If it be good enuff for my bro....
Posted on 02/27/2009 6:06:50 PM PST by free-n-TX
February 26, 2009 - President Obama released his budget proposal this morning. A small section of the sweeping budget plan has the potential to become a major impediment to a recovery in real estate markets across the nation. NAR is 100% opposed to the provision that modifies the Mortgage Interest Deduction and is prepared to use its formidable array of resources against its enactment.
As currently drafted, the plan changes the Mortgage Interest Deduction by reducing the amount of mortgage deductibility on families earning over $250,000. This proposed change in the Mortgage Interest Deduction will result in further erosion of home prices and home values. If this proposal is enacted it will set of a new round of price depreciation, will cause greater distress on the balance sheets of banks as the collateral value of mortgage backed securities declines. A second credit crisis could emerge before the first one is resolved.
As you read this NAR is launching a multiphase plan of action to eliminate this provision from the budget plan. In the next 24 hours, NAR will be expressing our concerns directly to President Obama, to all members of the United States House of Representatives and the Senate, placing advertisements in the publications read by Washington, DC decision makers. Additionally, NAR will be forming a coalition with other groups affected by this proposal.
Dear Fellow REALTOR®,
You may have seen news reports about President Obama’s budget proposal that was released today at 11:30 AM Eastern Time. A small section of the sweeping budget plan has the potential to become a major impediment to a recovery in real estate markets across the nation. NAR is 100% opposed to the provision that modifies the Mortgage Interest Deduction and is prepared to use its formidable array of resources against its enactment.
As currently drafted, the plan changes the Mortgage Interest Deduction by reducing the amount of mortgage deductibility on families earning over $250,000. This proposed change in the Mortgage Interest Deduction will result in further erosion of home prices and home values. If this proposal is enacted it will lead to a new round of price depreciation, will cause greater distress on the balance sheets of banks as the collateral value of mortgage backed securities declines. A second credit crisis could emerge before the first one is resolved.
As you read this NAR is launching a multiphase plan of action to eliminate this provision from the budget plan. In the next 24 hours, NAR will be expressing our concerns directly to President Obama, to all members of the United States House of Representatives and the Senate, placing advertisements in the publications read by Washington, DC decision makers. Additionally, NAR will be forming a coalition with other groups affected by this proposal.
This communication is the first part of our response, we will continue to update you as the situation and events warrant.
Sincerely,
Charles McMillan, CIPS, GRI 2009 NAR President
Here is the link to the NAR website...
It is ONLY tax code....what is the big deal?
Being a Realtor myself and a former mortgage broker I dont see where the problem is....cumbayahhhhhh !!!!!!
Non-real-estate groups should remember the maxim: “First they came after my neighbor, but I did nothing...”
LEAVEEEEEEE OBAMAAAAAAA ALONE!!!!!!!!!
Just scrap the mortgage deduction entirely, or introduce an equal RENTER’s deduction. Eliminate the stupid bias in favor of buying. If the latter had been in place, the housing crisis would never have happened. Far too many stupid people were convinced (usually by brokers) to buy instead of rent because of this idiotic deduction.
Also note that if you make enough gross income, your itemized deductions are reduced (see bottom of Schedule A). So this will reduce the amount of mortgage interest you can effectively declare and then you get all your itemized deductions reduced at the end of the Schedule A - your mortgage interest is reduced twice!
The law should be changed so all interest is deductible — or none. The mortgage problems came from people taking second mortgages because it was the only tax deductible form of interest. There are people who bought cars with their home equity lines because it was “a great tax break.”
And the Republicans were so scared to get rid of it for a flat tax. Øbama is bold and fiscally ignorant
You need to ask why the brokers were pushing mortgages to the unqualified.
They were being strong-armed by the Feds and race-baiters like Eliot Spitzer. See http://www.freerepublic.com/focus/f-news/1994241/posts?page=9#9 for some valuable background.
This man, born in Kenya, is intent on totally destroying this nation.
“Well, it seems that if any market is down Obama and his gang are going to stomp it the rest of the way.”
That’s exactly the plan. It was with Clinton as well, but he didn’t have the “crisis economy” to act as brazenly as Obama can because of the “crisis economy” Clinton helped fabricate.
A Nation with a broken economy is a broken Nation susceptible to crisis management by about anyone with a line of BS.
All I see and hear anymore is BS. Up is down, and down is up.
The way I understand this provision is the reduction on the mortgage interest is for those homeowners making over $250,000. Those people are not likely to be a foreclosure risk like the buy-vs-rent clients who were “convinced” to buy.
This is just another way to punish the folks who are doing well and pay higher taxes anyway.
These socialist scum plan to raise taxes astronomically, first on “the rich” and then on everybody else (First they came for the Rich, but I was not Rich so I did not speak out...).
I’m more than ever convinced that there will be a Call To Arms in my lifetime.
I’ll leave him alone if he’ll leave me alone, but that’s highly unlikely!
Obama wants to reduce the mortgage and eliminate the charitable deduction. The man is vermin.
How about eliminate the stupid bias in favor of socialism?
Socialism, not a “bias in favor of buying” caused the mortgage problem.
Correction: “Him” not him
I advocate making either home rental payments deductible (not 100%, but along a similar percentage glidepath to what mortgagees pay over time), eliminate the mortgage deduction entirely. Anything else is a perverse distortion of the markets.
And in order for it to pay off, you have to have a lot of other deductions.
The deduction does not benefit the buyer, as is often claimed. If it ever did, the benefit was short-lived.
No, it’s there for the benefit of the seller.
>> “This proposed change in the Mortgage Interest Deduction will result in further erosion of home prices and home values.”
This sentence illustrates a basic lack of understanding on the part of most real estate “professionals,” not to mention buyers and sellers: The conflation of the terms “price,” and “value.” The “value” of a real property (or anything else) lies in its UTILITY: what it can be USED to accomplish. For a house, the value lies in its capacity to be used for basic shelter. This value is usually approximated by the rent which could be gotten in the current rental market.
The “price,” on the other hand, is often substantially divergent (from the “value”) especially on high end properties. This difference is a reflection of the many factors which modify the thought processes of buyers and sellers. Factors like LOCATION, view, aesthetics, impatience, nostalgia, and the availability of money.
>> “If this proposal is enacted it will set of a new round of price depreciation...”
Well, probably, at least on the high end properties these folks want/own. But, also probably a limited effect, since $Million houses are already priced nowhere near their utility value, and it is only a LIMITED reduction. On the other hand, more reasonably priced houses are typically priced closer to their value. These are also often purchased by people right on the edge of their ability to pay. Maybe both spouses working, and a high percentage of income to housing payments.
In these cases, the interest deduction is a requisite for them to be able to handle the payments. If this deduction is taken away, (or if one loses his/her job) they will NOT be able to go on. Even if they are able to sell, they will not be able to buy another house, unless at a much lower price. The market would collapse.
The harsh reality is that we have been experiencing a “bubble.” High rate of employment, easy money, and idiotic government programs, (among other forces) has driven prices absurdly out of line with “value.” “Bubbles” ALWAYS collapse. ALWAYS. The best one can hope for is that it will slowly deflate with a gradual removal of the excessive “pressures.” It is insanity to imagine that any bubble will last forever, and foolishness to attempt to “pump it back up,” once it starts to deflate.
Unfortunately, that is what Obama is doing.
DG
I’d be in favor of eliminating all deductions — if witholding was also eliminated and elections were held on April 16th.
If these “rich” people who make over $250,000 a year have any money left they need to go take the money out and pay off their mortgages.
You need to ask why the brokers were pushing mortgages to the unqualified.
I am a member of the NAR and a Real Estate Broker...Many of these Mortgage Brokers preyed on immigrants of their own country of origin and didn’t care...it made money for them...Many of us saw this whole thing coming.
OK so the African dictator is elected by the American Idol viewers and then everyone is surprised when he acts like an African dictator!
Time for a commercial! NOT....
We allz gon be livin in huts directly.
If it be good enuff for my bro....
Then go and slit your wrists.
Well, this is where even I draw the line. Interest on hovel mortgages should be deductible!
A family which earns $250,000 and owns a $450,000 house with 10% down and a 7% fixed-rate mortgage cannot deduct all mortgage interest.
But a their next door neighbor, who earns $100,000 and owns a $500,000 house with zero down and a 9% interest only loan gets to deduct all mortgage interest.
Who is John Galt?
They were convinced by artificially low interest rates and the hope that they could make $50,000 in 6 months.
This is insane.
Every single time the federal government changes the real estate tax laws the housing market tanks.
Eliminating the mortgage deduction will destroy the market.
Obama is destroying our economy and our country.
The definition of “rich” will vary with this administration/dictatorship.
I agree, though, that people should pay off their mortgages.
What’s so magical about $250,000? Back around 1975, Harper’s or Atlantic Monthly had an article about WHO was rich. The author decided that $100,000 a year income was “rich.” One would have to earn more than $400,000 a year to equal that today. My guess is that individuals/households who earn betweeen $250,000 and $500,000 a year will contribute a very small fraction that is needed to fund this monstrous budget, that it will hit mainly professionals and small business owners hard because it will erode away their margin enough to put them into distress. Their whole business model will be useless. But Obama is clueless about such hard facts since hhis earning have come from celebrity, like some actor who has struck it rich. He has far more in common with George Clooney than any businessman.
“I’m more than ever convinced that there will be a Call To Arms in my lifetime.”
Amazing to think that 20 years ago, when Reagan left office, that kind of thought was unimaginable. Now it almost seems inevitable.
But at the same time, don’t underestimate the motive force of the Community Reinvestment Act, as turbocharged starting in the Clinton years. Please review the documentation
I agree, I know exactly what happened...I worked 30 years in the Financial Markets at the Chiago Board of Trade before becoming a Real Esate Broker...What motivates the markets is $$$...whenever you have the Fed’s coming in and telling a business how to run things, then they will FIND a way to get some of their money back. I have worked with these people that were given loans they should never have received, but they felt that they were intitled to the “American Dream” and under “Licensing Law” we can not say anything..Could mean “Punitive Damages” if I offer any opinion. I guess that makes me a Sheeple. Not proud of it.
You did the best you could. Thanks for sharing your experience.
So when are the churches and charities going to push back. This may further depress the housing prices and market of course, but it will severely cripple the religious charities and outreach - not to mention United Way, Red Cross, American Cancer Society, and all the other big charity agencies. Plenty of rich people make those places go with their charitable gifts. This is one of the most ignorant moves I have ever seen out of government in my life. And what about universities, hospitals, schools who benefit from large charitable donations? The whole economic society is going to come unravelled before this bozo is out.
that is his plan
Right or wrong people buy houses based on among other things the interest deduction. That is fact. Take it away and we will see even more Short Sales and Forclosures. The top end will fall too. Then the next crash we will see is in the commercial market. Lots of empty big boxes out there and more to come. It is not and will not be pretty out there for a long while.
Absolutely! If you tell a mortgage broker it is ok to make and 80 20 loan or a ninga loan or an inflated loan because they changed the ratios they will do it. It is legal. I am an appraiser. Saw it coming too. I am one of the people who did NOT put the car in the garage or the furniture in the living room when it came to value.
>> “Right or wrong people buy houses based on among other things the interest deduction.”
Agreed — to all.
>> “that is his plan”
Every day, this whole situation looks more like it was all INTENTIONAL. And the intent is becoming more obvious: destroy the American economy/capitalism.
DG
“(First they came for the Rich, but I was not Rich so I did not speak out...).”
Actually, in today’s culture it should read, “First they came for the rich, but I was not rich so I celebrated.”
I have been a business owner for forty years and all this makes me sick. I have spent a lifetime trying to achieve my personal goals with my own blood, sweat and tears.. I have spent countless 80hr. weeks giving 100% of my time and effort to my business and those I employ. For anyone to step in and turn my personal dream upside down is just ludicrous. I paid appx. $95,000 in income tax last year and yes when I filed my taxes I’ll get a $6,800. refund because of my mortgage interest which means I still paid $88,600. in taxes and another $12,000 in property taxes. I contribute dearly to our society and yet this insane new president wants to strip that away, and give it to those who prefer not to work so hard. Where is the logic in this? If this passes then I as a business owner will cut back on providing health care benefits to my employees and their families. Plus I’ll eliminate a few jobs along the way. I am a classic example of the enemy of the poor because they think my wealth should be rightfully theirs and I pity them and our country’s future.
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