The Homeowner Blogtag:www.thehomeownerblog.com,2009-02-10:/12010-03-09T15:39:43ZMovable Type 4.25Don't Tax Internet Purchasestag:www.thehomeownerblog.com,2010://1.512010-03-09T15:37:31Z2010-03-09T15:39:43ZColorado last week joined a growing list of states that are expanding Internet sales tax collection. North Carolina and Rhode Island last year passed similar laws. We sympathize with the need of many states to raise money in this troubled...Blogger Sales tax collection on Internet purchases should not be expanded. It should be repealed. More and more consumers have their yard sales on Amazon, EBay, and Craig's list. If we apply sales tax to virtual garage sales, the next logical step will be to require that consumers collect sales taxes on real garage sales. Other consumers, including those pinched by the economy and low income consumers, are saving substantial amounts of money by purchasing second hand and heavily discounted items on the Internet, so Internet sales taxes discriminates against lower income consumers..
E-commerce helps the environment in several ways. Odd items (and sometimes really, really odd items) that might otherwise end up in a landfill, find a home with a consumer in another state who always wanted one of those. E-commerce also saves a lot of gas and wear and tear on our transportation infrastructure, and reduces traffic jams. Instead of individually driving their vehicles to the mall, the UPS or FedEx trucks, or your postal carrier can drop off your purchases, and they go down your street every day anyway.
An e-commerce state sales tax exemption would be consistent with other sales tax exemptions for worthy purposes (back to school sales tax holidays, sales tax exemptions on prescription drugs, etc.). State legislators should consider the wishes of their constituents and repeal sales tax collections on Internet purchases. They should pursue alternative sources of revenue more palatable to their constituents if the state needs additional funds. ]]>
How to Fix the Financial Systemtag:www.thehomeownerblog.com,2010://1.502010-03-05T12:06:05Z2010-03-05T12:11:20Z Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} Normal...BloggerCongress is considering financial-system-overhaul legislation. Right now there are no laws in to prevent another financial meltdown. It's clear that major reform is necessary. The problems are complex, and there are many complicated proposals out there. Sometimes someone comes up with a fairly simple solution to a complicated problem. One of them came from the famous investor and "Oracle of Omaha" Warren Buffet. His recent suggestion: "In my view a board of directors of a huge financial institution is derelict if it does not insist that its CEO bear full responsibility for risk control," Buffett wrote. "If he's incapable of handling that job, he should look for other employment. And if he fails at it -- with the government thereupon required to step in with funds or guarantees -- the financial consequences for him and his board should be severe."
Buffet's concept can be formalized in federal legislation by requiring that the CEO and any other senior staff or board members who had been active proponents of the company's irresponsible policies be asked to seek new career opportunities elsewhere as a precondition for future federal bailouts of companies that substantially contributed to the financial crisis. This policy should provide for an orderly executive transition, and it should not apply to any employees or board members who weren't involved in the decision making process regarding these policies, or who only provided staff support. In most of the offending companies, you would be talking about only a small handful of employees, and in the last crisis probably only in the low hundreds.
Creating a career hazard for those who created the current moral hazard in the financial services sector would discourage their successors and potential imitators from such choices in the future.
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Regardless Of The Health-Care Summit Outcome, The Political Math Is Pretty Easytag:www.thehomeownerblog.com,2010://1.492010-02-26T16:11:57Z2010-02-26T16:14:58ZThe political math on this issue is really very simple. The public supports a health care bill, but believes the current Democratic alternatives are too expensive and the current Republican alternatives are too stingy. The public wins if both sides...Blogger Democrats will certainly lose a lot of seats this fall if they game the reconciliation process in order to pass a bill that the public perceives is too expensive. Republicans will hammer them mercilessly on both the cost of the measure and the unfairness of the process. Moderates will desert the Democratic party in droves, whether the healthcare bill passes or not. Conversely the Republicans risk losing their current polling advantage on this issue if they refuse to meet the Democrats in the middle and the Democrats then take the more moderate approach in order to pass a health care bill without gaming the process. The risk for Republicans is that the Democrats might voluntarily reduce the cost and coverage of their bill as much as it takes to get 60 votes in the Senate, which would require the vote of one moderate Republican and make it a "bipartisan bill" in Washington parlance. The bill would only have to be affordable and just a little better that the Republican alternatives to achieve wide public support, and that is not a big challenge. If the Democrats took the latter approach and succeeded, the current Republican polling advantage on this issue would evaporate.
Of course the latter approach also assumes that the liberal House Democrats would support such a Senate bill. Betting against such an outcome could be a smart move from a Republican perspective. The resulting bill could easily fail because of Democratic intraparty fights, and the outcome could be a disaster for the Democrats in November. Democrats would deserve the punishment because of their failure to respond to the need for moderate support.
The risk for Republicans of betting on Democratic self destruction is that the Republicans then have no control over the outcome. If the Democrats do manage to pass a bill that is broadly perceived as both affordable and better than the Republicans are offering, they will recapture public support on this issue. The polling advantage could turn against the Republicans if the public also perceives the failure to reach a compromise in the current discussions was more because of Republican inflexibility than Democratic inflexibility.
As the Olympic games in Vancouver wind down, the health care policy game finals are starting in Washington. Step right up and place your bets, folks. The final score will be announced this November.
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Some Proposed Administration Tax Increases are Needed; Others are Bad Policytag:www.thehomeownerblog.com,2010://1.482010-02-16T15:12:25Z2010-02-16T15:13:26ZThe Obama administration has proposed a number of new tax increases. The President deserves credit for recognizing that the ballooning federal deficit, resulting both directly and indirectly from the subprime mortgage crisis that preceded his election, must be addressed. It...Blogger Allowing the Bush tax cuts for high income individuals (over $250,000 per couple) makes more sense. At that income level those couples currently pay about 20% of their income in federal income taxes after deductions. Not that taxing people is a desirable goal, but the average total federal income tax currently paid by U.S. couples in that bracket is among the lowest in developed countries. While the wealthy owe President Bush their thanks for cutting their taxes by much more than they were cut for an average taxpayer, the expiration of the Bush tax cuts will only raise the effective tax rate on the wealthy to 22%. This should not cause an undue hardship on individuals at that income level, and they will still pay among the lowest federal income taxes compared to their peers in other countries. The new tax rates will also help home values and encourage home ownership in one respect, because the mortgage interest deduction will be worth more to high income individuals and couples at the higher tax rates.
While the expiration of the Bush tax cuts will raise the value of mortgage interest and real estate tax deductions for high income individuals, the Administration's proposal to cap those deductions for those high income individuals and couples is not a smart idea timing wise in the current weak real estate market. It is also unfair to those who had bought their home with the reasonable historical expectation that the mortgage interest and tax deduction would remain sacrosanct. Better revenue generation alternatives are to raise the capital gains rate on high income individuals after first giving them a reasonable time to dispose of fairly liquid capital assets, such as stocks and bonds. However, such capital gain tax increases should not be applied to residential real estate investments, whose values have dropped substantially in the current market, for the aforementioned reasons.
Home equity has historically been the single largest form of savings for most homeowners. With home values down dramatically, their savings rates at near all time lows, and their stock market and retirement plan investments devastated by irresponsible financial services sector practices, this is not the time to adopt any tax policies that would discourage home ownership.
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Is More Job Stimulus Legislation Needed?tag:www.thehomeownerblog.com,2010://1.472010-02-06T18:56:57Z2010-02-06T18:58:47ZMore job stimulus legislation is needed to help displaced workers and perhaps more importantly, to prevent the recession from getting worse. How it is structured is less important than other priorities. Most government job stimulus programs are inherently inefficient, no...Blogger The government bailouts by both Presidents were necessary to prevent another Depression, and job stimulus programs are necessary until we get beyond the risk of a worsening recession. At this point the more important debate should not be about which job stimulus program will work better, but over which financial services reform legislation will be the most effective in preventing senior financial services executives from taking further advantage of the current moral hazard. Once we've precluded the kinds of irresponsible decisions that caused the current economic crisis in the future, we will have prevented the need for both inefficient future financial services firm bailouts and job creation programs.
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A New World Financial Ordertag:www.thehomeownerblog.com,2010://1.462010-02-01T15:34:25Z2010-02-01T15:35:22ZThe world's foremost annual international gathering of government and financial services leaders finished a five-day meeting in Switzerland on January 30. There was almost universal agreement among world political leaders attending the World Economic Forum that the root cause of...Blogger Just as happened in the last 100 international financial crises, financial services firms have managed to socialize the losses by passing them on to taxpayers while retaining their profits, according to the World Bank. This moral hazard must be stopped through unified international regulation, and financial services sector leaders must relearn that the purpose for their sectors' existence is to efficiently provide credit for the real world. In our increasingly integrated world economy. New regulations that will force senior financial services executives who caused the problem to recognize their fiduciary responsibility to their stockholders and moral and ethical responsibility to society should be coordinated internationally to provide consistency. ]]>
Homeowners Hail Repeal of Law Prohibiting Real Estate Commission Rebatestag:www.thehomeownerblog.com,2010://1.452010-01-20T21:00:01Z2010-01-20T21:02:05ZThe American Homeowners Grassroots Alliance hailed the repeal of New Jersey's state law prohibiting real estate brokers and agents from providing commission rebates to home buyers. State real estate associations have also managed to pass similar laws in other states...Blogger The legislation will allow New Jersey real estate consumers to receive real estate commission rebates from real estate brokers and/or agents. As mortgage lending standards have tightened, leading to higher down payment requirements, those rebates have become increasingly important in facilitating home sales. Commission rebates, which can amount to as much as 2% of a home's selling price, may enable a home sale that would otherwise not be possible, especially for low and moderate income buyers. As a result, real estate commission rebates are becoming increasingly popular in states where real estate trade groups haven't passed similar protectionist legislation.
"We believe that the repeal of this bill will increase the pool of buyers and help to slow future declines in New Jersey home values, " said AHGA President Bruce Hahn. It's particularly helpful in states like New Jersey where the economy is tough and many buyers have difficulty scraping up a down payment. "We're delighted at this positive step, and hope it signals a trend towards removing similar barriers to competition in other states," Hahn added.
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Homeowners to FCC: Continue to Preserve the Open Internettag:www.thehomeownerblog.com,2010://1.442010-01-13T18:29:25Z2010-01-13T18:30:34ZThe importance of an open Internet to economic opportunities and the wellbeing of homeowners and other consumers grows every day. It is important for commerce, education, healthcare, and provides many other opportunities, such as the ability to work from home....Blogger The way in which we access the Internet is also changing. The four principles of network neutrality, which guide the FCC's efforts to preserve an open Internet, were written at a time when most of us accessed the Internet from our homes or offices. Today mobile access is becoming much more important, and the FCC is modifying its rules to address this new environment. The American Homeowners Grassroots Alliance supports that exercise. In our January 14 FCC submission we thanked the commission for their commendable performance and urged a similar approach to the new environment and the issues that arise from it.
We also urged the FCC to collaborate with the U.S. Department of Justice and the Federal Trade Commission to address some serious antitrust challenges that are outside of the scope of the current inquiry. The nation's national online network of homes for sale has faced repeated efforts to deny home sellers the services of discount real estate brokers who provide sales assistance at a fraction of the typical 5-6% real estate commission. Currently about 90% of home buyers search for homes on that consumer-facing online network, so it's imperative for home sellers to get exposure on that network. If they are denied access to that network because they prefer to use a discount real estate broker, an owner of a $200,000 home might be forced to pay a $10,000 - 12,000 real estate commission instead of a few hundred dollars a discount broker would charge.
The Federal Trade Commission has taken the lead on addressing this challenge and has initiated efforts to stop the efforts of numerous local Multiple Listing Services (MLSs) across the country who have sought to limit home sellers access to their networks through discount brokerage services. The FTC has been successful in the ongoing series of cases, although one MLS is now appealing the initial FTC finding against it.
Federal competition laws or regulations must be strengthened in order to more effectively discourage dominant private Internet commerce networks and search firms from engaging in such actions. In our comments AHGA urged the FCC to support such changes.
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New Rules Will Improve Mortgage Finance Disclosurestag:www.thehomeownerblog.com,2009://1.432009-12-31T18:46:11Z2009-12-31T18:48:09ZThe new federal government home mortgage finance rules requiring better disclosures to consumers beginning 1/1/2010 are a step forward, but more improvement is needed. They were watered down over the many years it has taken to develop the current rules....Blogger I learned of one of the remaining problem areas when I went to settlement on the refinancing of the mortgage on our home this past Wednesday. Our new monthly mortgage payments turned out to be about $200 per month more than the estimated amount in our Good Faith Estimate. The difference was that the estimated property tax and hazard insurance figures in our GFE were $200 less than the actual amount we have been paying. We provided our current real estate taxes and property insurance numbers to our mortgage broker before he gave us the GFE. We assumed he would use those numbers in his estimate and therefor didn't bother to check them. As a result the low GFE monthly payment estimate he gave us made us smile, and certainly reinforced our decision to go forward with the refi.
One thing the new rules do not address is problems like this. Curious as to whether there is a tendency for mortgage brokers to low ball taxes and insurance to make their GFE new mortgage payment numbers look better than they actually will be, I asked the settlement service executive what share of the refis that come to her with GFEs in which the mortgage brokers used very low and obviously incorrect real estate tax and insurance amounts rather than the homeowners current actual payments. "Most of them", she told me. This and a number of other RESPA problems need to be addressed, but at least we're making a start.
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Why Congress Should Allow Drug Re-importation tag:www.thehomeownerblog.com,2009://1.422009-12-20T16:55:47Z2009-12-20T16:57:42ZA pending amendment to the Senate healthcare bill would allow drug re-importation from other countries, saving consumers and the government an enormous amount of money. The pharmaceutical industry has argued that drug re-importation would gut their profits and medical research...Blogger If the pharmaceutical industry also cut back on medical research as a result of the re-importation proposal, that can easily be addressed as well. We could offset any decline in corporate primary medical research resulting from the re-importation proposal by reinvesting a small part of the considerable resulting government savings in expanded government sponsored medical research. Taxpayers could recover much of those additional costs as well, simply by requiring pharmaceutical companies to start reimbursing the government for the share of publicly owned intellectual property reflected in the cost of the proprietary drugs enabled by that research. We should have done that a long time ago anyway.
Pharmaceutical companies have argued that other governments who place caps on the amount they will pay for prescription drugs are also acting foolishly, because it is undercutting their profits and medical research investments. We disagree with that as well . Those governments are only practicing the golden rule (he with the gold rules). Foreign governments can't force pharmaceutical industry to sell them their products, so it is obviously still profitable for the pharmaceutical companies to do so. ]]>
A New Stimulus Programtag:www.thehomeownerblog.com,2009://1.412009-12-09T19:55:38Z2009-12-09T19:56:35ZPresident Obama outlined new incentives to ease the unemployment and strengthen the economy on December 8. Among the components are a "cash for caulkers" proposal that would provide tax incentives for home weatherization. With only the slightest progress towards economic...Blogger Congress won't start seriously looking at the President's recommendations until early next year. That's also appropriate, because we'll then have a better idea of how the funds from the previous stimulus package that are only now beginning to impact the marketplace are working, and Congress will be better able to gauge how to balance deficit reduction goals with the need for more stimulus as it exists at that time. Best news of all would be that the current stimulus program is beginning to significantly reduce unemployment by then, and much more of the money could be used for deficit reduction. All in all, there was only upside in the President's announcement. ]]>
Fannie Will Rent to Owners in Foreclosuretag:www.thehomeownerblog.com,2009://1.402009-11-11T18:30:17Z2009-11-11T18:32:00ZFannie Mae has announced a new "Deed for Lease" program to allow homeowners facing foreclosure to remain in their homes and rent them for up to a year. Typical rents today are far less than the mortgage payments on the...Blogger The Deed for Lease program is an outstanding idea. It allows the government to generate fair market rent revenue from foreclosed properties it would lose money on if sold in today's market. It helps many homeowners who are innocent victims of mortgage fraud or job losses/cutbacks as a result of a mortgage lender-induced recession. Home values continue to drop, and this program, like the home buyers tax credit extension just passed by Congress, will help prevent home values from tanking even more and possibly setting off another economic meltdown.
Many of these homeowners will at some point find another job or go back to full work weeks . They can then afford to buy their home back directly from Fannie, which will also save taxpayers the 6% real estate commission Fannie would have to pay if it sold through traditional channels.
Mortgage lenders should consider a similar program. Growing numbers of underwater homeowners who are innocent victims of job losses/cutbacks are simply moving out and mailing the house keys back to the mortgage lenders. Consumers who own financial services firms through their IRAs, 401Ks, pension plans or investment portfolios are being poorly served by financial services firm executives who do not take steps similar to Fannie's to protect their shareholders' assets. They hurt stockholders and the economy previously by lending the stockholders' money to home buyers without documenting their income or assets, or otherwise ignoring sound underwriting practices. It is time for the mortgage lenders to step up to the plate and help undo the mess they created.
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Time for Targeted Health Insurance Legislation?tag:www.thehomeownerblog.com,2009://1.392009-10-16T17:05:10Z2009-10-16T17:06:29ZThe health insurance industry got a sweet deal in return for their agreement to support health care reform legislation in this Congress. They will get millions of new customers, and were able to take off the table in this Congress...Blogger Considering the many other provisions Congress and the Administration could have included in the original package, the Senate Finance healthcare reform package is still a bargain for healthcare insurers. For that reason it is surprising that the insurers have broken the agreement by running the Medicare ads last weekend. On the plus side, the insurers' abrogation of their commitment to support healthcare reform legislation does create a wonderful new opportunity for the introduction of a supplementary healthcare insurance bill to create some additional healthcare insurance cost savings.
We suggest that Congress introduce another healthcare bill that would complement and follow the one now moving through Congress. That bill would allow healthcare insurers to compete across all state lines, direct a federal study of additional ways to increase competition/reduce costs in the health insurance sector, and (just as a backup), also prohibit preexisting healthcare insurance exclusions in the future. No doubt creative legislators and some of the folks at the White House could come up with additional provisions to reduce health insurance costs. They should title the legislation the "American Healthcare Insurer Payback" bill (AHIP).
This new package would also give the health insurers some additional legislation to focus their 2009 advertising dollars (and our insurance premiums) on, and the diversion would hopefully make it more likely for an amalgamation of currently pending healthcare bills to eventually pass. Since deals like the one made with AHIP are usually good only through one Congress anyway, this new complementary package would also give Congress an early start on working out the bugs and refining the measure so that it will be shovel ready for early serious consideration in the next Congress.
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Mortgage Loan Modifications Going Slowtag:www.thehomeownerblog.com,2009://1.382009-10-12T15:42:32Z2009-10-12T15:45:09ZA Congressional Oversight Panel recently concluded that the Obama administration's Home Affordable Modification Program (HAMP) is not going to be able to address many troubled mortgages. The program was not designed to address foreclosures caused by unemployment, and many borrowers...Blogger The Panel missed a possible fourth fundamental weaknesses in the HAMP program - fraud. A government witness at a recent House Financial Services Committee hearing testified that some mortgage modifications scored as HAMP loan mods were really normal refinancings of healthy mortgages. The lenders motivation for doing so would be to get the government to pay for the administrative costs (they are subsidized by HAMP) and earn points with the Obama administration for "doing the right thing". Both Congress and the Congressional Oversight Panel should investigate this allegation because it would have a significant impact on the actual success of the program.
The lack of support for HAMP by the lender community suggests that the best alternative is to let independent third parties decide whether it is in the interest of the lenders' stockholders to rework troubled mortgages. This is a traditional and appropriate job for bankruptcy judges, and Congress should enact bankruptcy reform legislation to empower them to do so. ]]>
State Leaders are Missing the Boat on Transportationtag:www.thehomeownerblog.com,2009://1.372009-10-07T17:27:03Z2009-10-07T17:28:32ZI listened to an interview with the Democratic and Republican candidates for Governor of Virginia last night. One of the hot topics in Virginia (and many other states) is transportation infrastructure. All states have been hurt by the recession, and...Blogger Both candidates are missing a great opportunity to address Virginia's transportation gridlock. Both are currently focused entirely on how to pay for more road and transit projects rather than on how to reduce the need for those projects. The biggest problem is peak capacity. Traffic on major roads in the Washington DC area (rt.66, 495, 95, etc.) isn't bad during the middle of most weekdays. During rush hour those roads turn into parking lots. Many of Virginia's proposed transportation projects are mainly about widening the parking lots in urban/suburban areas. There is a better solution to spending all that money on widening those parking lots in Virginia and many other states, which in many cases would be creating capacity that is unneeded except during rush hours.
On August 3, 2,286 federal and private sector employees as well as 1,765 state employees participated in Telework Day in Virginia. Those teleworkers saved approximately $113,000, avoided driving 140,000 miles and removed 75.89 tons of pollutants from the air on one single day. If all eligible Virginia employees teleworked one day per week for a year, teleworkers in the Commonwealth would collectively avoid driving 602 million miles, remove 360,800 tons of pollutants from the air, and save $807 million in commuting costs. Over the course of a year this would equal a $1,822 annual raise for every teleworker in Virginia, and save 46 hours a year in commuting. A survey of Virginia's teleworkers also showed that 69 percent felt they accomplished more than a typical day at the office and 91 percent said that they would be more likely to telework again as a result of their experience.
Similar experiments in other states have also showed similar favorable results. The federal government has adopted policies to encourage telecommuting. Today an estimated 7% of federal workers telecommute. If we reduced the average number of daily commuters in Virginia and other state cities and suburbs by 20% (by letting them work at home one day a week), rush hour gridlock would probably end or be substantially reduced in most areas. The pressure on the state transportation infrastructure would thus also be greatly reduced. We need to move from Governor Kaine's worthy experiment to concrete permanent state teleworking policies to reduce rush hour traffic. The need for transportation infrastructure investments in Virginia can be substantially reduced by enacting permanent policies and incentives such as tax credits for homeowners and their employers to encourage teleworking. Both candidates should redirect some of Virginia's transportation budget to directives and incentives that would enable more Virginians to work from their homes, which in turn will reduce the need for many of the transportation infrastructure investments.