Comments on: Housing Stimulus Bill Explained

By: Victor

Victor — Mon, 16 Mar 2009 14:36:44 +0000

Am I reading this correctly? Anyone who purchased a home under the stimulus plan for the $7,500.00 credit prior to January , 2009 will have to pay it back as a no interest loan over a fifteen year period. It is NOT a tax credit, but only a loan. Is that correct? Also, if two people purchased the home, not married, will the pay back be at $500.00 per year over the payback period or 7 1/2 years or will it be amortized out over 15 years at $250.00 per year?
I will appreciate your response to my e-mail address. Thank you.

By: paul

paul — Wed, 25 Feb 2009 17:49:50 +0000

Unless I read the bill wrong it doesn’t sound like you qualify for any help because you bought the house before 2005

By: Jeff

Jeff — Sun, 22 Feb 2009 15:48:40 +0000

As a recent college graduate, I do not sympathize with the individuals who are caught in this mess. Ultimately this bill rescues the irresponsible/ignorant and the lendors who had to have known the major risk in all of this. There is little reason that a house should appreciate at anything higher than maybe 1% plus the inflation rate, with the exception of extremely developed areas that are in high demand. Price increases of 10% on average are obviously going to price nearly everyone out of the market when real wage growth is only at about 3%.

Now we have a bill that attempts to bail out these individuals and establish a price floor for housing. So now I pay double because this tax will fall on me, as well as the difference between the true market value and the artificial price floor established when I go t purchase a home. To say that I’m outraged over this issue is an understatement.

To the individual who said we operate under Keynes, that is true, however Keynesian economic policy has been just as big of a failure as pure supply-side. See the lost decade in Japan as a perfect example. You cann pay someone to dig a hole, and then fill it back up and expect that to add any economic value to an economy. That is what you have to accept in the purest principles of th Keynes theory. On top of that it assumes government runs surpluses in booms, which they generally do not, and then uses those reserves during the downside of the business cycle. In addition to this look at the reckless policies of the Federal reserve who cuts interest rates to loosen credit during overleveraged times. This only serves to create commodity bubbles since there is no return to be made in savings accounts. Due to the pressure of commodity inflation and the fact that savings accounts net a negative real return during federal funds rates that basically are 0%, it creates another imbalance that has to be created somwhere down the line.

By: d

Tue, 17 Feb 2009 03:28:39 +0000

I am responding to Adam. Your are correct you did offend me. I am a very responsible single mother & woman. I pay my mortgage every month and all my bills on time or two weeks before they are due. I was engage to be married and purchased my first home before my engagement. I had a nice normal mortgage, then I added my fiance on it and that is where my nightmare begins, this person tried to take my house after two months of being added onto the mortgage and deed. Due to this and the fact I took a lesser paying job after 9/11.(I live in NYC) I was sold a horrible mortgage an adjustable rate which turned out to put me into a negative amortization and to get out that mortgage I had no choice but to take a interest only per the mortgage lender. I was taken advantage of not once but twice. Dispite the fact more then 33% of my salary is going to my mortgage, still I have taken every last penny to make sure it is paid in full and on time. Because it is my responsibility to myself and the people of this country. I hold down three jobs and go to school and a parent. So next time you want to put down people like myself you should think twice. Not all of us are taking advantage or being irresponsible. For the record, I do believe the people who did this to me should be in jail. If you only knew the stress I feel everyday and how it bothers me because the mortgage brokers (criminals) are free while I kill myself to do the correct thing. Again, I may not have the knowledge you do about mortgages but let me assure you, no one will ever do this to me again. I also believe to what happened to me is predetory lending (single mother). One more thing I thought I would share with you. I tried for the HOPE program guess what I did not qualify so, guess what I am still going to keep on doing what ever I need to do and you can mark my word you will never see a foreclosure outside my door. Even if I never get any equity in my home. So sometimes good people like myself finish last.

By: EX Argent Wholesale Rep

EX Argent Wholesale Rep — Tue, 28 Oct 2008 16:02:43 +0000

sorry for the typos & misedits…was typing fast and it’s friggin cold in here….

By: EX Argent Wholesale Rep

EX Argent Wholesale Rep — Tue, 28 Oct 2008 15:59:10 +0000

All of you have missed the reality of the issue…and there are many issues.
1st: when a lender forecloses on a home, they are forced to sell it below market value many times 30% or more. If enough homes are foreclosed on in an neighborhood it has a tremendous impact on the value of all of the homes in the neighborhood. Imagine a homeowner who took out an 80/20 ARM, responsibly improved their credit and now wants to refinance to a more secure 30yr fixed, or take cash out to make improvements/put a kid in college/etc, or has been offered a promotion that requires a move and now needs to sell the home…In order to accomplish any of these scenarios an appraisal will be ordered and the value of the home will be based upon the homes currently “on the market”…that means the home has to be for sale….if enough of those homes are on the market due to foreclosure, the values will be substantially lower…which means that the responsible homeowner described earlier will almost assuredely be be upside down due to devaluations. This could be you! I bet that “bailout” sounds like a good better idea now, huh? Imagine the impact that would have on a scale of national proportions.

If you still don’t get it….maybe you should get more comfortable with the reality of the borrower’s who will actually qualify for the program. I guarantee it’s a lot less people than the politicians would have you believe. While they are saying it’s available now….the lenders/banks have the final decision on whether they offer it or not. It’s completely up to their discrection and will be used.

By: Cassers

Cassers — Tue, 02 Sep 2008 20:05:51 +0000

My husband and I took out a loan responsibly, however when ones job changes because of economic factors and the same income is just not there, I do not consider myself to be irresponsible or a bad debtor. I think the article is typically black or white, not much room for gray areas.

By: Walt

Walt — Wed, 27 Aug 2008 16:54:08 +0000

J Dog – Concerning your husband’s buyout, your tax rate is based on “taxable income” not gross income. Your itemized deductions reported on Sch A should reduce your taxable income near or in the 15% bracket. You can find your state tax rates on their website.

By: jim

jim — Thu, 07 Aug 2008 18:21:16 +0000

Patrick – I left it out because I felt it was out of scope and affects fewer people, I didn’t want to make things overly complicated.

By: Patrick Brennan

Patrick Brennan — Thu, 07 Aug 2008 17:32:12 +0000

FYI – you omit discussion of the key provisions which is the allocation of second home gain/loss. This will prevent second home (and vacation) home owners from foregoing gain on a portion of their second homes.

Currently it is possible to sell your main home – avoid $500k of gain, and then move into your second home and do it again 731 days later.

The new law takes this away (and makes a HUGE administrative nightmare to allocate the days in and out).

Patrick

By: jim

jim — Fri, 01 Aug 2008 02:35:29 +0000

Saladdin: I agree, while it’s not a centrally planned economy a la the USSR, it’s certainly more Maynard Keynes than Adam Smith.

By: saladdin

saladdin — Fri, 01 Aug 2008 00:45:50 +0000

Kevin,
Our economy/society has not been a “free market” in many many years. The government regulates how fast we drive, who we can marry, what we pay for milk, what our electricity rates are blah blah blah.

I know you know this (whether we agree on if this is good or not is not the issue) but government regulation/reach into markets are the rule not the exception. Anyone who thinks we have a “free market system” is just wrong.

saladdin

By: chanelle

chanelle — Wed, 30 Jul 2008 22:15:08 +0000

So this bill will not help people who are backwards in their homes? We live in Riverside County, CA, and the home values have dropped drastically since we bought. At one point our home appraised for over $500,000, now we’d be lucky if it appraised at $350,000. From this article it sounds like this bill will not help people who are backwards because of the market like we are. Is that correct? Is anything else in the works to help people in this kind of situation?

By: Rick Morley

Rick Morley — Tue, 29 Jul 2008 20:07:16 +0000

I can understand both sides of that argument. But it still feels like the primary benefactors of this lastest bill are the wealthy and the stupid. The stupid benefit by not having to face the consequences of buying houses they could not afford. The wealthy benefit by having the government bail out their companies. Just look at what Fannie Mae’s stock price did since the government announced they would inject money into the company. I agree that our economy would be in a bad place if Fannie Mae failed, but by bailing the company out, the government most directly benefited the rich.

By: jim

jim — Tue, 29 Jul 2008 13:29:34 +0000

Kevin, funny you should mention Adam Smith. We stopped using Smith’s ideas long ago (if we are to boil down economic policy down to the ideas of a single man) as they permit things like The Great Depression, we’ve been following more Keynes than Smith. If you read a little about Keynes (even just Wikipedia), and you may already know this, but he advocated government intervention to prevent major economic catastrophes. I think we can all agree that we don’t want a depression, even if a few people get relief they probably wouldn’t need if they were more prudent.

The fact that only 30 year fixed mortgages are getting relief makes this bailout palatable.