All Posts Tagged With: "Housing"

Politicians, Bailouts and Bank-Owned Houses

Around the corner from my former apartment in Newton was a house that was taken in foreclosure. The “For Sale” sign had been there for a very long time, the lawn wasn’t mowed regularly and the shrubs had died in the winter but hadn’t been removed.

Walk around your own neighborhood and see how many houses are for sale. Sometimes the sign openly states that it is bank-owned, other times you might have to search on the county assessors website. There are plenty of bank-owned houses in Iowa; there are many, many more in California, Nevada, Michigan and Illinois.

The point is this: With such a large supply of bank-owned houses, of course houses will continue to fall in price. When a store has excess …


Is The Crisis Abated?

On Sunday I shared some initial thoughts about the Fed take-over of Fannie Mae and Freddie Mac. If you read it, you know I’m not exactly happy about the outcome.  My friend Bithead shared some great thoughts Monday, and I don’t disagree that something needed to be done.   He and I both agree dumping the CEOs was necessary.

And on Monday the Stock Market reacted very favorably to the news, with a huge rise in the Dow (500 points, settling up 289), with a strong positive impact to the banking industry.

But I’m still convinced that the solution divides the interests of those in the government now set to manage the affairs of these companies.  Everyone who looks at this right now is breathing …


Government Mortages: The New Balancing Act

Today US Treasury Secretary Henry Paulson announced plans for the new Federal Housing Finance Agency (FHFA) to take Freddie Mac and Fannie Mae into conservatorship.   The power to do this was provided in HR 3221 which was passed in July.

The move includes replacement of the CEO of both organizations, and an infusion of about $200 billion.  In return, the Treasury gets $1 billion in preferred stock from each company without providing the cash for it up front (I’m assuming this will work like a stock option).

From the Wall Street Journal:

It is unclear how much the government’s intervention will ultimately cost taxpayers. In exchange for agreeing to provide as much capital as needed to the companies as they cope with heavy losses on


What A Week: Housing

By now you probably know that both Freddie Mac and Fannie Mae have had very poor quarterly reports.  Worse than expected.  And now we’re in for worse trouble.

Money is now expected to be tighter as we roll into the fall and home buying will continue to be slow due to the fact rates will be higher and people will be disinclined to borrow and therefore buy.

Don’t mind the fact that having the media and the industry simply telling the public that it’s bad probably causes a lot more people to sit on their hands.

With home prices as low as they are now, it’s the best time to buy.  The cost of money is already low and continues to be offset by the …


The Housing Bill Is Law

As expected, President Bush signed HR 3221 into law this morning, making billions of federal dollars available to home owners, shoring up Fannie Mae and Freddie Mac, and providing closer oversight of the financial aspects of home ownership to the Administration and Congress.

What a shame.

After speaking with a good friend of mine that is a CPA, the tax incentives, particularly the $7,500 tax credit (a topic which is burning up the search engines at this time), are going to make life harder for tax preparers, tax payers, and probably increase the cost of running the IRS.  As I’ve said before, There are going to be a lot of problems keeping track of this. 

Plus, this is just an unfair competition with banks.  …


Follow-up On The Housing Bill

In reference to my post on Saturday regarding HR 3221, the “Housing and Economic Recovery Act of 2008″, I discovered a site where there is a copy of the Congressional Budget Office Cost Estimate for HR 3221. Over the next ten years, according to the estimate, this bill will create a nearly $25 Billion deficit.

Another blogger, John D. Thornton, has some interesting insights regarding the OFHEO.

I’ve been getting some hits on Saturday’s post that are searches like this “explain the $7500 tax credit on the new housing bill that was just passed“.   I’m glad to see there are people wanting to understand it better.  This could be achille’s heel of the bill.

There is additional information available (this is …


Swamp Stomper Alert: Housing Bill Heads to White House

Well, it took almost 3 months, but Congress finally passed the bill today, on older version of which was  passed by the House in May, after some considerable back and forth between the Senate and the House.  The bill is HR 3221 (pdf), titled: “Housing and Economic Recovery Act of 2008”.

The entire bill is over 600 pages long.  The table of contents is 7 pages.  And technically, this is a bill that began its life over a year ago.  Sponsored by none other than Nancy Pelosi.  And apparently Bush is planning to sign.

He should not.

Touted by most of the media is the section that provides up to a $7,500 tax credit is 1,800 words.  And the  media manage to mention it …


Another Good Reason To Be A Democrat

It’s so easy to get away with things.  Right in front of everyone.  No one seriously does anything about it.  We’ve seen it with Obama, Clinton, Clinton, and today, with Chris Dodd.

I don’t know why I keep thinking that people like Dodd are respectable and of high integrity.  When Countrywide gave him a great, no a ridiculously incredible deal on his mortgage (his wasn’t a sub-prime, was it?), he had to know right then an there that he was get preferential treatment of an order that was inappropriate for a US Senator.  Add to that the fact he received significant political contributions from the company and then he co-sponsors the Dodd-Shelby housing-bailout bill (that essentially bails out the likes of Countrywide).

And now, National …


Congress Should Not Micro-Manage The Economy

Not so much because tinkering with the economy on a regular basis is messy as much as having Congress doing the tinkering is just dangerous. Remembering that the Prime Directive of nearly every member of Congress is “Do nothing that interfere with my re-election”, and the corollary is “Take care of my deep pocket special interests”, it is exceptionally difficult to trust anything that Congress does, especially when it is wrapped up in the “we’re here to help” blanket.

So today (Thursday), the House passed a bill to spend yet another $300 billion that we don’t have in order to firmly entrench the new entitlement: home ownership.

We won’t spend any time bemoaning the end of apartment dwelling as we know it. Nor the fact …


McCain Seeks To Help Homeowners

In Friday’s New York Times, there was an article about McCain’s new proposal to help homeowners who are in that borderline group of people that were impacted by the recent rate resets and yet are legitimately able to pay a fixed rate mortgage.

The Times characterized this as a “shift” and “pivot”, which is probably fair to an extent.  McCain’s plan does not appear intended, however, to help those that have be reckless in their borrowing or lending.  McCain’s comments in the past have been such as:

“it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers”

McCain’s plan provides a path for about 200,000 to 400,000 homeowners to refinance their …


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