It looks like we let the "Fox in the Hen house" Am I the only one to see through this mess. The Federal Reservve caused this mess, yes the Federal Reserve.
Back in the last Quarter of 2005, Chairman Greenspan had the chance to re-correct the market to a slow and soft landing by stopping the quarter point increases in the Fed Funds Rate. It takes normally 6 to 9 months for the market to react, instead the FEDS Choose to stop raising rates well into 2006 and took a wait and see attitude for well over a year plus several months to make a move to lower rates to counter act and the market.
The Feds found themselves chasing the market with large moves to lower rates back in September of 2007,the market got out of control, to complicate matters, the other entity that controls Fannie Mae and Freddie Mac was to blind to see that the Conforming Loan Rates did not reflect the market value in which those entities purchased loans from the primary mortgage market, thus many lenders got caught with their pants down, because the GSE and the Federal Reserve were not in sync, coupled with the SEC and the Supervision in both Houses of Congress failed meserably.
Now a new Federal Reserve Chairman, New Treasury Sectrary and a New President all are making it worst. If you want to fix it, lets not overly regulate and already fragile system. Lets look at the underline problems, Banks, MBS, and Collateral Debt Obligations.
Many lenders have foreclosures that can be salvaged by turning these mortgage related instruments that are non performing assets and converting them to producing assets by simply leasing out these problem REO's on their books to tenants, who want to buy using lease with an option as a method of buying in the future.
Give them a credit for their Down payment, while they are paying a higher than market rents to be applied when and if they exercised their option to buy in 2 or 3 years from now. Values would move upward and they would have time to clean up their own financial situation if credit and down payment was an issue, obviously that would be conditions to the credit. But that works.
Recently, Senator Alex Padilla,D San Fernando introduction or revival of SB407 Point of Sale retrofit requirement that all sellers of residential real estate would be burden with a cost that has far reaching affects that many homeowners can ill afford. This is not the time when homeowners have been facing a deep resission, high unemployment, and for what, another backdoor buracractic department to collect fees for the state.
Perhaps Senator Padilla doesn't reconize the real problems of the state, it's called living within your means. Cut back on salarlies and those expensive trips he's been taking, perhaphs if stayed a home, maybe he'd realize his low flow toilet requires him to flush it 2 and 3 times to make it go down, what ever the case, maybe he's in bed with those energy retrofit companies.
Regardless Senate Bill SB 407 does not come at the right time.The real problem is the lack of thinking of the consequences, that's how we got into this mess in the first place. I don't know what behind Senator Padilla's agenda, but I think it imposes more harm than good, especially at a fragile time like this for the real estate industry and to impose this burden on all California property owners who want to sell their home or investment property is darn right ill responsible on the part of Senator Padilla.
If you want to solve the shortage of water and help solve the global warming issue and envormental problems that we are facing, try desalination plants to add ocean water to our water systems and pipe in water to desert areas to plant trees and other oxigenated plants that displaces carbon dioide. Now thats something to work on. If we tried some constructive thinking instead of ways to create backdoor taxation, we would be better off. I hope comon sense prevails and SB407 is defeated. Comments are welcomed.
Many citizens are deeply concern with the direction the economy is going. Many hard working people are concerned with losing their jobs, homes, or have seen their 401k's retirement investments dwindle 40 to 60% in value over the last year.
Fixing the problem, one must understand the problem, and how they relate overall to the economy.
1. Congress can use stimulus money by way of reducing or eliminating the taxes from all passbook savings accounts, up to at least $150,000 per year on all personal income taxes. This gives the American public an incentive to save.
2. Regulate the passbook savings rate that is tied to the 52 weekly average of the 10 year Treasury Note, minus 1% point on all passbook savings accounts. What that does, is flood the banks with money.
This will not only encourage the American public save but also give banks an incentive to lend, this forces them to lend.
3. A Stimulus, is something that creates, and encourages new Jobs, or improves stability in existing Jobs that help move the economy forward. The average American appreciate the tax credit the Stimulus provides, however, most don't realize, that's really a token, which we can't afford, do the math, its very costly.
4. Give American taxpayers a shot (Stimulus) in the arm, by giving them a tax deduction of interest for buying and financing a major big ticket item, such as major appliances, cars, planes, boats that are manufactured in America, (at lease made partially in the U.S. (That's a real incentive to create and keep jobs.) I am not saying to have a trade war, but for Americans to have a choice to help keeps their Jobs here in the U.S. or find themselves displaced in the future to foreign companies that now taking place and losing jobs here in the U.S.
5. Reduce the Capital Gains tax to 5% (Remember this, taxes are non productive, more is less, less is more) Most people think that capital gains relief is for rich investors, that's far from the truth. Realize this, that most Americans who own a home, or the average person who is not a homeowner who has a 401k they invested in mutual funds, stocks or bonds or has a small apartment unit they own, also that falls in that category.
Having a Capital Gains tax of 5% federal government and 5% to the state does not takes away revenue, it actually adds to it by creating cash flow (Stimulus) to the government in volumes by giving an incentive to sell and cash in paying a fairer tax, versus holding on forever, paying no capital gains taxes and passing it along to your heirs,who get the stepped up basis. Paying very little, if none in capital gains taxes.
6. With regards to the current toxic loan problem that banks have on their books, pool those loans to a National Clearing House, and Lease those homes out with an option to buy for renters who want to own a home. Giving them a three year window to exercise the option to buy, these renters would have an opportunity to own and be a productive part of society. There of course would be conditions over that three year period, but that would at least make a non performing asset into a healthy performing asset that is at least bring in money each month. That's a Win, Win, not only for the taxpayers, but also for the tenants and the economy.
With respect to the Housing Market, and The Foreclosures that were attributed with the Toxic Loans on the market. If you want to fix it, and create some stability in the market, you don't need to raise taxes, you don't have to give away hundreds of billions of dollars away like candy. We just need to Think. We need to raise the confidence of the American public and the real estate market; the stock market will fix itself by that confidence. We also need to stop listening to the doom and gloom news a little. The News is a self perpetuating attitude of doom and gloom, it won't go away like a head cold, unless you solve or fix the problem. We Need to really look at the problems and solve them, not add to them.
All I can say, it is ashame that we have these smart people running the government, who have education and No Common Sense!
If a free society can not pays it's bills, and the government continues to spend, raises taxes and can not afford to pay its' own bills, what will be the final outcome be for that free society? Anarchy? The Big question is: How does a government exist?
March 8th, 2009 Dear Tim Keithner and to all 435 Congress Members and 100 Senators My name is Carlos R. Arvizu, I am a real estate broker with Prudential California Realty. My purpose in writing you today is to share my thoughts with you in the hopes you can share with your readers about the current state of the economy and what I call a "Common Sense Cures for the Economy" with respect to the housing market.
I am sorry, some of these folks in Congress mean well, but frankly some of them don't have a clue of how to solve a problem. I am in the lending/real estate field and have lived life, and studied real life economics. If you have a problem, get at the root of the problem and solve it. Granted we have lots of problems with foreclosures, lending issues, jobs loses and health care to name a few, however, with property values down, interest rates at an all time low, that's a perfect time to create synergy in the any market. It's my opinion that there are things that we can do to move the economy upward by creating an incentive to stimulate the embroiled American public whose confidence has shaken by a malignant media need for news, along with financial vampires.
Our banking problems stems from a lack of cash flow and confidence of the banking community in making loans to consumers and to the banks themselves. The American people are tired of hype and a constant barrage of financial woes. Let's start solving these problems and regain the confidence of our nation. Since we have a confidence problem with the banking community, as well as consumers, we can fix that with the cooperation of the banking industry as well as, our Congressional representatives. This is what I would recommend; We need to recognize we have a cash flow problem, so let's start with the Banks themselves and the House of Representatives.
1.Eliminate the personal taxes from passbook savings accounts up to $150,000 per year and regulate the interest paid to depositors to 1% less than the 10 year weekly Treasury bond rate average. That's an incentive to save. Cash Flow! The American public would start loading up on savings..
2.Reduce the Capital Gains tax to 5%. Many people are unaware or confused that capital gains relief is meant for the wealthy, that's far from the truth! Wealthy investors tend to keep on investing in larger and more prosperous investments for greater returns. This is really a tax break for anyone who owns a home or has invested in a 401k retirement plan, or owns a small rental property to retire. A capital gain is considered a long term investment which can include your 401k tied to mutual funds, bonds or stocks. By reducing the capital gains tax to 5%, many Americans in a 401K retirement program can opt out without drastically paying 30% to the Federal and State (Calif.) by the time you take in consideration the capital gains tax along with inflation, most of your investment has eroded significantly.
Reducing the Capital Gains tax to 5% also increases the coffers of the treasury department. Recently, many of us have seen the stock market drastically reduce 40% to 60% of its' value, if you had time to hold on to regroup, that might be ok for some, however, if you're in your late 40's, 50's or older, that could be devastating. Older folks don't have the job opportunities that younger people have, even though it's against the law to discriminate against age, it does exist. The benefit to the government is by reducing the capital gains tax, actually creates a windfall of cash flow to the government by way of volumes of small investors who have long term capital gains having the opportunity to sell and cash out to spend on retirement or use as they see fit. (Remember this," More is Less, and Less is More")
3.With regards to the current toxic loan problem that banks have on their books, pool those loans to a National Clearing House, andLease those homes out with an option to buy to renters who want to own a home.Giving tenants a three year window to exercise the option to buy one of these distressed homes.
Some tenants want to be homeowners, they just haven't the cash down payment, or lack credit sufficient to qualify to buy right now, but give time, an incentive to buy with a plan of action, along with the opportunity to own, they will be a great productive part of society, of course there would be conditions that they have to earn in order to have the opportunity to own, such as pay above market rents in order to qualify for an FHA loan, to use toward their down payment and closing cost. They have to have sufficient income to qualify. As far as credit is concern, it can be marginal now, but they have 3 years to work on it, they will need to meet with a credit counselor, devise a plan of action during this 3 year window.
Yes, they will pay above market rents, approx 20%, but they can use this as a credit toward their down payment and closing costs (forced savings), provided they meet all the terms and conditions, otherwise they lose the credit that is non refundable. That's earning the opportunity. They win, by having the opportunity to buy at today's price, they get time to reorganize their life. The banks win, eliminating their toxic loans by capitalize on turning a non productive, non performing asset into a performing asset.The taxpayers win, because they are not flipping the bill. The entire country wins, as the economy starts flushing out these toxic loans from our vocabulary, and the American Financial System can get back on track..
My name is Carlos Arvizu Sr., I am a realtor with the Rancho South East Assoc. Board. I am considering running for Congress of the 34th District, which consist of Downey, parts of Bellflower, Lakewood, Norwalk, Montebello, Downtown Los Angeles, SouthGate, Huntington Park, Bell, Bell Gardens, and Maywood. This is for the 2010 Congressionnal bid.
I am a long term Realtor, and we need someone who wants to fight for Real Estate Interest and the well being of the average American, young and old, pre senior and senior citizens. Lets stop the erosion of our economic health.
That's why I want to run to help fix some of the problems we have been facing. I need your help and support. If you think some of these suggestions make sense to you, please help me get elected to help fix these problems. A common sense approach.
How to fix the Nations Financial Mess
To Solve this Problem;
Since we have a cash flow problem, let's start with the Banks themselves. To solve that problem is simple, yet complex, but there are a few things we can do to restore capital, one of the things we need to do is flood the banks with money, without getting the economy into more debt than it needs to.
How is the 64 million dollar question. One way is relatively simple, we need to change our way of thinking with the use of the tax laws and the regulatory bodies; (congress job) as well as, regulate the banking interest that banks pays its customers. So how do we do that:
1. Congress can use stimulus money by way of reducing or by eliminating the taxes from all passbook savings accounts, up to at least $150,000 per year on all personal income taxes with an increase each year, with a built in inflation factor, tied to the cost of living. This gives the American public an incentive to save.
2. Regulate the passbook savings rate that is paid to depositors money into the banks, this creates an additional incentive for consumers to Save money. The rate of interest can be as simple as using the 10 year treasury bond note rate as a bench mark, that is tied to the 52 weekly average of the 10 year Treasury Note, minus 1% point on all passbook savings accounts. What that does, is flood the banks with money. It is not in the best interest of the country for the government to give money to the banks directly by way of stimulus funds, just to horde it, it would be of greater benefit the American public to get a stimulus to save money. This will not only encourage the consumers to save but also give banks an incentive to lend, They can't horde it if it's not working capital. This forces them to lend. The Federal Government should not be in the business of owning the banks, this is not a way to go.
If you want to fix it, and create some stability in the market, you don't need to raise taxes, you don't have to give away hundreds of billions of dollars away like candy. We just need to Think. We need to raise the confidence of the American public and the real estate market; the stock market will fix itself by that confidence. We also need to stop listening to the doom and gloom news a little. The News is a self perpetuating attitude of doom and gloom, it won't go away like a head cold, unless you solve or fix the problem. We Need to really look at the problems and solve them, not add to them.
3. The Stimulus of $400 for individual taxpayers is really a token, that we can ill afford. You don't necessarily have to give away a tax credit to every working person of $400., while that may seem unpopular, and it's sure nice to get a few extra bucks in your pocket, however do the math, it's very costly. The Bush Administration did that very same thing, it gave 3 of those same token tax credits away and drove the debt up more than $150 billion dollars, that will take 2 generations at lease to live with that burden of debt, and it really didn't help. A Stimulus needs to be an incentive to create or keep existing Jobs.
An unemployed taxpayer doesn't pay taxes, it adds to the burden of debt.
4. Give American workers a shot in the arm, by giving them a tax deduction of interest for buying and financing a major big ticket item, such as major appliances, cars, planes, boats that are manufactured in America, (at lease made partially in the U.S. (That's a real incentive to create and keep jobs.) I am not saying to have a trade war, but for Americans to have a choice to help keeps their Jobs here in the U.S. or find themselves displaced in the future to foreign companies that now taking place and losing jobs here in the U.S. This is an Incentive Stimulus.
5. Reduce the Capital Gains tax to 5% (Remember this, taxes are non productive, more is less, less is more)Most people think that capital gains relief is for rich investors, that's far from the truth. Realize this, that most Americans who own a home, or the average person who is not a homeowner who has a 401k they invested in mutual funds, stocks or bonds or has a small apartment unit they own also that falls in that category. If you bought something 30 years ago, and need the money to pay hospital bills or nursing home care to provide for nursing home care and your taxed at 30% Federal and State, that wipes out most of your hard earned dollars along with inflation. Y you lose buying power, and if you need that for retirement purposes, inflation eroded much of that.
Having a Capital Gains tax of 5% federal government and 5% to the state does not takes away revenue, it actually adds to it by creating cash flow to the government in volumes by giving an incentive to sell and cash in paying a fairer tax, versus holding on forever, paying no capital gains taxes and passing it along to your heirs ,who get the stepped up basis. Paying very little, if none in capital gains taxes. This gives the average American the right to chose how and when to spend their proceeds on their long term investment, that actually helps the government with cash flow to help pay the running of the government and we have a healthy economy, which in the end helps circulate more money into the economy and as well as enrich the coffers of the United States Treasury. (More is Less, Less is More, something to think about!)
6. With regards to the current toxic loan problem that banks have on their books, pool those loans to a National Clearing House, and Lease those homes with an option to buy for renters, who want to own a home. Giving them a three year window to exercise the option to buy, these renters would have an opportunity to own and be a productive part of society. There of course would be conditions over that three year period, workable credit, deposit, and income sufficient to make a rental payment, that would at least make a non performing asset into a healthy performing asset that is at least bring in money each month.
That's a Win, Win, not only for the taxpayers, but also for the tenants and the economy. Common Sense approach to stabilizing the real estate market, and gradually increasing property values to stabilize the real estate market.
7. Have the lending institutions to continue to modifying their loans in their pipeline of delinquent loans. This will dry up the foreclosures on the market and stabilize the housing markets. Any bank receiving help from TARP monies need to help those who are in this mess that the banks and financial institutions help create this mess.
My name is Carlos R. Arvizu Sr, and I am planning on running for Congress for the 34th District. I want to thank you and the treasury department for getting me angry enough to at least help fix someone else from losing their home, even though I can't save mine. Thanks again.
A recent article just came accros my screen that Delphi Batteries a subsidery supplier of Batteries for GM, have requested a Bankruptcy Judge to allow Delphi Batteries to eliminate the healthcare of Retirees. It is not the retirees of Delphi to blame for the bankruptcy, it's poor management.
*** News Flash***Cutting the Health benefits for future employees allows Delphi to survive on the balance sheet, however, past employees should not be penalized at the expense of losing their healthcare benefits because of poor management....Past employees have no way to protect themselves and have a legitiment right to health care. For many retirees, it is much too late get another job. The Directors and Senior management of Delphi Batteries who suggested this, are nothing more than thieves hiding behind a corporate vail.
This opens the door for more problems, If that is the case, perhaps the Bankruptcy Judge should consider going back to all of the board of directors of Delphi Batteries along with senior management for the last 40 years and retreive all the profits and benefits that benefitted them also, that way at least it's fair. Care to comment? Carlos Arvizu Sr. TheDon1950@aol.com
Another Stimulus Bill is about to take a trip around capital hill very soon. Our political leaders have a grave responsibility in using the public tax dollars wisely, not just distributing wealth from one hand to the other.
Giving credits (money) to everyone doesn't do a dam_ thing unless, the tax credit can effectively generate jobs and support systems to maintain those jobs, but also create JOBS. Be careful in what your legislators are doing. Adding to the deficient without job creation can be long lasting, President Bush gave us 3 tax credits stimulus packages with Congressional support during the last 8 years, and did we not learn that this was a token gesture, that actually added to our grandchildren debt, they will be paying for.
Let's get specific, we have approx. 180 million people who work in this country and about 10% are now unemployed, As an example, President Bush dished out a token 300 bucks stimulus to spend on what ever, Let's Do the math (180,000,000 times $300 dollars, that adds up to a lot of zero's 54,000,000,000) $54 Billion Dollars, do that times 3. that equates to 162 billion dollars during the last 8 years.
** Let's look at how a real tax credit can stimulate an economy. As an example, let's say you buy an American made car, if you were allowed to write off the interest, as part of a tax stimulus package, that vehicle, then, woukd stimulate buying activity, which maintains and creates a demand for an American Made product.
** We can do the same with Appliances that are made in the U.S., this would allow the American public to choose to buy American; there is a benefit (JOBS). Not saying there is nothing wrong with buying foreign, but recognize We cut our own throats, without really looking at the underlying problems, we help other economies to flourish, and put us deeper in a trade deficient.
**We need to realize that we can use our tax system work for the country, but it can also be detrimental and work against us if we tax too much or just tax those who own businesses or who we consider rich.
An Example; a vehicle over $30,000 has an added Special tax called (a luxury tax), a boat gets taxed as a luxury so 10% special Luxury tax crippled the Boating Industry in this country. So what happens?
People start changing their spending habits. Manufacturing plants that supplies JOB's here in the US, make decisions based on profits, not expenses, that ultimately forces manufactures to layoff people.
Imagine, if you were employed by a manufacture or other business that was dependant for it's survival on the consuming public to buy their products and if no one is buying boats as an example, this has ultimately adds to the problem we been facing in the US. We need to start paying attention to these things. This spiraling affect does filter down to the lowest common denominator, supporting jobs.
**We helped encourage foreign trading partners stimulate their economies since 1971 when President Nixon took us off the Gold Standard, and made America fight the worlds battles economically with printed paper dollars backed only by more debt (federal reserve note), believe it or not, many people in this country still thing our dollar is backed by gold in Fort Knox. It's time to re-think our monetary policy for the good of our United States of America. TheDon1950@aol.com
The Govenor of the State, has said that California has budgetary problems. I think that's an understatement. What California need to be asking specifically is the budget broken down. According to
the budget proposal for 2008/2009 fiscal year we are spending 41.3% on education
25.3% on Health and Human Services
and a whooping 7.3% of the Departmet of Cooreections. We spend more on Prisons that houses only 173,000 inmates which 70% return to the system.
Something is wrong. I think we need to have an overhall of the of all these depts. Thats 73.9% of the budget. If you don't have enough coming in, some belt tightening must be done.
We borrow from Peter to Pay Paul. That is a prescription for disaster. We need to find ways to reduce expenses, but also find ways to generate more income, by looking at our tax codes.
More is less, and less is more. SOmething to really think about. CUtting the capital gains tax to 5% will believe it or not, increase revenues to the State, that they would not otherwise have. Email me and I would gladly share that with you.
I am considering running for office in 2010. Give me your thoughts.
The Road to Recovery is upon us. Most people believe it or not, are still listening to the doomssayers, yet if you look at the underling events that are taking shape today, and analyze the momentum of activity on the market, you'll discover that multiple offers are being made on more and more property each day, even on November 18th 2008. Typically October, November and December are slow months.
Why you might ask? We all know Convential Lenders are not lending ask brisk as they were in years past, however, having said that, capital markets had stopped lending because of the MBS's, CDO's, and SPV's that contaminated the commercial paper markets. The climate at the Treasury Dept. clearly shows that banks are becoming healthier with bailout money. Fresh capital, not tarnished capital will be hitting the streets soon.
Why you ask? Bad Debt is being reconfiguered or restructuring to performing assets. How, LOAN MODIFICATION! Loan modification will soon shed many of the foreclosures that have been coming on the market due to FASB 157 that took place in Janury of this year, which required lending institutions to balance it's books on the market value of assets versus liabilities. The bottom line, Loan Modificationsare turning Bad Assets into Performing Assets with the restructuring of loans, Banks can start borrowing on those good assets as Leverage. They generaly have a ratio of 12 to 1 against it's assets that they can lend out.
That's probably why Treasury Secretary Paulsen changed direction on buying bad debt and holding. It's better to feed the cat and have a healthy animal, than to keep feeding something that has already died, which will prolong the enevitable funeral. Let those Lenders pay the consequences is what is happening, a restructured debt can be eventually turn in to a refinance in the future when the economy is in a better position.
Now you might ask when do we start bottoming out? March 2009. Those who are buying now will reap the rewards, those sitting on the fense will be saying I should have bought when I had an opportunity to do so. I just made an offer on 2 units for $240,000 in San Diego California, if that's not the bottom, it's sure close to it. I anticipate a counter to $275,000 this is an REO, not a short Sale. Those short sales will soon drastically fade away as loan modifications drys any hopes of those would be speculators who are thinking of selling on a short sale and buying another shortsale.
Those buyers out there who want a to capitalize on the market now, can call me at 562-755-3856 to help them buy at todays prices and gain a future investment....
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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