as of today), banks will still be reluctant to lend in SFO area.

To any who now see the homes you have hoped to buy, count on putting 20% down and losing 100% of that equity over the next 2 years. This means on a $700k home, you will put down $140k and lose all of it.

Neutron,

I guess that you were looking at the Firts Time Buyers Credit, only.

I was talking about the forgivness re-fi into FHA when I opened my trap.
Sorry, two different things.

>> To any who now see the homes you have hoped to buy, count on putting 20% down and losing 100% of that equity over the next 2 years. This means on a $700k home, you will put down $140k and lose all of it.

I thought so ... means buying now is complete stupidity.

Perma,

Dunno. Many would begin to compare the cost of edcating kids privately from k-12 against the backdrop of the equity loss as a trade.

The bay area also had a run up around 1997-1998, the 2000 prices was already up by 30 - 40% compared to 1997.

I see the stock market is up today despite the latest news on house prices. I guess the logic is just too tough for Wall Street speculators to figure out so I'll help:
1) 70+% of GDP comes from consumption
2) Consumption has been supported by debt from home 'equity' loans
3) Home 'equity' is disappearing and rapidly going NEGATIVE in many cases
4) Consumption will fall as home 'equity' becomes unavailable
5) A recession, at least, is inevitable
6) Recessions are BAD for the stock market
I shake my head every day as people manage to ignore these, and many other, basic facts.

The Bay Area run-up lasted just about 10 years to be exact (1996/97-2006/07) with a brief and mild Silicon Valley-only respite in 2001-2002 due to the dot-com collapse (which the rest of the Bay Area did not experience). And the run-up, by all accounts, was tremendous and unabated for just about that entire time.

Stop debating about the next 1-term Hoover candidate, one of them may not even finish the term.

There are sure very smart (and selfish) Americans around. The fact that we are reduced to choosing between McCain and Obama means that the truly wise and big picture guys are hiding out to aim for the white house AFTER the blowup.

I can't help chuckling when I see the press talking about the "strong dollar".

Strong what? Exactly one year ago, Euro was at 1.38, AUD at 0.88, JPY at 121, oil at $76, gold at $680...

And now we have a strong dollar?

Yea - the "we already factored that in 'cause we are looking 6 months out" is getting pretty old.
Wall Streets '6 months out' is like that 50 pounds a dieter just knows they will lose in 6 months.
Simple truth: stocks AND bonds are an over valued asset class. We need the credit contraction becuase there is too much money in the system making too much stuff too dear. Stocks should represnt the real ability to provide a good or service to a consumer WHO CAN ACTUALLY PAY FOR IT

"(Sec. 603) Allows a one-time tax credit of up to $7,000 of the purchase price of a single-family principal residence in foreclosure."

It doesn't sound like it needs to be paid back. I read it as being basically an incentive to buy from a bank over a private seller. Sounds like a bank bailout to me.

I don't know if the article is misrepresenting the bill or if some of you are discussing another provision. Normally when I read "a one time tax credit" it seems to me it is a dollar for dollar reduction in tax liability which doesn't get repaid.

Honestly, I don't mind the $7000 credit to the qualifying families.

Australia has a straight handout of $7000 in many states to first time buyers of a house below a certain amount (non-luxury home category), period. Many states also have stamp duty exemption which amounts to more than $10K. In many other countries with active government encouragement of home ownership, you don't need to buy a "foreclosure" home to get the incentives.

Ask yourself, do you really want to live in a foreclosure-laden area? What is the worth of $7000 US peso in the grand scheme of things? If someone is so brave to jump into a foreclosure home from now till 2009, I salute him, and I don't envy his $7000 at all.

The Bay Area run-up lasted just about 10 years to be exact (1996/97-2006/07)
The SF Case/Shiller Index (Excel alert) also agrees with your assessment. It is worth noting that absolute bottom was hit in Feb. 1994 (65.79) and then we scraped along the bottom until March 1996 (65.92). During that two year period there were a couple of times that it looked like we had turned the corner, only to be confronted with a low during the off season. Peak was May 2006 (218.37). That's 230% over 10 years...

From East Bay Prime: If you build it, they will default.
This appears to be a section of the Berkeley Hills that was burned out during the Oakland Hills fire. Empty lots were purchased and new homes were built. Enter a buyer not quite up to the task of home ownership.
7151 Buckingham Blvd - taken back by WaMu for $1,057,604. Currently listed at $868,900.
7157 Buckingham Blvd - fully financed for $979,000; now for sale at $775,000.
This is an area of $1million+ homes. Uh-oh, there goes the neighborhood.

EBGuy,

is Berkeley Hill and Oakland Hill the same thing?

Are the Berkeley Hills and the Oakland Hills the same thing
Yes... and no. I changed the city name to emphasize that the homes I was referring to are in Berkeley (as the fire is normally referred to as the Oakland Hills Firestorm of 1991). FYI, there is another home on Buckingham that I saw on Craigslist (or the MLS) recently, but I could seem to find the listing. I remember it was also going for "less than market value". Amazing how little new construction you need to bring FBers out of the woodwork.

This little gem was transcribed from a Discover Card ad the other day that showed happy consumers and their big screen TVs, designer sunglasses, iPods, and all sorts of other consumer items that are now considered an essential part of modern life.

==============================
We are a nation of consumers ... and there's nothing wrong with that.

The trouble is, there's so much cool stuff, that it's easy to get a little carried away.

But what if more credit card companies were like Discover Card?

What if they actually helped us spend smarter?

Maybe then we could have a better quality of life and be in a better financial position while we're living in it.

Discover Card. Brighter.
==============================

The business model of all modern banks is to collect interest and fees while sticking someone else (i.e. taxpayers, or currency holders to be more accurate) with the default risk. They can't make money if they do not lend. This will continue to the extent that somebody is willing to assume that risk. Legislation is one way out. Exchanging paper for gold is another. Best not to wait for human nature to prevail.

Did anyone else see that Bennigan's and Steak & Ale are gone? They just filed chapter 7 bankruptcy.

http://www.mlive.com/businessreview/tricities/index.ssf/2008/07/as_bennigans_corporate_files_c.html

LOS ANGELES — A moderately strong earthquake shook Southern California on Tuesday, swaying buildings and tossing food off grocery store shelves for about 20 seconds. There were no immediate reports of major injuries or structural damage.

The quake, estimated at 5.4 magnitude (reduced from an initial estimate of 5.8), was centered 35 east of downtown Los Angeles in Chino Hills, just south of Pomona in San Bernardino county. It was felt as far east as Las Vegas and as far south as San Diego.

Hi OO,
My problem with it is that now the government is subsidizing a buyer who buys from a bank instead of the regular market. We all might like the obvious result which is the regular market has to drop the price by that amount to remain competitive with the bank.

I hate being lied to. This is so clearly a bank bailout and not a homeowner assistance plan. I like the results and the plan helps the solar industry but I think we have to be very vigilant about cheering when the government screws one group or another. It will eventually come back to haunt you when you tolerate a society that sacrifices one group out of convenience for a larger or more powerful group.

This is so clearly a bank bailout and not a homeowner assistance plan.
What?! You like foreclosures/REOs on your street driving down prices... Unintended consequences?! Clearly you are an ungrateful taxpayer :-)