http://www.thehomeownerblog.com/ en Copyright 2010 Fri, 16 Jul 2010 09:35:22 -0500 http://www.sixapart.com/movabletype/ http://www.rssboard.org/rss-specification
The outcome clearly reaffirms the analogy of the Congressional legislative process to the making of sausage. In the view of many, the legislation does not address all the problem areas. In the view of others much of it is unnecessary and/or harmful. There is probably some truth in both views. Clearly the legislation's effectiveness in many areas will depend on the process of developing the numerous implementing regulations, where the outcomes in each case can range from strong and effective new rules to unintended consequences, and/or a waste of everyone's time.

Based on the history of major reforms, we will probably see some of all three. The legislation will also be revisited many times both to address loopholes and overkill. Both lie in the eyes of the beholders, and will certainly be influenced public opinion regarding financial services sector practices after the regulations have been implemented. Nevertheless there is today less likelihood of a future financial services meltdown than there was yesterday. For that we should be grateful, and thank the sausage makers for all the time and effort they put into the process.

]]> http://www.thehomeownerblog.com/2010/07/our-savings-are-a-little-safer-today.php http://www.thehomeownerblog.com/2010/07/our-savings-are-a-little-safer-today.php FDIC Financial Fri, 16 Jul 2010 09:35:22 -0500
Nevertheless, the Federal Housing Finance Agency has a point. Sometimes hoped-for energy savings don't fully materialize. Unfortunately some energy saving investments, such as solar panels, return far less in energy savings per dollar of investment compared to other alternatives, such as adding insulation to older homes that have little or none. It is understandable that the FHFA would not want to subrogate its mortgages to other debts, when many of those energy saving alternatives will leave the homeowner with less money for their mortgage after they have paid their PACE special tax assessment.

Nevertheless the PACE program is good for homeowners, the environment and the country. Over time, reduced energy demand could help reduce energy costs. We hope that Fannie and Freddie will work with the DOE and the White House to find a workable compromise that would minimize the impact on PACE programs that rely on the first-lien status. One alternative might be to tie the PACE program to actual energy savings in the home. For example, if the energy efficiency improvements actually save the homeowner $50/ month as documented by pre and post improvement records, the portion of the pace loan financed by that amount of savings could be made senior to the mortgage.  From Fannie and Freddie's standpoint this would make the program neutral as far as increasing the risk of mortgage default. Many types of cost efficient home energy improvements would be totally covered by that rule. Others, such as solar panels, might not be today, but the homeowners would still benefit from federal tax credits for them (and in some cases state and/or local tax incentives as well). Hopefully, with President Obama's just-announced Department of Energy awards of nearly $2 billion in conditional commitments from the Recovery Act to two solar companies, the cost effectiveness of solar panels will also come down as the plants produce millions of state of the art solar panels each year.  

]]> http://www.thehomeownerblog.com/2010/07/a-disappointing-development.php http://www.thehomeownerblog.com/2010/07/a-disappointing-development.php Energy Financial Wed, 07 Jul 2010 15:08:24 -0500
According to FTC Chairman Jon Leibowitz, 200,000 homeowners who defaulted on mortgages serviced by Countrywide may receive refunds under the settlement. This was an appropriate settlement, and should discourage similar gouging by mortgage lenders and servicers in the future. Eligible homeowners will receive instructions on how to apply for the refunds in coming months. More information is available at http://www.ftc.gov/countrywide.

]]> http://www.thehomeownerblog.com/2010/06/thousands-of-homeowners-to-get-millions-in-refunds.php http://www.thehomeownerblog.com/2010/06/thousands-of-homeowners-to-get-millions-in-refunds.php FTC Tue, 08 Jun 2010 12:23:49 -0500
A fiduciary duty requirement is not that onerous. Real estate brokers owe a fiduciary duty toward their toward their clients, as do attorneys and many other professionals. It's not that complicated or hard to do, nor have fiduciary duty obligations resulted in excessive numbers of lawsuits or other serious problems in other sectors.

If a fiduciary duty standard were created, we doubt than many investment advisers would have any difficulty in adhering to that standard. The few that didn't would deserve the punishment that they would receive, and the existence of the standard combined with an occasional enforcement when necessary would greatly improve the image of the profession.

It's time for investment advisors who care about their clients and financial services executives who care about their reputation to join consumers on this issue and help get rid of investment advisors who don't. ]]> http://www.thehomeownerblog.com/2010/05/holding-financial-advisors-to-a-higher-standard.php http://www.thehomeownerblog.com/2010/05/holding-financial-advisors-to-a-higher-standard.php Financial Real Estate Mon, 17 May 2010 14:35:16 -0500
We believe that there must be a mutually acceptable middle ground somewhere in this debate. The telecoms all say they continue to support network neutrality, but are concerned that some future FCC may not adhere to its light regulatory approach. The companies claim that the Internet were to be heavily regulated, it could undermine continued private investment that is critical to achieve universal broadband availability. This is a credible argument - infrastructure  investment in this sector continues to be impressive despite middling profit levels, and continued federal budget realities are such that universal broadband availability will not be achieved anytime soon without that investment. With these factors in mind it would seem that there must be some formula that would give the FCC just enough authority to protect maintain network neutrality should some company violate Network Neutrality principles in the future, but not so much authority that investors or consumers need fear that private sector investment might be threatened by a heavy-handed regulatory approach by a future FCC. ]]> http://www.thehomeownerblog.com/2010/05/should-the-internet-be-regulated.php http://www.thehomeownerblog.com/2010/05/should-the-internet-be-regulated.php FCC Sat, 15 May 2010 06:58:55 -0500
Acoustic switches are mandated on offshore oil rigs by Norway and Brazil, and some major oil companies install them even where they are not required. The Mineral Management Service (MMS) of the U.S. Department of the Interior, which regulates U.S. offshore oil rig safety procedures, concluded that the $500,000 devices are not necessary in light of other existing emergency shut-off alternatives. The oil industry has raised doubts about the effectiveness of acoustic switches, which fortunately have not yet been put to a real life test. The MMS was clearly wrong about the need for additional backups, but the oil industry could be right about the effectiveness of the as yet untested  acoustic switches. The solution is to ban all new U.S. offshore oil exploration and oil production rigs until independant rigorous testing confirms that acoustic switches are fail safe, and to require their installation (or the installation of a fail safe alternative), on all new exploratory and working offshore oil rigs in the future. MMS should also re-inspect all existing U.S. offshore oil rigs and require the installation of additional safety measures as appropriate. ]]> http://www.thehomeownerblog.com/2010/05/bp-oil-spill.php http://www.thehomeownerblog.com/2010/05/bp-oil-spill.php Dept. of the Interior Sun, 02 May 2010 09:32:23 -0500
Opinions on the latter vary greatly, and those opinions are mainly conjecture no matter which side they fall on. In the opinion of the financial services sector, all substantial regulatory changes are risky. If we heed their opinion, there will very little protection against another meltdown in the future. We've seen the results of the meltdown, and we would rather risk over-regulation than leave ourselves exposed to another financial meltdown. Besides, any regulatory excess will soon be corrected anyway. We can trust the financial services sector to get right to work on correcting any such excesses, even before President Obama signs the bill! That would be a productive use of their time and money. For that matter, even if the bill was virtually toothless, we can also count on the financial services sector to get right to work on watering it down further before President Obama signs the bill. Better that they productively spend their time and money bringing the measure back to neutral rather than gutting a weak bill entirely. At least that way we'll buy ourselves a couple extra years before the next meltdown.

Ultimately we are looking at the same math as the health care bill. If the Administration and Senate Democratic leadership want to pass the bill they will need 61 votes, and will need to make such compromises as necessary to get those votes. That's fine with us. The financial meltdown was real, but the risks of over-regulation are a matter of opinion. We should all support the Administration and Senate leaders who appreciate the gravity of the risks in this effort. Supporters of substantial regulatory reform have differing views amongst themselves on what will work best. We should recognize the challenge of getting the needed votes and should temper our own respective opinions regarding specific provisions in order to facilitate the immense task of getting the kind of financial services reform we need through Congress.

]]> http://www.thehomeownerblog.com/2010/04/go-bravely-forward.php http://www.thehomeownerblog.com/2010/04/go-bravely-forward.php Financial Services Obama Administration Thu, 15 Apr 2010 12:40:17 -0500
The proposed National Broadband Plan is the first step to reaching a common agreement on the specifics and priorities of those goals. Once we reach a consensus on the goals, we will face significant challenges regarding the mechanics of its implementation. Those challenges will involve complicated decisions between alternative ways to achieve the nation's broadband goals. Policymakers will have to make those tough choices, but the Plan is the critical precursor to the day when all American homeowners and other consumers can fully realize the benefits of broadband.

Chairman Genachowski  and the staff of the Federal Communications Commission deserve our thanks for taking this first step. ]]> http://www.thehomeownerblog.com/2010/03/a-plan-to-provide-broadband-to-all-americans.php http://www.thehomeownerblog.com/2010/03/a-plan-to-provide-broadband-to-all-americans.php Broadband FCC Sun, 14 Mar 2010 10:17:00 -0500
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. ]]> http://www.thehomeownerblog.com/2010/03/dont-tax-internet-purchases.php http://www.thehomeownerblog.com/2010/03/dont-tax-internet-purchases.php Consumers Economy Taxes Tue, 09 Mar 2010 10:37:31 -0500 Congress 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. ]]> http://www.thehomeownerblog.com/2010/03/how-to-fix-the-financial-system.php http://www.thehomeownerblog.com/2010/03/how-to-fix-the-financial-system.php Banks Financial Fri, 05 Mar 2010 07:06:05 -0500
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.

]]> http://www.thehomeownerblog.com/2010/02/regardless-of-the-health-care-summit-outcome-the-political-math-is-pretty-easy.php http://www.thehomeownerblog.com/2010/02/regardless-of-the-health-care-summit-outcome-the-political-math-is-pretty-easy.php Healthcare Legislation Obama Administration Fri, 26 Feb 2010 11:11:57 -0500
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.

]]> http://www.thehomeownerblog.com/2010/02/some-proposed-administration-tax-increases-are-needed-others-are-bad-policy.php http://www.thehomeownerblog.com/2010/02/some-proposed-administration-tax-increases-are-needed-others-are-bad-policy.php Housing Mortgage Obama Administration Real Estate Taxes Tue, 16 Feb 2010 10:12:25 -0500
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.

]]> http://www.thehomeownerblog.com/2010/02/is-more-job-stimulus-legislation-needed.php http://www.thehomeownerblog.com/2010/02/is-more-job-stimulus-legislation-needed.php Financial Services President Obama Sat, 06 Feb 2010 13:56:57 -0500
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. ]]> http://www.thehomeownerblog.com/2010/02/a-new-world-financial-order.php http://www.thehomeownerblog.com/2010/02/a-new-world-financial-order.php Banks Global Economy World Economic Forum Mon, 01 Feb 2010 10:34:25 -0500
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.

]]> http://www.thehomeownerblog.com/2010/01/homeowners-hail-repeal-of-law-prohibiting-real-estate-commission-rebates.php http://www.thehomeownerblog.com/2010/01/homeowners-hail-repeal-of-law-prohibiting-real-estate-commission-rebates.php DoJ FTC Real Estate Wed, 20 Jan 2010 16:00:01 -0500