The House of Representatives has passed legislation that would tax the bonuses of senior AIG representatives at a 90% rate. In one sense that approach is a good first step forward, and serves as a good example for how to approach similar abuses in other financial services firms. The step forward is that it is aimed at individuals rather than the companies. Companies don't make decisions, their senior executives do. Fine a company and you're really only punishing the stockholders, who in many cases are consumers who own the company's stock in their IRs, 401Ks or stock market accounts.
The mistake is that the House approach uses a shotgun where a scalpel is needed, it leaves the real culprits in place to wreak future havoc to our pocketbooks and the economy, and it micromanages personnel policies.
Homeowners have been holding yard sales and bartering goods and services for a long, long time. It's been a great way to bring in some extra money and get rid of unused stuff. Today, a lot of the yard sales and bartering are being conducted online, using outlets such as Craigslist.com and Ebay.com. This has been an especially important means of income to homeowners who are facing tough economic times and looming forclosures. California-based http://swapthing.com offers 3.4 million+ items and services for barter or swap.
A looming threat to these trends are efforts by some state and local governments to require consumers to collect sales taxes on these transactions, and send them to the appropriate state and local government. This could be a real headache for consumers, because there are some 7,000 state and local taxing authorities, and each one taxes different products and services at different rates. State and local governments should either tighten their belts as many of the rest of us has had to do, and/or look to other sources of additional tax revenues besides untapped consumer Internet transactions.
President Obama announced the "Making Home Affordable" program on Wednesday, March 4, 2009. It will contribute to the housing recovery, but won't be a panacea because of its numerous restrictions. According to an analysis by Zillow, a real estate website, about 25% of homeowners nationwide will be eligible. Any step forward is a good step, so we should welcome it and also understand that more steps will likely be needed.
The program has two parts. The Home Affordable Refinance program will enable those who have an existing mortgage owned by Fannie Mae or Freddie Mac to refinance at lower rates. The Home Affordable Modification program provides incentives to lenders to help at-risk homeowners avoid foreclosure by reducing monthly mortgage payments. Homeowners can go to FinancialStability.gov to find out if they are eligible, and monitor the site to keep up with details as they become available.
Other parts of the housing crisis solution, such as federal bankruptcy reform legislation, are also in process. We are also optimistic that the Administration and Congress will be willing to take additional steps if they are needed.
We must find a way to reduce the inventory of unsold new and foreclosed homes before the housing market will stabilize. A 10% home buyers tax credit to offset home buyers very real fear of further price declines is the most logical way to approach the challenge. The economic stimulus bill included such a provision, limiting the credit to a maximum of $8,000 for first time buyers only.
Unfortunately, limiting the credit to first time buyers and to $8,000 is too restrictive to accomplish the task. It's modification could be done at a relatively modest cost, and should be considered as part of President Obama's budget plan.
Welcome to the Homeowners Blog. We created this blog as a place where the average homeowner can share ideas and experiences about the major challenges relating to home ownership. Those obviously include the housing crisis/mortgage meltdown we now face. They also include other challenges related to buying, selling, remodeling, financing, or building a home, as well as other major economic challenges facing many homeowners, like health care costs. In addition, we also plan to talk about the major policy issues that impact homeowners and home ownership, also from the perspective of the average homeowner.
In this politically correct world you might wonder what we mean by "average" homeowner. We use the term strictly in the politically correct demographic sense. The "average" homeowner isn't rich, nor is he/she poor. If you exclude the richest 10% and the poorest 10% of all homeowners, the 80% remaining would be "average" in our opinion. Similarly, if you exclude the 10% of the homeowners whose political philosophy is furthest to the right, and the 10% of the homeowners whose political philosophy is furthest to the left, you would be left with the 80% of homeowners whose political philosophy spans the range most political opinion.
In short, we're a bunch of flaming moderates who are seeking practical solutions to the real life economic and policy challenges we face in our daily lives. If this description sounds like you, we invite you to join us and participate in this blog.
Bruce Hahn
President
American Homeowners Grassroots Alliance and the American Homeowners Foundation
The American Homeowners Grassroots
Alliance is a nonpartisan consumer advocacy organization dedicated to assisting
homeowners understand significant policy issues affecting homeowners and
homeownership, and helping them make their voices heard by state and federal
officials.
The American Homeowners Foundation is an
educational and research foundation providing information and tools to help
consumers make wiser decisions when they buy, sell, remodel, finance or invest
in homes.
