From the LA Times:
No more extensions of tax credit for first-time home buyers
The provision that puts up to $8,000 in buyers’ pockets won’t be renewed a third time, industry leaders and lawmakers say.
…
Proponents of the $8,000 credit for first-time buyers and the $6,500 credit for move-up buyers made it clear during the debate on Capitol Hill that the benefits would not be renewed when they expire. And a lobbyist for the National Assn. of Realtors confirmed that at the group’s annual convention last month.Lawmakers “made us promise practically in blood that we would not come back” for another extension, Linda Goold, the Realtor group’s director of tax policy, told her members.
During the debate, Sen. Johnny Isakson (R-Ga.), a former real estate broker and a longtime proponent of the tax credit, promised his colleagues, “This is the last extension.”
And Senate Finance Committee Chairman Max Baucus (D-Mont.) said, “It is important that this tax credit does not become a permanent fixture of the tax code.”
As it stands now, buyers who meet the income eligibility requirements have until midnight April 30, 2010, to ink a deal and must close by midnight June 30 to qualify.
From Bloomberg:
Mortgage Anxieties Mean Fannie-Freddie Limbo as Fed Pulls Back
Fannie Mae and Freddie Mac, the linchpins of the American housing market, continue to bedevil the U.S. financial system.
In February 2003, their regulator issued a report saying the companies were taking on too much risk by using implicit government backing to plunge deeper into the mortgage market.
The government-sponsored entities would pose a systemic threat to the economy in the “remote” chance that either failed, Armando Falcon told the Bond Market Association the same day. The Bush administration, considering his report a potential threat to financial markets, asked him to resign.
Five years later, regulators seized the mortgage-finance companies. Since then, leaders from former Federal Reserve Chairman Alan Greenspan to Warren Buffett have argued the companies can’t be sustained in their dual roles — a for-profit enterprise beholden to shareholders and a tool of housing policy — and should be nationalized or sold.
Nothing has happened. Instead, Fannie Mae and Freddie Mac, which buy home mortgages from banks and package them into bonds sold to investors, have been bailed out with $1.5 trillion in direct and indirect government aid. The Obama administration is banking on the companies to help end a three-year housing slump. The president is delaying plans to lay out a new framework for them in February, and Congress hasn’t scheduled hearings on their future.
“They’re going to get a giant pass on all of this,” said Paul Miller, a former examiner for the Federal Reserve Bank of Philadelphia who is now a bank analyst at FBR Capital Markets in Arlington, Virginia. It’s going to be “three to five years before their fate is determined.”
From HousingWire:
S&P Downgrades Five Mortgage Insurers
Standard & Poor’s downgrade the credit ratings on five mortgage insurance companies. The credit ratings agency said continued losses on insurance claims exceeded previous expectations, as low-risk books of business are starting to experience greater losses.
“The lower-risk books of business within the mortgage sector (such as those with higher FICO scores or lower loan-to-value ratios) have been and will be more adversely affected than we had anticipated and U.S. mortgage insurers’ losses will continue to be greater than previously expected overall,” S&P analyst Ron Joas wrote.
…
“If the US economy were to experience another setback, prolonging the exit from the recession, delinquencies and resulting losses could increase at an even greater rate, with lower benefits available from rescissions than what has been seen over the past year,” Joas wrote.
I think a few months after this tax credit expires would be a good time to go house shopping. Thoughts?
From the NYT:
The Recession Begins Flooding Into the Courts
New York State’s courts are closing the year with 4.7 million cases — the highest tally ever — and new statistics suggest that courtrooms are now seeing the delayed result of the country’s economic collapse. The Great Recession may be showing signs of easing, but the legal fallout from the financial troubles, the numbers suggest, may have only just begun.
And the increase in New York offers a preview of the recession-related cases showing up in courts across the nation.
New York’s judges are wading into these types of cases by the tens of thousands, according to the new statistics, cases involving not only bad debts and soured deals, but also filings that are indirect but still jarring measures of economic stresses, like charges of violence in families torn apart by lost jobs and homes in jeopardy.
“New York State’s courts are closing the year with 4.7 million cases — the highest tally ever”
another reason if your up against the wall. stop paying your mortgage and live mortgage free.
SAS
#3 –
I think you are correct. Things will get worse in a few months.
Check out this link: http://www.bloomberg.com/apps/news?pid=20601087&sid=a7I0yRLF4adQ&pos=2
If 10 yr treasuries go up as the article says, and 30 yr MTG jump, it can’t do anything but drive down housing prices. Certainly no jobs created this year and as additional mtg resets happen, higher int rates + principle is going to hurt.
Unless a lot of these mtg can be reworked quickly, future pain = > than past pain in housing.
“I think a few months after this tax credit expires would be a good time to go house shopping. Thoughts?”
according the artice: April 30, 2010, to ink a deal and must close by midnight June 30 to qualify.
Thats right before the spring & summer upticks.
perhaps around the Sept-Oct time there might be some deals.
however, i would imagine up until then, sales vol might be pretty high. and yes, the media will spin it.
thoughts off top of my head.
SAS
“Wall Street’s 10 Greatest Lies of 2009”
http://www.alternet.org/media/144776/wall_street%27s_10_greatest_lies_of_2009/
Thank you for the thoughts Nomad and SAS.
“Ahead of layoffs, angst mars holiday in Spa City government”
http://www.saratogian.com/articles/2009/12/27/news/doc4b36d36a87512848848882.txt
-Twenty-six full-time and 16 part-time employees will lose their jobs at midnight Dec. 31
our gov, including trenton would never ,ever lie to the taxpayers.
I am officially awake.
Uh, no…. back to sleep.
renter
I don’t think sellers are under any pressure to lower prices when its become common knowledge that if you stop paying your mortgage you have close to a two year window before your evicted.
thats why if I buy I will put the minimum down. 1st sign of trouble stop paying
(10) Sas
An unfortunate development that most layoffs occur at the holidays. I can now say that the angst of waiting for the axe to fall is a definite downer and makes the season a lot less bright.
With a few notable exceptions, this year sucked. And the coup de grace is still a possibility.
renter,
I agree that homes will go on sale as soon as May 1. Unfortunately, I wouldn’t put it past our brilliant leaders to extend the credit further. Especially if this March looks anything like last March.
If the trend in the ten continues, mortgage rates will be much higher come March. I’m sure this will give the lobbyists the ammo they need to come back to the table.
J-E-T-S JETS JETS JETS!!!!!
What a year, a huge bond, stock and commodities bull market, recession over and now a Jets Superbowl!!!!!!
God Bless America. Now all I need is a continued collaspe in housing and I will be one happy camper!!!!
“No more extensions of tax credit for first-time home buyers”
Buy a home now, before the credit expires.
Not to mention the one-two punch of the Fed MBS program expiring in March, prior to the credit expiring.
Buy a home now, before the credit expires.
why?
Stop complaining. We need to pull forward as much housing demand as possible otherwise we won’t have any “growth” in the economy. In the next election I plan to vote for the growthiness candidate.
We’re in the real estate doldrums now.
Go to bed, wake up in April.
John,
The J-E-T-S are not yet in the playoffs. Actually, this looks like the making of another repeat heartbreak performance. The Bungles will rest their entire offense but will start their regular defense (which is actually better than Indy’s). Sanchez will be the late season Sanchez as opposed to the early season version. Jets lose in OT when Ocho Cinco catches an 80-yard bomb. He then defies the away crowd by reenacting a Jet crashing in the end zone only to be fined for the 90th time by league officials.
Stu- Either way props to Jets. 8:20pm Sunday night prime time nationally televised game. If Jets lose will be last football game every played at Giants stadium and will go down as the biggest choke ever televised on national tv. If they win it will be like the 1980 Mircle on Ice team. Absolutely amazing. The thing about Jets is they do it in style. Either way we had a 16 have season this year which most of us thought the Jets would be toast long before we ate our Thanksgiving Turkey.
BTW Morgan Stanley is predicting 8% mortgages, yippeee for large cash down buyers.
Dec. 28 (Bloomberg) — If Morgan Stanley is right, the best sale of U.S. Treasuries for 2010 may be the short sale.
Yields on benchmark 10-year notes will climb about 40 percent to 5.5 percent, the biggest annual increase since 1999, according to David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. The surge will push interest rates on 30-year fixed mortgages to 7.5 percent to 8 percent, almost the highest in a decade, Greenlaw said.
Maybe we can do cash for clunkers for housing. My 50’s POS split with original boiler would qualify. Lets put all us people in our little 1940’s-1960’s little capes, ranches and splits in our own mcmansions.
i dont love the color of this Range Rover, but the price? not bad at all.
http://philadelphia.craigslist.org/cto/1509114257.html
miles are relatively low, and i’d have to take it to my mechanic to take a look … but on the surface, not bad at all.
wouldn’t be an everyday car, either. mostly as our snow vehicle, since the other 2 cars we’ll have (paid off older cars) are front wheel drive.
or will SUVs be even cheaper to buy next summer?
crossroads says:
December 28, 2009 at 8:11 am
renter
I don’t think sellers are under any pressure to lower prices when its become common knowledge that if you stop paying your mortgage you have close to a two year window before your evicted.
thats why if I buy I will put the minimum down. 1st sign of trouble stop paying
as previously discussed here, the ‘stop paying’ idea is easy to say, more difficult to pull off for those who buy this year or next. if you bought in 05/06/07 and are 200k underwater like Frank/Bi, different story.
do you have a family? how will you/they like bouncing the kids around to a different school? how will your family like the idea of packing for this great new house … and then a year or 18 months or 2 yrs later just doing it all over again?
the added stress of all that, plus work, keeping your job, finding a new place, etc … i just think it is much much easier said than done.
just one guy’s opinion.
Rover from 2000?
Avoid.
You’ll probably blow through the sales price in repairs.
My family loves LR, but nobody would be driving one not covered by factory/extended warranty.
Find out what a policy would cost prior to buying. I’ll tell you it won’t be cheap or easy.
Lawmakers “made us promise practically in blood that we would not come back” for another extension, Linda Goold, the Realtor group’s director of tax policy, told her members.
Well, it’s a good time to buy as prices and rates are at historic lows and are slated to rise rapidly this spring. That’s what Candy the realtor told us at an open house recently.
Yikes expensive to fix & maintain. If it just a snow thing get something else or do you just want the LAND ROVER.
Did they really change the Jets time to 820pm? Was going to go at 1. Now not so sure……
Grim 29 looked into an extended warranty online for a land rover. They didn’t want anything to do with it at any price.
There are only 2 or 3 companies that will cover any Rover. Budget about 1.5-2g a year for a bumper to bumper policy.
Blow one shock on that Range and you’ll be out 2 grand. There is no middle ground on these cars. You will either get one that lasts forever without issue, or you will get a boatanchor lemon that’ll drag you into the poorhouse.
The game time has been changed. I’m pretty sure it is the only game left with playoff implications, hence the time change.
I’ll be on a plane landing at 8:20 on Sunday night into Newark. John…I’ll wave to you as I fly over.
Yikes how about a 98 Mercury Mountaineer v8 about same miles for 3 thousand. Black ,leather loaded. Cheap to fix ,easy to get parts.
Save 5k & just use when it snows or other cars in shop.
I am far away just wanted to let you know there are better deals for your intended use. You can throw one of these away every 2 years for the price of the warranty on the Rover per Grim.
Out of warranty range rovers, bmws, Mercedes etc. are only ment for people who are somewhat handy. They are very expensive to fix at dealership, and local shops botch repairs. High end foreign cars, shocks, tune ups, tires and other minor repairs all start at $1.000 at dealership. A plain old three year old Caddie SRX discountinued model can be had very cheap, comes with automatic four year warrantly for like $1,500 can be extended to 7. Buy a three year old off lease model and you can have a four year warranty and if it is a lemon kick it to curb a few weeks before warranty expires. The luxury of the land-rover is not worth it. Landrovers are hugely popular leased vehicles as they are very expensive to buy and very expnsive to MAINTAIN. This ain’t no Ford Explorer whey jiffy lube gives you a $29.99 oil change with a free car wash.
SRS in 6 handle, Happy New Year to everyone.
SRS may actually be a buy at six. Today is last day of tax loss selling and it is down 87%. However, I would only buy as a cheap short term hedge vs. long real estate related positions. Naked, this one is a dog either way, too late to short and around one year too soon to long.
I actually been looking for stocks to pick up cheap on tax loss selling today, amazing there is nothing out there. That is a sign of a great year.
#7 sas: Actually it is kind of before the Spring/Summer uptick. The contract to purchase has to be signed by April 30th,that leaves out all of May and June.
-Twenty-six full-time and 16 part-time employees will lose their jobs at midnight Dec. 31
Why laying off any police officer or fireman is a political risk–you go up against arguments like this:
“When you basically go out and risk your life, having low morale is not a good thing,”
“The contract to purchase has to be signed by April 30th”
Which really means the activity will die around April 15th as no one wants to push it too close. Of course the press will spin the great amount of RE activity as a sign that RE has recovered, not unlike the cash for clunkers program which actually saw lower numbers after the stimulus was removed then before it was started.
Throw in 5.5% mortgages and banks still unwilling to loan and we might have another crisis on our hands.
#25 John: Mtg rates at 7.50/8, who cares. I remember when those rates were actually quite attractive.
That being said bye by 500K POS Cape with 7.50/8 mtg rates more like 250k.
#44 – Mtg rates at 7.50/8, who cares.
You’re absolutely right. Those were attractive rates in the not too distant past.
#40,
Tax loss selling when the market is up big time this year? Ahhhh? How about Santa rally instead?
“Those were attractive rates in the not too distant past.”
People used to save the requisite 20% down in the not too distant past as well.
#47 – Fair point. I wonder how many people have realized that the %20 down payment covers their a** as much as the bank’s…. probably not a lot.
#47/48 Putting 20% down today IMO makes absolutely no sense. Cover your arse? Keep your down payment;go with the minimum.
I agree, but just for fun took top ten losers in 2010 in S&P 500 and put limit orders buys on them at 20% off yesterdays close. A man’s gotta dream.
8% is like the normal Mortage rate over last 30 years. But 500K pos starter homes with 10% down is impossible at 8%.
Next week should be interesting. Nassau County Long Island Assessors office does releases annual market rate valuation of homes for tax purposes. People may be shocked. They hire a 100% independent outside firm to do it based on similar sales/comps in 2009 as your house. They take the average of the five house and then do some adjusting, (double line road, busy street, by powerplant etc.). People will be suprised how much their home fell. However, Nassau adjusts tax rate so your taxes won’t fall. Still good kick in butt for home sellers with home prices at 700K with a 500K assessed value with the five similar homes on-line for all to see.
frank says:
December 28, 2009 at 11:00 am
#40,
Tax loss selling when the market is up big time this year? Ahhhh? How about Santa rally instead?
#49 – I wouldn’t be purchasing today, in about 3 years though….
Difference of opinion on the min. That %20 acts as a sufficient cushion should I have to sell in a depreciating market. I wouldn’t be bringing money to the closing on a sale. It also eschews the need for PMI.
Admittedly, we are already in a depreciating market for homes so you could make the argument (as you do) it isn’t a necessity. A fair point and one I’ll give you.
I’d still sleep better with the cushion.
Could americans be this stupid, to allow
the feds to go on like this??
Why NJ/LI home prices will fall in 2010
Foreclosure inventory to work off.
Rising Mortgage Rates.
Rising Property Taxes and Home Insurance, plus a lot of towns in 2009 were added as flood zones which makes it mandatory to discuss at closing, plus expensive.
Expiring tax credit.
Unemployment still high.
2011 may be bottom, but does not mean it is an investors market. Sometimes things flatline for several years. That is dead money. For a primary home we are happy with no appreciations, no losses will make us happy, for an investor home that is bad news. Once we hit a bottom we should feel ok putting down 20%. Also long term we had some pretty good baby boom years between 1999 and 2009. Long term those kids will need a place to live and that should help entry level homes. The 1970s and early 1980s were light baby years so we have to work through that.
re: 20% down and tax credit expiring etc. I think it is all about where you live. In NJ the tax credit is just a little blip on the radar when it comes to buying a home.
A young engaged couple I know here in the Midwest was recently given their wedding gift a year early. 50k downpayment to go out and buy a house before the tax credit expires in April.
50k is about 25% down on an above average house here.
I kid you not parents, relatives, friends and the rest are all in a massive rush to get them into a home before they even walk down the isle based upon the tax credit. There have been to look at over a dozen homes already in the last month.
I had a drink with him last night and asked him what he wanted in a home. He is an outdoors man and wants land and room to stretch his legs. He is a gun owner with a carry permit (packs a loaded weapon regularly on the front seat of his truck) and hunts a good bit and sometimes off his back porch. Owns ATVs, motorcycles etc and works on his own cars as well as does lots of mechanical work for a living.
She wants a house in the burbs close to work and the family does not seem to care too much about open space etc, was more interested in the amenities like the kitchen and baths etc.
I posed one question to him, “what if prices drop allot after the tax credit expires, are you going to be upset.” He shrugged and said deposit money is a gift and he won’t worry too much since he will get the house he wants.
Neither have much money, so the 50k wedding gift to them is very tempting and the tax credit is allot to them as well especially with the bills they are incurring getting married.
Going to be really interesting to see what kind of compromise they come up with before April, there are many homes for sale here and prices are down about 20%.
My opinion is the the first time home buyer tax credit works more out here in the Midwest where the prices of the homes are lower and the taxes are lower and the incomes are lower.
Tosh/3B: We have done the math and the thought process of going FHA with 3.5 down vs. Fannie with 10% down. The bump up to pay for mortgage insurance is pretty large. Additionally, the amount we will drop further from here is questionable. The time to do FHA and walk away has most likely passed. The likelihood of being so underwater that it is worth killing your FICO score is small.
If you are truly planning on living at your new address for an extended period of time and you get the house without overpaying for it, I think the math tells you that you are better off without mortgage insurance.
Keep in mind, a low credit score can cost you many an opportunity. I know of a few people who didn’t obtain excellent employment due to the hiring firm checking their credit. Want a nice car? You better pay cash. Want to live never knowing when the repo man is coming? Willing to have your kids change schools mid year? Finding a rental is tough when your credit score sucks.
Honestly, if I was young, single and didn’t have a lot saved up, I would do the FHA no questions asked. Once you have roots and can afford to lose a hundred grand, then FHA may not be such a bright idea.
Flame away board mates.
While I agree that changing mortgage interest rates should – and will, eventually – result in changing home prices, the latter will almost certainly lag the former.
Grim, Schump – any idea historically what kind of lag time one might expect?
Stu issue is more than PMI, most trade up homes will break the conforming mortgage amount. Plus good jumbo rates require 25% down. You will end up with an 8% mortgage and PMI and on a small downpayment luxury home.
On a million dollar home you need to put down enough to make it conforming. If not the added monthly mortgage will eat up any money saved by walking away.
Now in my town we added flood insurance wrinkle. It is 1% of mortgage up to 250K. So someone buying a pos 275K cape in my town with 3% down is getting slammed all over the place. $200 a mont flood insurance, PMI and a higher rate.
“Tosh/3B: We have done the math and the thought process of going FHA with 3.5 down vs. Fannie with 10% down. The bump up to pay for mortgage insurance is pretty large.”
Stu, isn’t PMI required for less than 20% down?
Meter, inaexact science, mortgage rates rose in 1999 and 2000 yet home prices went up. Should be opposite. In that case rising stock mkt made home buying easy.
#50 Home prices were pretty flat in 99/00 any rise in rates were modest. Rates now going from 5 to 7.5/8 would destroy house prices.
They were around 6.6% in 1998 and shot to 8% in 2000. Yet home prices did not fall. On LI/BC that is when housing bubble began.
New TSA rules.
I feel sorry for the Flight Attendants, this is going to be impossible to enforce.
http://gizmodo.com/5435188/leaked-homeland-securitys-post-underwear-bomb-airplane-rules
#55 Stu: I have no intention of walking away from a mtg. I have done the numbers, for my purposes, and believe the upfront insurance premium plus the PMI is worth it, less cash to put down, keep my cash stashed if you will. I have one child left almost finished high school, and than that is it. Once the college is done for my last child, than it is just my wife and I. At that point, we will aggressively pay down the mtg, and eliminate the PMI. We will look at the house as a forced savings vehicle,and nothing more. We only need the house for another 15 years or so, so we are not looking at the appreciation issue. If we “make” money fine, if not, than not an issue.
We are at the stage now we can continue renting from the land lord, or rent from the bank lnadlord. If we rent from the bank than we know we are set for as long as we stay there, plus can fix it to our liking.
#61 – Yet home prices did not fall.
Let’s not forget that this same time period was the tech boom.
3b, one problem with low downpayment up front is lack of bargain hunting. I think IRS gives you X amount of days after purchase of home to do mortgage and then after that it is only deductable up to 100K under home equity limits. I am house hunting in last 2010, early 2011 and I will give it a year and then give up and stay in my POS. Once rates rise it throws more and more buyers from qualifying as monthly costs eat up too much of their income. Estate sales, divorces, transfers, short sales, foreclosures, bridge loan homes want to sell. Someone bidding on a 500K home who can do it non-contingent on a mortgage and can show 500K in cash or cash equivalents is getting a better deal even if they back door a mortgage anyhow. The highest offer is often not the best deal. Even more important on high end with an empty house. Someone who inherits a home with 5k a month mortgage/RE taxes/Property taxes that is empty wants it sold, cash is king. So put down little but come in strong.
“Stu, isn’t PMI required for less than 20% down?”
Nope!
Banks will still do 10%. Will no longer do 0%. You better have good credit though.
John,
I’m referring to conforming loans. Yes, when you need to borrow 800K, it’s a whole different world.
3b,
It works better for you. You are at a different place than my family is.
Stepping back and relooking at the situation…why would anyone buy a house with the expectation of ruining their credit score and having to move after 3 or 4 years. This is just insane. The closing costs and the costs to modify the place to make it your own (which almost all of us do), make it cost prohibitive versus just paying rent.
If you don’t plan to jingle mail it in, then pay less in mortgage payments. If you see the housing market imploding again, simply sell the anchor with a slight loss. Noone says you have to stay there.
Would love to know the number that the average person here would require to make jingle mailing an option. 10% of home value (50K on a 500K home), 20% (100K on a 500K home), 30% (150K on a 500K home) or more? Personally, I would need to be convinced that homes would drop about 40%, on a 500K home before it made sense for me to mail it in. Do any of us here really see us dropping 40% from here? (Clot..no need to answer!)
What is the conforming loan limit nowadays?
Sean (62):
If those security rules are enforced, it’s going to kill the industry. Boarding is going to have to start 3 hours prior to takeoff to search all bags. Funny, the planes aren’t there until an hour before, if you are lucky.
Just once I’d like to see the billions we’ve spent on the TSA yield a single ‘proactive’ suggestion.
Here’s a better suggestion. Only enforce these stupid rules in 3rd world countries where security is non-existent anyway.
I read an article where even with all of the new rules and security improvements, half of the guns that security inspectors hid in baggage in Newark are still not detected. And with this, they are going to make the flying even more sh1tty for the 999999999.9% of us.
#60
I think a jump to 8% would have a huge impact on housing prices. I think people buy homes based on the monthly payment.
Renter (69):
I couldn’t agree more. 8% was fine when people put 20-40% down. 8% will break the camels back, when people are doing 3.5-10% down.
Stu – No wat the Flight Attendants are going to be able to keep people who are about to have a #1 or #2 accident in their pants from running to the lavatory. Are they going to lock people up for this?
What is worse is the TSA canceled their program to purchase those 160k “puffer” scanners to detect explosives made by GE back in Sept 2006 and have been removing them from the airports. If they had them in Amsterdam there is a good chance this latest bomber would have been caught.
The TSA is just one big jobs program, they spent 50 billion on aviation security since the Sept. 11 and we still only have a no fly list of 4,000 names.
Now the TSA is moving onto the Millimeter Wave Whole Body Imaging technology. Pretty invasive stuff called the “Electronic Strip Search” they can see your twig and berries in in 3D, but will it detect a ballon stuffed in your rearend with PETN?
http://epic.org/privacy/airtravel/backscatter/#background
Stu [68]
We need much more profiling – and very hard to do it without a whole lot of PC whining.
Amsterdam airport didn’t use body scanners on U.S. bound passengers – they have 15 of the machines – because of the privacy outcry in Congress (mostly, from some Utah congressman concerned about anyone seeing his wife’s a$$ on the screen).
re#68 Stu
The TSA is just one big jobs program, they spent 50 billion on aviation security since the Sept. 11 and we still only have a no fly list of 4,000 names.
Now the TSA is moving onto the Millimeter Wave Whole Body Imaging technology. Pretty invasive stuff called the “Electronic Strip Search” they can see your twig and berries in in 3D, but will it detect a balloon stuffed in your rearend with c4?
http://epic.org/privacy/airtravel/backscatter/#background
renter [69]
Through the RE boom of the late 80s the mortgage rates were in 8-10% range; it is the general shape of the economy and inflation expectations that determine what people do. If the inflation stays very low, we are not going to have 8% rates. If we get 10% inflation, everyone will jump on 8% rate…
Stu,
No worries, if rates move to 8, Uncle Sam will be offering even more down payment assistance than he does today.
Some numbers to support the impact of a 3% increase in mortgage rates.
Assume 500K home:
10% down at 5% rate = $2415 payment
10% down at 8% rate = $3301 payment
Anyone putting 10% down probably could afford the hike.
Assume 500K home:
3.5% down at 5% rate = $2590
3.5% down at 8% rate = $3540
Most people putting 3.5% down probably can’t even afford a home. Where are they gonna come up with another $1,000 a month? What percentage of mortgages generated today are FHA? Over 2/3rds right?
Me thinks the gubmint is gonna have to keep printing money!
Stu- US government needs to issue 2.2 Trillion in new debt this year nearly 20% of GDP. Rest of the world is doing the same, Japan is gunning it as well to as they put it “protect lives”.
There cannot be purchasers for all of these new bond issuance (sane ones at least), the Central Banks and Governments are printing like mad. Currency depreciation is the name of the game although they will never admit it.
MY FHA totals are wrong. Government backed mortgages are 15.5% of the total. Of them FHA is around 77%.
Some interesting tidbits from the OCC and OTS Mortgage Metrics Report for the Third Quarter 2009:
The percentage of current and performing mortgages fell to 87.2 percent of the servicing portfolio as of September 30, down from 88.6 percent a quarter earlier and 91.6 percent a year ago.
That meant 3.4 percent of mortgages were 30-59 days delinquent, 6.2 percent were seriously delinquent (60-90+ days late), and 3.2 percent were in the process of foreclosure.
Government-guaranteed mortgages continued to perform even worse, with just 83 percent current and 8.2 percent seriously delinquent.
These types of loans now make up 15.5 percent of all mortgages in the portfolio, a 10.4 percent increase from the third quarter and a 28.9 percent increase from a year ago.
The bulk, 77 percent, are FHA loans, with 19 percent VA loans and the remaining four percent other government-guaranteed loans.
Mortgages held by Fannie Mae and Freddie Mac are performing the best, with 92.1 percent on-time, thanks in part to a higher concentration of prime loans.
Unsurprisingly, option arms continue to perform very poorly, with just 67.7 percent current as of the end of the third quarter.
In the second quarter, 70.3 percent were in good standing, and 82.1 percent were on-time a year ago.
Thankfully, the more than 850,000 outstanding option arms represent just 2.5 percent of the total servicing portfolio.
Of the option arms modified, more than half received principal balance reductions because of the nature of the loans, which by design can experience negative amortization.
The joint OTS/OCC report covers about 34 million home loans with an aggregate balance of approximately $6 trillion.
What does FHA cost? (since we like to throw around the idea all of the time.
Mortgage insurance is a policy that protects lenders against losses that result from defaults on home mortgages. FHA loans require
mortgage insurance primarily for borrowers making a down payment of less than 20 percent.
Mortgage insurance is charged to the homeowner each month at the rate of .5 percent per year of the total loan amount. FHA also charges an upfront mortgage insurance premium of 1.5 percent.
FHA’s monthly mortgage insurance payments will be automatically terminated when these conditions occur:
* For mortgages with terms 15 years and less and with Loan to Value ratios 90 percent and greater, annual premiums will be canceled when the Loan to Value ratio reaches 78 percent regardless of the amount of time the mortgagor has paid the premiums.
* For mortgages with terms more than 15 years, the annual mortgage insurance premiums will be canceled when the Loan to Value ratio reaches 78 percent, provided the mortgagor has paid the annual premium for at least 5 years.
* Mortgages with terms 15 years and less and with loan to value ratios of 89.99 percent and less will not be charged annual mortgage insurance premiums.
500K home example I used before:
3.5% down FHA. Add 7237 to your closing cost and since you’ll roll it in (most do), your monthly payment is $2780.68 for the first 5 years.
10% down conforming. = $2415.70
So over 5 years, the FHA jingle mail option will cost you $21,898 more than traditional (not to mention you have to lock away an extra $32,500 which conservatively would have earned you about a grand of interest over the 5 years.
I think I’ll still keep my credit score intact.
For 2010 $729,750 is max conforming limit around here. That means the blue ribbion towns where homes cost around one million you need $270K down. You need 200K just to avoid PMI and that extra 70K is to avoid the huge non-conforming jumbo rate of interest. These buyers will have real skin in game. The good homes in these towns still run 1.3 million and for those homes you really need $570K down.
Now if your credit score sucks already, then it’s a no brainer :P
Though, rarely does one find a high credit score and no money for a down payment saved.
I’m done. Let’s get back to the non-RE related topics such as airline security and Obama bashing.
John,
Are you and I the only ones working today? :P
They latest airline security proposal is to eliminate all bathrooms on airplanes. Fight attendants will hand out hospital bedpans as needed for in seat use. Passengers will be responsible for observing those to their left and right.
“Fight attendants will hand out hospital bedpans as needed for in seat use.”
Thank goodness. I though we would have to sh1t into an air-sickness bag!
[81] stu,
“Are you and I the only ones working today?”
No, I’m working (for now).
500K home @ 6% interest and 10% down = $3500 in PITI
Please tell me who’s able to afford this? It’s a f*cking shell game and people have become so removed from it that it’s pathetic. Anyone with a shred of common sense would never even think about buying a house until prices fall back in line with the mean. F*ck the interest rate, that can also be worked but the price will drain you of every drop of blood. Why are people so f*cking stupid anymore? Once again, I open some listings I received this morning and had to f*cking laugh. And again, for those that don’t know, including you stupid @ss realtors reading this, I’m a long term homeowner.
Yes the rest are deadbeats.
Stu says:
December 28, 2009 at 1:28 pm
John,
Are you and I the only ones working today? :P
#79,
If you can afford a home that costs more $729,750, you should have down payment, I would not worry about those people.
If you’re trying to buy a 1.3 million home and can’t find a down payment, you should not be buying it, because you can’t not afford.
Any respectable RE agent should tell you this.
The credit won’t be renewed a third time? Does that mean the credit won’t be renewed again? It was only renewed ONCE. If renewed again, it would be for the second time. Sorry, someone has to stick up for the English language. When the world is falling apart, at least good grammar will see us through. Wait, did I just end a sentence with a preposition?!
grim says:
December 28, 2009 at 9:50 am
There are only 2 or 3 companies that will cover any Rover. Budget about 1.5-2g a year for a bumper to bumper policy.
Blow one shock on that Range and you’ll be out 2 grand. There is no middle ground on these cars. You will either get one that lasts forever without issue, or you will get a boatanchor lemon that’ll drag you into the poorhouse.
thanks, JB. sadly, the Range is getting crossed off the list.
mikeinwaiting says:
December 28, 2009 at 9:54 am
Yikes how about a 98 Mercury Mountaineer v8 about same miles for 3 thousand. Black ,leather loaded. Cheap to fix ,easy to get parts.
Save 5k & just use when it snows or other cars in shop.
only prob mike is the range looks 17x better than the MM. i realize ‘looks’ is a very small part of a major decision, but IMO, the 90s cherokee is the coolest looking SUV, and Range is 2nd.
here’s the cherokee
http://dealerrevs.com/pictures/3068551.jpg
Yikes(89):
I found a much better Off Road Vehicle for you…
http://tinyurl.com/better-than-LR
I rented a Range Rover on my last trip to Europe and was not impressed.I did take it off road too.
Neither is this guy impressed.
http://www.youtube.com/watch?v=hAm4FWvDJWs
Frank(87):
“…you should not be buying it, because can’t [sic] not afford.
Any respectable RE agent should tell you this.”
I’d agree if there were any respectable RE agents. Diogenes with my lamp, and all. If there are any, they’re living today with Elvis Pressley and Jimmy Hendrix in Tooth Fairy Village on Unicorn Island.
8% was reasonable when houses cost nearly 40% less than today’s asking. Its not just down payment, its cost
“If Jets lose will be last football game every played at Giants stadium and will go down as the biggest choke ever televised on national tv. If they win it will be like the 1980 Mircle on Ice team. Absolutely amazing.”
John,
What are you smoking? A Jet win, on Sunday, comparable to 22 year old kids beating the pros from Russia and Sweden and capturing the gold? I guess the next Net win will be just a significant as Rollie shooting the lights out against Hoya Saxa in Kentucky?
that 500k house at 5.5% was a 300k house at 8% just a few years ago. Remember when we used to call 500k “half a million”?
Frank you are full of BS!!!! You know it is impossible for me to dispute your theory as I need to find a “respectable RE agent” to confirm it and none exist. Whey don’t you ask me to find the Loch Ness monster while you are at it.
frank says:
December 28, 2009 at 1:44 pm
#79,
If you can afford a home that costs more $729,750, you should have down payment, I would not worry about those people.
If you’re trying to buy a 1.3 million home and can’t find a down payment, you should not be buying it, because you can’t not afford.
Any respectable RE agent should tell you this.
Barbara,
Cost is the ONLY thing. They can spin it anyway they want, talk until they’re blue, repeat the talking points, bullsh1t or arm twist all they want. It’s all about the price and NOTHING else matters.
its not rates, it not down payments, its grossly overvalued properties.
#72 cobbler: Rates were in the 8 to 10 range, but house prices were in the 125k to 250K range, for a nice house in a good town. Plus THe U.S, economy etc, was in a much stronger position 20/25 years ago.
and I’m sorry, 2,000 sq ft 60s split with pea green linoleum, aluminum siding, green astroturf in the “florida room” and composite wood paneling in the “finished basement” IS A HANDYMAN SPECIAL IN ANY SCHOOL DISTRICT.
I mean, come on, are you f*cking kidding me? A raised ranch for Gina and Tony:
http://www.realtor.com/realestateandhomes-detail/362-Valley-View-Ave_Paramus_NJ_07652_1113638556
#74 Stu With your 10# scenario, the pymt also increases almost $1000 a monte, even with 10% down I do not think many would be able to afford that kind of increase, plus with the obligatory minimum 10K a year and rising property taxes. It looks pretty ugly.
Stu says:
December 28, 2009 at 1:01 pm
Some numbers to support the impact of a 3% increase in mortgage rates.
Assume 500K home:
10% down at 5% rate = $2415 payment
10% down at 8% rate = $3301 payment
Anyone putting 10% down probably could afford the hike.
Assume 500K home:
3.5% down at 5% rate = $2590
3.5% down at 8% rate = $3540
In this economic climate, with job security being terrible, i wouldn’t feel comfortable with a mortgage & taxes over 3000.
taxes are going to go up. kids are expensive. 10 years from now, that 2500 could be 3500. who knows if comes will rise?
we’re DINKs and make a good amount and we made sure to keep our mortgage and taxes in the 2500-3000 range
103: Pass as no full kitchen in the basement.
#102 gary: Dont buy that when you can buy this and save yourself like 300k.
http://www.njmls.com/cf/details.cfm?mls_number=2917440&id=999999
106 is going to send Gary off the handle
#97,
Are you saying that all RE agents are scam artists? If so, I agree with you. Add lawyers to this category as well.
#106
Looks like a garage!
@ 98,
Gary, I agree, but cost means different things to different people. Go shop for a car nowadays and the first question the schmo salesman will ask is how much you want to pay per month.
I tell them I’m not interested in discussing monthly payments. I want to know how much off the sticker they’re willing to eat.
But most people won’t do that. Same with those new 40-year (!) mortgages. People are being conned into thinking they can actually afford things they have no business buying.
3b,
Did they run out of windows when they built this one?
Nothing beats this listing:
http://www.realtor.com/realestateandhomes-detail/South-Brunswick-Twp_NJ_08540_1088024171
106 – that is awesome. I like how one of the photos is taken from the middle of the street. Is that where you’ll be laying, waiting for a Land Rover to come along, a month after buying this shack?
gary: most americans including nj residents are morons, and dont care,or a just to stupid.
plus they read newspapers
Barry is now on the air explaining
we should not be worried.
the suspect acted alone,, no problem
go keep the party going
3b (103):
I don’t disagree with you at all. I suppose the point I’m trying to make is that someone who has the means to save the requisite $50,000 down could probably handly the $900 increase. Those who can barely afford to save the $17,500 would die if asked to fork over an extra $1,000 per month.
The bottom line for potential buyers in our area is… If you can’t figure out how to save 2,000 per month after expenses, you should be renting and saving up for that downpayment.
janet, acting with our international
partners, who always have our interest at heart will protect us.
I always go back to this listing for laughs.
http://www.trulia.com/property/42579087-19-Dubois-Ave-Alpine-NJ-07620
an aside result from all these inflated values? People can’t afford to update and maintain their homes. A fews years out from th bubble and Ive seen the results. 700k houses bought at peak and still 25 years worn and outdated. So despite making the monthly payments, houses are deteriorating almost as quickly as foreclosed and empty properties.
3b,
Further proof that anyone, anyone that even thinks about buying at least for the next 24 months is out of their f*cking minds. Patience, common sense and long term are foreign concepts for people. It’s the big hat, no cattle theory for 99% of the proletariat. I can give two sh1ts about what kind of money I can make when I sell my current home, if I make anything. All I’m interested in is the price I’m paying for the next move.
Wow! Do you think the sellers will include the cinder blocks in the back yard of that Riveredge home?
Well they are scammers, but I don’t know about artists.
NAR controls MLS. If I could list there myself and show my own exclusives and let other “agents” show my home and “split” commision with me there would be no traditional realtors.
Realtors is an odd concept, impagine if your sold your car in the newspaper and the buyer is about to hand you the 6K tellers check and all at once someone steps in the middle of transaction and demands 6% for their services.
Now if realtors were smoking hot women or hot shot sales people I would not mind but most are bored middle aged overweight housewive’s or rug wearing washed up salesmen who could not cut it in the real word. I like to have a pharma type sales girl, hot, smokin, takes to a knicks game does a little flirting and then gets the deal done. Realtors just bore me.
frank says:
December 28, 2009 at 2:56 pm
#97,
Are you saying that all RE agents are scam artists? If so, I agree with you. Add lawyers to this category as well.
out at gathering over the holiday,thinking
can people be this stupid over housing?
answer: yes,
#109
Not even. Looks like a shed.
A well-kept 3/2 cape in a town like Fair Lawn should be listed in the upper 200s to around 300K. Don’t even think about trying to spin it any other way. Look at the long term trend line and then shut the f*ck up. Anything else is a bunch of bullsh1t. 20% down on 300K is $60,000. That’s a lotta f*cking dough, I don’t care what anybody says. A 240K mortgage with PITI will run you $2300 a month. Add up all the other monthly expenses and this is the limit for A LOT of people.
Last post is just a rant, not aimed at anyone posting. :)
its amazing how even this board underestimates the run up in prices and the impact on the monthly bottom line.
Gary(#125),
Sure your math is correct. But 3.5% of 300k is only $10.5k. Monthly payment be damned; pay if you can and if not no biggie.
Barbara,
Manipulation and time are very powerful tools, aren’t they?
Rich52,
After owning two homes over the last 18 years, believe me, my math is correct.
And anyone that only has $10,500 shouldn’t be buying a house. Period.
Gary, It wasn’t a question, it was just a statement. Your math is correct.
3b[100]
At the peak of 1988 boom the prices (“good” towns) were at about 50% (nominal $$) of what they were in 2006, so inflation adjusted they were at almost the same place. Both 1988 and 2006 prices were equally outrageous. Buyers in both 1988 and during the drop of 1989-1993 paid close to 10% on 30-yr conforming. I bought in 1991 and had 9 5/8%, and refi’d only in 1994 to 8% (and 3 times since). Prices is what matters most, lower rates are only important for the marginally qualifying buyer.
Gary,
I’ve given up too. These NJ list prices are completly insane. Most of these places require $100K renovations to make them even habitable. Couple that $12K property taxes and forget it. I decided to focus on Norwalk,CT which has some affordable areas but cruddy schools (no kids yet). Decided that I would have to wait much longer because people are even crazier than NJ. This 1,400 sq ft gem with no updates has been reduced several times after starting out at over $1.5m. All yours for about $1 million now. I truly don’t understand how the breaking point is not on the horizon.
http://www.trulia.com/property/1075885013-1-Bittersweet-Trl-Norwalk-CT-06853
#111 stu: It is a conversation piece house. The front is the front, but it could be the back, or it could be the side. By the way it came on in July at that price and has been sitting rotting there since.
#134 bystander: Custom built in fcuking 1937!!!
#121 stu: If you are nice, perhaps write a 500 word essay. And pay full price of course.
Around half the people on this site don’t have a mortgage. Mortgage are for the rich folk who need the tax write off. Us lower upper class folk are just scraping by.
Barbara says:
December 28, 2009 at 3:31 pm
its amazing how even this board underestimates the run up in prices and the impact on the monthly bottom line.
#133 cobbler: I bought in 1987 almost peak, property taxes were $1800 a year. Property taxes now on that same house are over 10K. Most of that increase in the last 5 years.
#138 john: Real wealthy folks dont buy houses for the tax write off.
#125 gary: Actually there are quite a few houses in Fairlawn listed in the 200’s back to peak late 80’s prices!!! Also in Bergenfield and other less desireable BC towns. Those declines are coming to the blue ribbony train towns as well.
John,
I figure less than half and probably most of the younger ones only became aware of real estate in 2003ish. The language has changed completely along with the price.
should read “more than half”
I agree, you can only write off one million on a mortgage and if you are making 100 million a year that does not help much. plus only two homes.
Younger people for the most part are stupid. Back in March I had a lovely conversation with an Indian couple in their 20’s who did not want to buy stocks but wanted an investment property. They asked my opinion and at the time tax free A rated GO Munis were paying almost 7%. I told them since historically homes return 3% a year, are expensive to buy and expensive to sell, a pain to maintain and have costly real estate taxes and insurance why don’t you just buy a muni at double the rate of return, zero tax and no work.
With a straight face they told me RE is a better investment and they like to invest in things they can touch.
Bottom line, many many people believe that RE outperforms, stocks, bonds, commodities which is crazy. Yes RE had a 1996 to 2006 run up. People forget costs associated with the home and inflation. My home I bought in 1999 is way under water if you count in repairs, RE taxes, mortgage interest and then inflation adjust it. Most people just go I paid 300K in 1998 and in 2009 it is worth 500K so I made 200K.
3b says:
December 28, 2009 at 3:56 pm
#138 john: Real wealthy folks dont buy houses for the tax write off.
125, 141:
I grew up in Fair Lawn and purchased starter home in ’96 for $160k. Sold for $215 (lots of renovation) in ’99 when moved to FL. We looked there when we moved back in ’07. I think every other town (BC & Morris) offered more bang for buck at the time. Prices have really tanked in that town since. I would say 35% on avg. Lots of our family still there.
John,
BUT…..I own investment properties that even after all the expenses out perform any stocks at any hey day. Even with the knock down in value, my rents rise and vacancies are zero. If I sold, my money would safely be making 1.5% in an account. I’m making mega return on a lesser asset but I still retain much equity. Investment property is another game that got all screwed up over the last 9 years. As a result I bought my last in 99. No doubt the Indians were looking at an equity play instead of a monthly cash flow. Foolish in any market.
#144 John:Most people just go I paid 300K in 1998 and in 2009 it is worth 500K so I made 200K.
You are exactly right, shocking as that is. I know someone who spent 200K on renovations, says they are not concerned about the decline in house prices, becsuse they will get all that back when they sell in 20 years!!!!
Yep your new kitchen/bath/siding today will be worth the same 20 years from now, when it is all old and crappy.
3b[139]
Dunno what’s been happening with RE taxes between 1987-91, but mine went from 3,9K in ’91 to 9,0K this year – which is more than inflation but more or less in line with price change from ’91 (which was a trough or close). Town had some mitigating factors, though (bunch of expensive houses built in the 90s).
You bought pre-bubble. Rents are falling faster than house prices. These indians want to buy a house that rents at a loss each month and plan to make 100% of the profits on appreciation alone. That is gambling. An investment property should be able to at least break even.
You are making a killing in RE as that is what you know best. These are indians who in their caste system would not even use a screwdriver as that is beneath them. Hiring people to do every little thing and using a realtor to buy and sell while looking for turn key mint condition investment property is a disaster waiting to happen.
With Leveage comes risk. Home buying with a mortgage is like buying stocks on margin, leveage very good or very bad. In RE from 1982 to 2002 was very good. I know RE very well I am just patient.
Barbara says:
December 28, 2009 at 4:36 pm
John,
BUT…..I own investment properties that even after all the expenses out perform any stocks at any hey day. Even with the knock down in value, my rents rise and vacancies are zero. If I sold, my money would safely be making 1.5% in an account. I’m making mega return on a lesser asset but I still retain much equity. Investment property is another game that got all screwed up over the last 9 years. As a result I bought my last in 99. No doubt the Indians were looking at an equity play instead of a monthly cash flow. Foolish in any market.
Obama Says ‘We Will Not Rest’ Until Plotters Found (Update1)
Can I take a guy on vacation in Hawaii seriously when he says this stuff.
current banner on msnbc’s mobile site.wonder what this is about.
BREAKING NEWS: Ambulance speeds to first family’s compound in Hawaii, AP reports
We are safe again.
http://www.msnbc.msn.com/id/34601479/ns/travel-news/
Heads need to roll over this, the latest bomber got onto the flight in Amsterdam without a passport according to a witness Kurt Haskell of Newport, Michigan who is also an attorney.
http://www.breitbart.tv/interview-witness-says-sharp-dressed-man-aided-terror-suspect-onto-plane-without-passport/
[151] gator
And Chris Matthews (he of the Obama man-crush) is reporting that his “tingly” feeling has changed to a “sinking” feeling, pending further developments.
So you are worried about NJ’s fiscal health?
New Jersey and the USA is one big crime syndicate with a complicit media that refuses public disclosure. If you want the truth try to get your hands on the Comprehensive Annual Financial Report.
“The Biggest Game InTown” about the Government CAFR wealth shell game.
The video was produced and then on January 8th 2000 was distributed only on VHS tapes. It was put up for internet access on December 25th 2008. The documentary gets the valid information out there and was annotated on the lower script line with 2009 information
Watch it here. http://video.google.com/videoplay?docid=6703413885850200097#
Now go back to work slaves.
Some of the biggest employers in the U.S. are warning that a provision in the Senate’s proposed health-care overhaul could lead to cuts in retiree benefits and a sharp reduction in reported earnings next year.
Companies including Boeing Co., Deere & Co., MetLife Inc. and Xerox Corp. plan to lobby Democratic leaders to drop the provision, which would change the tax status of payments for retiree health benefits.
Democrats identified the change as a way to help pay for the health-care overhaul. It would raise about $5.4 billion over 10 years — a relatively small slice of the bill’s overall cost — according to estimates.
AT&T Chief Executive Randall Stephenson, shown at the Detroit Economic Club on Tuesday, warned in a letter to lawmakers that a tax provision in the Senate health-care bill would be a distraction to capital markets.
The AFL-CIO has joined the corporate giants in an unusual alliance to warn the provision would encourage companies to drop drug benefits for million of retirees.
One industry group estimated that as many as one-third of the companies providing the benefits could drop them to avoid the hit to earnings. Many of the companies that would be hardest hit are unionized and offer better retiree benefits than are available under Medicare.
Under the 2003 law that created a prescription-drug benefit known as Medicare Part D, companies that continued to provide such benefits on their own qualified for a 28% tax-free subsidy — worth about $600 a year per retiree. Hundreds of major companies took advantage of the provision and were able to list the subsidy on their balance sheets as a reduction to their retiree health liability.
But the Senate bill would tax the subsidy, dramatically increasing companies’ tax liability for years. Under U.S. accounting rules, companies would be required to register the change as a loss in earnings — all at once.
Journal Community
Vote: Do you support the Senate bill? An analysis by the American Benefits Council, an advocacy group for large employers, found the tax change could result in a one-time 35% reduction in earnings for a typical company now receiving the subsidy. For companies with very large legacy plans as a result of multiple mergers, the impact could be more severe, say experts and company executives. Caterpillar Inc., another major company raising alarm over the provision, projected in its annual report that it expected to receive $370 million in Part D subsidies between 2009 and 2018.
The chief financial officers of a dozen large U.S. corporations said the provision “would result in large earnings statement reductions” by requiring employers “to immediately account for the present value of this tax increase,” according to a letter sent to Democratic leaders and the White House this month.
In a separate letter, the chief executives of AT&T Inc. and Verizon Communications Inc. warned “the change in tax treatment would prove to be a distraction to the capital markets, at a time of grave economic uncertainty.”
Many big companies count this provision as their chief complaint with the Senate health-care bill.
“Proposed changes to the tax treatment of the retiree drug subsidy would punish companies that are doing the right thing by continuing to provide retiree prescription drug benefits,” said Tim Elder, a spokesman at Caterpillar Inc.
Mr. Elder said the financial impact on Caterpillar would potentially cause the company “to re-evaluate continued coverage.”
The tax on drug-benefit subsidies is expected to help pay for expanded coverage for uninsured people. The House bill includes a similar provision but would phase in the new tax gradually.
Opponents argue any revenue gains could prove illusory if companies all decide to shed their retiree drug coverage, thus pushing people onto Medicare Part D. Paying the companies a subsidy costs the government roughly $600 per person, while covering the retirees themselves would cost the government about $1,900 each.
The American Benefits Council concluded that the provision would become a net revenue drain if just 24% of retirees are dropped from employer plans. About seven million retirees now receive their drug coverage through subsidized company payments, according to various estimates.
Ken Porter, an expert on the issue at the Benefits Council, said internal discussions among corporate members of the council indicated that about a third of the companies receiving the subsidy may choose to shed retiree drug plans before the bill becomes law.
“My sense is that you are going to see a lot of companies dump their retirees onto Medicare,” said Tom Scully, a former Medicare administrator who helped created the drug benefit program. “I do not believe that the tax guys in Congress made the right calculation here.”
Luckily, none of this effects Public Retiree Health Plans, who will still get Brand Name drugs for Free, while Private Sector Retirees Pay More for Adulterated Generic Drugs from China.
God, how do you guys muster the energy to crank 150+ posts on a day like today? Count me impressed.
Spent a day out in the world today and saw five things that utterly convince me that the Gottendammerung is at hand. And it’s coming very, very soon.
Never (not even Fall ’08) have I ever had a worse feeling about everything than now. I regularly rise at 4- 4:30 AM and cannot come close to going back to sleep. Knob Creek doesn’t even help anymore; the nightmares come at the same time and I’m bolt upright in a cold sweat almost at the same moment night after night.
OTOH, I’m on a wicked hot streak betting EPL and the bowl games. Go figure.
The Fed is going to stop buying agency paper. Yeah, right.
The tax credit for buying a home is going to sundown. Yeah, right.
The bond vigilantes will simmer down and go home. Yeah, right.
Buckle up.
Clot what did you see (5)?
Schump – we aren’t even close to Gottendammerung or Ragnarok. If the Jets make it to the Superbowl and actually win then I will join you in the bunker, but not until then.
Schump [152],
The vigilantes, is this just “a” sell off in the bond market or “the” sell off? What a total bunch of idiots, buying 10 year paper at 2%. Forgot, the fed was the main buyer. They can manipulate until you find me a silo. It does not matter. Mr Market always wins in the end.
BC to clarify “the sell off” will be foreigners. Until then it’s a slow burn of PETN in your pants.
mike (159)-
I don’t want to bum you out. Suffice it to say, all five incidents spoke to the absolute callous, depraved and fundamentally insane nature of the genus known as hominem New Jersicus.
All five involved “adults” entrusted with the care and leadership of children. I have never wanted to move out of this country more than I do now.
BC (161)-
We all know “the” selloff is imminent. Of course, TPTB will step into the breach the moment the current episode gets a little too sticky for everyone’s liking. However, I think the intervention this time around will involve a pre-planned, carefully-orchestrated crash of the equity markets.
I somehow think you can only get away with that 1-2 times…then, Mr. Market will have his way.
If I took my family to EWR right now and tried to pay cash for one-way tickets to Santiago, do you think I’d get waterboarded?
BTW, white people don’t get whiter than me.
Clot 165 The white thing not good. Stick out like a sore thumb. Solve Jersey way ,go get a spray on tan.
I would pay to see Schumpy waterboarded.
Schumpeter says:
December 28, 2009 at 8:14 pm
OTOH, I’m on a wicked hot streak betting EPL and the bowl games. Go figure.
im losing money fast in these damn bowl games. seriously need a prayer here.
can you give me your next 3 locks (assuming you’re betting with the spreads)
I’ll stick to my NFL picks, back in school I hit 10 out of 10 one weekend and I even picked some losers like Brigham Young to win, had a hard time collecting. Never seen a fat guy run so fast, I eventually caught up with him in the cafeteria gorging on the ice cream machine, never seen a fat bookie run and eat ice cream at the same time.
Go Longhorns…. I may put my NFL winnings on them…
gary
I’ve got another name you can add to Graydon and Madison. I heard Makayla today. WTF is a Makayla?
WTF is a Makayla?
Curious minds want to know:
http://www.thinkbabynames.com/meaning/0/Makayla
Well worth the read:
http://online.wsj.com/article/SB126178934938205455.html?mod=rss_Today's_Most_Popular
As Slump Hits Home, Cities Downsize Their Ambitions
“Months after many economists declared the recession over, cities are only now beginning to feel the full brunt of it. Recessions often take longer to trickle down to local government, in part because it takes time for the sales and property-tax revenues on which municipalities depend to catch up with a depressed economy.
But the sting this time around is expected to be far more acute and long-lasting then in previous recessions. Projected deficits are especially deep in some places and tax revenues could be pinched for years as consumers turn thrifty and real-estate prices remain diminished. That means the relatively painless measures such as borrowing, deferred payments to pension plans and scattered layoffs that have been used during past episodes of fiscal strain are unlikely to be effective in some cities.”
http://online.wsj.com/article/SB126178934938205455.html?mod=rss_Today's_Most_Popular
As Slump Hits Home, Cities Downsize Their Ambitions
“Months after many economists declared the recession over, cities are only now beginning to feel the full brunt of it. Recessions often take longer to trickle down to local government, in part because it takes time for the sales and property-tax revenues on which municipalities depend to catch up with a depressed economy.
But the sting this time around is expected to be far more acute and long-lasting then in previous recessions. Projected deficits are especially deep in some places and tax revenues could be pinched for years as consumers turn thrifty and real-estate prices remain diminished. That means the relatively painless measures such as borrowing, deferred payments to pension plans and scattered layoffs that have been used during past episodes of fiscal strain are unlikely to be effective in some cities.”
Try again:
http://online.wsj.com/article/SB126178934938205455.html?mod=rss_Today's_Most_Popular
As Slump Hits Home, Cities Downsize Their Ambitions
Makayla is white people trying to be like black people.
@170
I think it’s traditionally spelled Michaela.
http://en.wikipedia.org/wiki/Michaela
Someone going to file a gift tax return? You have to at least elect a gift split methinks….
54.Sean says:
December 28, 2009 at 11:44 am
A young engaged couple I know here in the Midwest was recently given their wedding gift a year early. 50k downpayment to go out and buy a house before the tax credit expires in April.
I would pay to see Schumpy knobcreekboarded.
Would that simulate drowning for him or habit?
167.Stu says:
December 28, 2009 at 9:06 pm
I would pay to see Schumpy waterboarded.
Strumpy: here…just stick out your tongue and shake your head side to side……perfectly easy way to fcuk up a nice drink….
http://www.youtube.com/watch?v=h1-Z5BlP22o
Now now let’s not pile on clot or is it Schumpy.
On a positive note “It’s the end of the world as we know it & I feel fine”.
Per Clot,well maybe not so fine. Clot road trip to the hinterlands very defensible position here. Plenty of stables & ammo.
Thank you so much, there aren’t enough posts on this… or at least i cant find them. I am turning into such a blog nut, I just cant get enough and this is such an important topic… i’ll be sure to write something about your site
This is a good information for first time home buyers. A resource!
What a great resource!
I admire the valuable information you offer in your articles.Great post, You make right points in a concise and pertinent fashion, This is a really good read for me, many thanks to the author
Thank you so much, there aren’t enough posts on this… or at least i cant find them. I am turning into such a blog nut, I just cant get enough and this is such an important topic… i’ll be sure to write something about your site
Thanks 4 The Great Read!! I found out My Free Credit Report is a quality site to aquire my credit and get the score for free. Has Anyone else used them?
I want to thank you so much for taking the time to make this post — I, for one, appreciate it! Hearing someone else’s point of view gives me pause to consider. Anyway, thanks again and I’ll be back for more!
Hello, great point. Posts like this one are why I follow your blog. Have a great 2010!
Hey great blog I will be completely visitig it again!
Thank you so much, Great information… You keep writing and I’ll keep reading.
Sorry, aber das bezweifel ich ganz stark…Baer
Das htte ich nun gar nicht gedacht. Hast du dazu weitere Quellen? Gru Wschbeckenunterschrank
Thanks for this cool post. Anyway i found your blog on google and find it very useful. I’ll be sure to come back again for more!
When I originally commented I clicked the “Notify me when new comments are added” checkbox and now each time a comment is added I get four emails with the same comment. Is there any way you can remove me from that service? – Thanks
Thanks for this cool post. Anyway i found your blog on google and find it very useful. I’ll be sure to come back again for more!
Sorry to ask, but any idea of how to stop spam? My sites are getting hammered like crazy
Very impressive website, as well as some good ideas in your post. I’ll be back her for sure. Thanks for the good content.
As a Newbie, I am always searching online for articles that can help me. Your blog really helped me and I will be back soon. Thank you for the information.
Check out this better craigslist alternative: squibers.com you can view craigs list by photo, and get SMS alerts when things you want come for sale. Its SO awesome I never have to use craigs list anymore! craigslist alternative squibers
Registry cleaning software for Windows 7 is one tool that you have that can help you to get the most out of your computer.
Substantially, this article is really the best on this issue. I concur with your conclusions and are going to look forward to your coming posts. I will bookmark your URL directly. Yesterday, I was reading an informative article of how organizing email can increase business productivity. You find this great article here: Articles Base: Organize Your Email And Optimize Your Business.SOS – HAITI – SOS – HAITI – SOSGive A Helping Hand to the peoples of Haiti! For your donantion, check out Yele Haiti
Hi, I found your blog on google. I’m pretty glad to have found your blog because I think it is amazing! I will definitely come back! Great resource for my students. Youproblog
Saw your blog bookmarked on Delicious.
Some interesting and intelligent content you have here on your site. I have several wordpress sites and like your theme. I do notice that you are not monetising your traffic to its maximum which is what I used to do until someone pointed out to me that you can actually earn yourself some decent amounts to help pay your hosting and domain fees etc. Looking at your Alexa rankings I can see you obtain some decent traffic which for very little work could help you out. I use this WordPress Plugin which effectively turns words and phrases in all (or just some if you like) your content, making contexual links which your visitors will click upon. Take a look at it and see what I mean, I easily clear my hosting and other fees each month using this. Hope that helps you out – we fellow wordpress bloggers have to stick together!
I was just looking at relevant blog content for a project research when I happened to stumble on yours. Many thanks for the valuable information!
I said the colts, but I have no reason to believe that. I just saw them dominate the Ravens two weeks ago.
I’ve been trying to find a decent article about this for a while now. Would you mind if I Copy’ed your article I’ll give a link back to your site of course!
I agree with everything that was posted in this article, Im a loyal reader so please keep updating so frequently!
I am currently reading it on my Blackberry and will scan it once I get home. I love your site and marketing strategy.
Cool post! How much stuff did you have to look up in order to write this one? I can tell you put some work in.
Nice blog. I got a lot of good information. I’ve been keeping an eye on this technology for awhile. It’s intriguing how it keeps changing, yet some of the core factors stay the same. Have you seen much change since Google made their most recent acquisition in the domain?
Go Saints! Become a fan of facebook page here: Colts Will Lose Super Bowl 2010!
Took me time to read all the comments, but I really enjoyed the article. It proved to be Very helpful to me and I am sure to all the commenters here! It’s always nice when you can not only be informed, but also entertained! I’m sure you had fun writing this article.
Thanks 4 A Great Article! I’ve heard New Teeth Whitening is definitely a great Teeth Whitener to aquire 4 free. Anyone else used them?
Your blog is so informative keep up the good work!!!!
Hi, I cant understand how to add your site in my rss reader. Can you Help me, please :)
I was just surfing for fun and then I found your web site. Very informative post. Thanks a lot ! I have checked over a few of your other articles and found some great information too.
Will this help to lift my metabolism as well?
There is obviously a lot to know about this. I think you made some good points. I have just subscribed to your rss feed Keep up the good work ,great job!
Thank you for your help!
Hi. nice data on Maqui Berry. I found your good blog while researching google. For the last few days I’ve been attempting to find more. Especially anything to do with the dieting babble. I’ve seen it all and my best friend keeps pushing her newfound weight loss craze on me. So I’m glad I found you. All the best!
Hi. Very interesting site. I found it on Bing. I will definately recommend it to my friends. Please keep up the great work.
Blog looks really good mate, keep it up! I keep shedding the pounds thanks to information like this and my studies on resveratrol.
Rather superb entry, definitely informative information. Never ever imagined I would find the tips I need right here. I’ve been scouring everywhere in the web for some time now and had been starting to get disappointed. Thankfully, I stumbled onto your site and received exactly what I was struggling to find.
I fully believe the higher than comment, the internet is with a doubt growing into the foremost important medium of communication across the world and its due to sites like this that ideas are spreading therefore quickly.
I actually recommended your blog to my readers. Thanks for all the striking information!
Anyhow hold up the excellent perform.
What knowledge the teachers supply for the student could be invaluable. You can find the item not possible to understand woodworking without this information and knowledge which you might have from a woodworking teacher.
Thank you for a great blog! I like reading your posts and articles and point it out to my readers. Well done and a big THANKS for the tips!
I saw and article on a new skin cream called beliva that helps reduce wrinkles and age spots. I did a little research and found that people love this stuff. I went to the website to buy some and found that they are giving away free samples. Enjoy!!
Cool, there is actually some great ideas on here some of my subscribers may find this relevant, I will send them a link, many thanks.
your blog looks awesome! Keep up the great work. I found you on Google. Your blog keeps me motivated to building mine helping people with easy tax write offs with their car. Keep it up! :)