Real Estate & Housing: Treasury Drops Short Sale Requirements - CNBC

Real Estate & Housing: Treasury Drops Short Sale Requirements - CNBC

Panel Members Consider Eliminating Home Mortgage Deduction!!!!!

JMO:

Please look read the article below (the highlighted portion need the bottom). If the Govt disallows the mortgage interest deduction they will have removed any reason whatsoever for someone buying a house.

WASHINGTON (AP) -- The federal deficit has topped $1 trillion with three months still to go in the budget year, showing the lasting impact of the recession on the government's finances.

In its monthly budget report, the Treasury Department said Tuesday that through the first nine months of this budget year, the deficit totals $1 trillion. That's down 7.6 percent from the $1.09 trillion deficit run up during the same period a year ago.

Worries about the size of the deficit have created political problems for the Obama administration. Congressional Republicans and moderate Democrats have blocked more spending on job creation and other efforts. Republicans also have held up legislation to extend unemployment benefits for the long-term jobless because of its effect on the deficit.

Another failed effort would have provided cash-starved states with money to help avoid layoff of public employees and finance the Medicaid program for the poor and disabled.

The June deficit totaled $68.4 billion, the second highest June deficit on record, but down from the all-time high of $94.3 billion in June 2009, a month when the government was spending heavily to stabilize the financial system and jump-start economic growth.

June is normally a surplus month as the government collects tax payments from corporations and individuals who make quarterly payments. Only seven years in the past 56 have seen deficits in June.

Many private economists are forecasting that the deficit for the entire budget year, which ends on Sept. 30, will come in around $1.3 trillion. That would be the second highest deficit on record, but it would be down slightly from last year's all-time high of $1.4 trillion.

The Obama administration is forecasting that the deficit for the 2011 budget year, which begins Oct. 1, will remain above $1 trillion for a third straight year, projecting an imbalance of $1.27 trillion. And the administration predicts the imbalances over the next decade will total $8.5 trillion.

The deficits have been driven higher by the lingering effects of the worst recession since the 1930s. About one-third of the higher deficits in this period are a result of a drop in government tax revenues.

The other two-thirds of the deficit increases reflect higher government spending to stabilize the financial system with the $700 billion bailout program and the $787 billion stimulus program that Congress passed in February 2009. The increased spending also reflected added demands for such programs as unemployment benefits and food stamps.

The tide of red ink has sparked a political backlash with surveys showing rising unhappiness among voters with the ballooning deficits.

Through the first nine months of the current budget year, government revenues have totaled $1.6 trillion, up 0.5 percent from the same period a year ago.

Government spending totals $2.6 trillion, down 2.8 percent from the same nine months a year ago. That decline primarily reflects lower spending on the financial bailout effort as banks are now repaying the billions of dollars they received to bolster their capital reserves at the peak of the financial crisis.

President Barack Obama has appointed a national debt commission to report after the November midterm elections on ways that the federal deficits can be brought under control.

The heads of the panel told the National Governors Association on Sunday that everything needs to be considered including curtailing popular tax breaks, such as the home mortgage deduction.

"The debt is like a cancer," Democrat Erskine Bowles told the governors. "It is going to destroy the country from within."

Associated Press Writer Andrew Taylor contributed to this report.

Home Prices Could Drop 50% As The Great Recession Resumes « Intelligent Investing - Forbes.com

JMO:

Although I disagree that home prices are poised to drop ANOTHER 50% from where they are today, I do believe that any double-digit drop could be catastrophic. Not only would another precipitous drop represent "the last straw" for many homeowners that have tried to "do the right thing" by maintaining their payments, it would also represent a loss in equity to those buyers that have come into the market in the last year or so. This combination, in my opinion, could create another wave of foreclosures, strategic walk-aways, short sales, etc that would dwarf what we've seen thus far. The attached article appears to infer that 1999-2000 levels represent the "support" values that home prices are seeking. I would disagree. At least in the Arizona and California markets, with which I am more familiar, the explosive rise in home values occurred between 2004-2007, which means the realistic support would be based on home values between 2003 & 2004.

Home Prices Could Drop 50% As The Great Recession Resumes « Intelligent Investing - Forbes.com

Fannie Mae Cracking Down On Strategic Defaults

REALTOR® Magazine-Daily News-Fannie Mae Cracking Down on Strategic Defaults

JMO:
For many states with anti-deficiency statutes, like Arizona, the possibility of being sued is minimal. However, the bigger "take away" from this article is that lenders are being pressured to do "principal write-downs". In effect, writing a new mortgage based on current market value and conditions. This would be a huge step in slowing the pace of foreclosures, deeds in lieu and short sales. I'm also waiting for Fannie/Freddie to realize that we need to create some benefit for owners of investment (rental) properties as well. Right now, all the government endorsed programs are designed to benefit owner-occupants of primary residences. I'll continue to follow these developments and keep everyone updated.

Foreclosure rate steadies as banks hold back - Mortgage Mess- msnbc.com

Foreclosure rate steadies as banks hold back - Mortgage Mess- msnbc.com

JMO:
The most significant part of this article was the statement that home buyers with good credit and conventional fixed rate loans are now the fastest growing group of foreclosures. This means that it can no longer be blamed on sub-prime, adjustable rate borrowers. This is a good indication that something will change soon because if the good borrowers are now being turned into sub-prime borrowers we will need to see new loan programs created otherwise the real estate market is likely to stall. On a side note: we are starting to see year-over-year appreciation in certain markets in the U.S. (16.2% appreciation in the Phoenix Metro Area according the NAR). If homes continue to appreciate and rates go up (very likely), you will see the pool of qualified buyers drop significantly. At this point the only thing I can see happening is for the Fed to artificially suppress interest rates to allow for property values to continue to rise. This would serve two purposes: 1. It would benefit banks by bringing values up and mitigating some of their losses and 2: it would stimulate home buying.

Facebook | Sal DiCiccio: Property taxes are about to go up in Phoenix

News Release

Office of Councilman Sal DiCiccio, District 6
602-262-7491
Council.district.6@phoenix

.gov

Property taxes in Phoenix are about to go up. The City Council on May 25 will consider allowing the rate taxpayers pay to rise over the next 20 years.

This comes on top of the city, in the past for months:

* Imposing a new food tax (up $50 million per year)
* Increasing water rates ($30 million per year; a 40% increase over 5 years)
* Increasing sewer rates ($3 million this year)
* Increasing fees on small business

And now the City of Phoenix wants to raise property tax rates, even though property values have gone down.

All of these fees and taxes were imposed to afford an average cost of $100,000 per city employee – that’s for all 14,000 employees. This could all be fixed if Phoenix simply would restructure operations. My office has asked Phoenix to address the high cost of labor at City Hall. Instead, the city has chosen the easy route of raising taxes and fees on the public, all of which I have opposed.

At 2 p.m. on Tuesday, Phoenix will consider raising the property tax rate under the guise of a “floating rate.” That means taxes will “float” up.

Phoenix imposes property taxes as a percentage to a property's assessed valuations. When property values were climbing, Phoenix kept it rate constant, which mean it took more dollars from every property every year as their values increased. Now that values have dropped, Phoenix wants to tax homeowners at an even higher rate and take a higher percentage of the equity homeowners still might have in the homes.

This is being done because city budgeters failed to account sufficiently for declining property values and the city now lacks the revenue to repay bonds. Phoenix must solve this problem internally by making structural changes and not look to shift the responsibility onto taxpayers.

Instead of hitting taxpayers yet one more time, I believe the city needs to address its own bloated labor cost bubble and initiate structural changes such as managed competition to bring its expenses down. Homeowners and taxpayers are hurting in this economy, and the city of Phoenix is just making the burden heavier by piling on more and more taxes and fees. That's not the way to lead Phoenix out of this recession.

Respectfully,

Sal DiCiccio
Phoenix councilman: Ahwatukee, Arcadia, Biltmore and North Phoenix
200 W. Washington St. 11th Floor
Phoenix, AZ 85003
602-262-7491
council.district.6@phoenix.gov

"Right To Rent" Bill Being Considered

The US House of Representatives is considering a bill, called the “Right to Rent Act” (H.R. 5028), that would allow this homeowner-to-tenant conversion.

JMO:
Although there are other provisions in place to keep owner-occupants from being displaced, this bill on it's face could have severe impact on real estate values, as it would dramatically impact the "investor/speculator" market. Under this bill, an owner-occupant at their sole discretion could choose to convert their ownership to a lessee tenancy for up to 5 yrs. Although it would be a month-to-month tenancy the subsequent purchaser (investor) would be required to uphold the terms of the lease for the full 5 yr period unless the tenant (former owner) breached the agreement in some way. This will make it much harder to "flip" properties because a successful "flip" should end up with an owner-occupant in the property. Under this scenario, it could only be flipped to investors for the 5 yr term. This one is worth following....I'll keep everyone posted