O.K., so we now have the bailout! This seems odd, that millions of Americans who are in trouble are passed over and $700 Billion goes right to the people who caused this mess to begin with. Now Wallstreet will breathe a sigh of relief, hold on to the money for a while before they are pressured to lend again in 2009.
HERE IS THE PROBLEM AMERICA IS OVERLOOKING: The banks are still not aiding those in need. They are "Short Selling" homes to investors, but not the home owners. Many homeowners are filing bankruptcy to force lenders to renegotiate loans that the lender should be doing by their own free will. Now here is the clincher and the trigger that will drain our economy for the next 5-7 years if something is not done:
As you may know, President Bush passed legislation in 2008 to waive any IRS taxes on the shortfall for those who sell via short Sale or are foreclosure victims. Everyone seems to think that EVERYONE is included and they could not be further from the truth. That law ONLY applies to those who did not pull equity or refinance their home. In other words, if you paid $300,000 for your home in 2003 and in 2005 you pulled $100,000 out to pay off bills, etc. (you owe $410,000) and the home is now worth $290,000 and you sell for that number (Short Sale), you will NOT be exempt from the $110,000 shortage and you WILL receive a 1099 for this amount.
This law needs to be revised and updated for the NOW situation facing this country. No, it's not fair to the ones who are paying on time, but this law must change and all of those IRS penalties must be waived across the board......... and I'll take a beating for saying this, but it should apply to ALL properties including investors. Wallstreet was bailed out, now (as Obama and McCain put it) Mainstreet will need a bailout as well. Otherwise, one in six Americans will face another financial disaster and the economy will be impacted again in another way because those people will not be able to SPEND and BUY things. And that is the medicine for the economy to recover.
This will be another disaster if the legislation is not changed again. America needs the bailout worse than Wallstreet ever did.
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