A better bail out idea?

[Ecomike]

I can't help but wonder if a new tax break (bail out) for residential house investors designed to spur a short term (6 months to one year) buying frenzy of already foreclosed houses where the banks currently stuck with foreclosed houses sold and refinanced those houses to investors at special early, low, 3 year interest rates, combined with special income tax deductions for the first few years (enough incentive to get the bad mortgages off the banks books in just a few months and convert them into performing assets) , might not be a better solution to the problem.

[RichP]

I can't help but wonder if a new tax break (bail out) for residential house investors designed to spur a short term (6 months to one year) buying frenzy of already foreclosed houses where the banks currently stuck with foreclosed houses sold and refinanced those houses to investors at special early, low, 3 year interest rates, combined with special income tax deductions for the first few years (enough incentive to get the bad mortgages off the banks books in just a few months and convert them into performing assets) , might not be a better solution to the problem.

I'll tell you one of the problems up here, the houses are not too bad, $175K gets you a 3 or 4 bedroom house on an acre or two. Tons of New Yorkers moved up here, taxes shot thru the roof as the result of having to build new schools. My taxes were $500 when we moved up here in 1985 till 1992, this year, $6,000 in school taxes alone and another $2500 in property taxes. Couple that into the cost of gas for those NY'ers to commute to their jobs in NYC and when gas was $.99-$1.10 no problem, but when you triple your monthly expense for gas and triple your taxes thats the end. Very few budgets can handle that, gas prices were the economic killer, no doubt in my mind, drove prices straight up across the board. Hell, the local bus company doubled their monthly tickets for those commuters from $299 - $499 and it's going up again.

[Ecomike]

I'll tell you one of the problems up here, the houses are not too bad, $175K gets you a 3 or 4 bedroom house on an acre or two. Tons of New Yorkers moved up here, taxes shot thru the roof as the result of having to build new schools. My taxes were $500 when we moved up here in 1985 till 1992, this year, $6,000 in school taxes alone and another $2500 in property taxes. Couple that into the cost of gas for those NY'ers to commute to their jobs in NYC and when gas was $.99-$1.10 no problem, but when you triple your monthly expense for gas and triple your taxes thats the end. Very few budgets can handle that, gas prices were the economic killer, no doubt in my mind, drove prices straight up across the board. Hell, the local bus company doubled their monthly tickets for those commuters from $299 - $499 and it's going up again.

No wonder everyone is moving to Houston, Texas.

Curious, here the school taxes are property taxes, how is that your property taxes are not school taxes?

A friend of mine told me the other day he spends about $250 a month for toll road fees just to get to work and back here.

My mothers house was $20,000 when they bought it in 1960. It sold for $300,000 when my mother gave it up in 2001. Her annual property taxes (including school property taxes) were only $2,300 in 2001. The buyer bulldozed the perfectly good ranch style house, 3000 sq. ft., and built a 2 story house that looked like a condo and sold the new house / 6000 sq. ft lot for 750,000 about 6 months later.

I just recently got out from under a 13% house loan, assumed VA mortgage
I assumed the loan, mortgage in 1981, 29 years left on the mortgage just before the Texas economy collapsed. Houses here were being mortgaged with ARMs in 1981 at 20% then. Never had the credit to re-finace when it would have mattered due to the recession, appraised value, etc. 2 years after I bought it it was worth 60% of what I owed on it. I was 21 when I bought it. Paid it off early last year.

[Ecomike]

I must agree that gas, fuel, and energy prices had a lot to do with breaking the back of everday people, thus killing the economy. It also affected home values as people started moving back closer to their jobs, thus killing the new home values in outlying areas.

[fscrig75]

Not sure how the taxes are in Houston, but in El Paso they are horrible. The city keeps annexing land so it can grow, but they can only do it on the east side of town, were I live, and they are constantly building new schools.
I think I paid close to $3500 last year, and I'm sure the city counsel will raise them again for the next year.
I know you Texans out there don't want to hear this but I wish they would start a state income tax. It would take some of the burden off of home owners and get those people living in apartments/living in Juarez/living in New Mexico to start paying their fair share for the school services they use in the city.

[WrenchMonkey]

I must agree that gas, fuel, and energy prices had a lot to do with breaking the back of everday people, thus killing the economy. It also affected home values as people started moving back closer to their jobs, thus killing the new home values in outlying areas.

I don't buy it...

People average what, 12, 15k miles a year? At 20mpg, that's six or seven hundred gallons of gas. So what was $6-700 a year is now $2-2500.

$1,800 a year increase is only $150 a month, over the course of what, seven years?

Even if your income didn't improve at all in seven years (which would suggest you're doing something wrong), that kind of expense increase might cause you to quit eating out, start buying the cheap toilet paper, whatever.

$150 a month in gas is not enough to drive you out of a $250,000 home.

Period.

Robert

[Ecomike]

Not sure how the taxes are in Houston, but in El Paso they are horrible. The city keeps annexing land so it can grow, but they can only do it on the east side of town, were I live, and they are constantly building new schools.
I think I paid close to $3500 last year, and I'm sure the city counsel will raise them again for the next year.
I know you Texans out there don't want to hear this but I wish they would start a state income tax. It would take some of the burden off of home owners and get those people living in apartments/living in Juarez/living in New Mexico to start paying their fair share for the school services they use in the city.

Bad idea. Here in Texas we shoot first :explosion and ask questions later when anybody mentions State income taxes.

FYI, the apartment dwellers pay rent to the owners, the apartment owners pay property taxes with no homeowner tax exemptions like you get, so the apart dwellers are paying the apartment owners more than enough rent to cover the apartment owners property taxes, which are higher than yours already. Oh, and the apartment property values are based on rental value, income value, which is usually higher than the market value, unless it is abanded apartments, empty, then maybe the apartment owner can get market value apraisal.

[WrenchMonkey]

Just realized how I spiraled right off topic...

What crisis there is (and I personally think it's being overblown) was caused by greedy banks making high-risk, high-profit loans to greedy people buying houses they couldn't afford.

Getting those houses sold off to investors who could afford them, might not be a bad idea, IF the investors can then find people to resell the houses to.

Robert

[Ecomike]

I don't buy it...

People average what, 12, 15k miles a year? At 20mpg, that's six or seven hundred gallons of gas. So what was $6-700 a year is now $2-2500.

$1,800 a year increase is only $150 a month, over the course of what, seven years?

Even if your income didn't improve at all in seven years (which would suggest you're doing something wrong), that kind of expense increase might cause you to quit eating out, start buying the cheap toilet paper, whatever.

$150 a month in gas is not enough to drive you out of a $250,000 home.

Period.

Robert

You forget, that 8 am and 5 pm traffic to work is stop and go 10 mpg mileage for most people.

He was also saying that higher oil prices have caused higher prices for everything, food, taxes to feed the police gas vehicle consumption, fire, sewer, water, EMS, school buses, building heat and AC for public buildings, schools, etc..... get it?

[fscrig75]

Bad idea. Here in Texas we shoot first :explosion and ask questions later when anybody mentions State income taxes.

FYI, the apartment dwellers pay rent to the owners, the apartment owners pay property taxes with no homeowner tax exemptions like you get, so the apart dwellers are paying the apartment owners more than enough rent to cover the apartment owners property taxes, which are higher than yours already. Oh, and the apartment property values are based on rental value, income value, which is usually higher than the market value, unless it is abanded apartments, empty, then maybe the apartment owner can get market value apraisal.

That might be right, haha, I really don't know the ins and outs of apartments. But the apartment rates here are crazy, I lived in Colorado Springs before more to El Paso. The rates are about the same as they are in the Springs.
But we still run into problems since we are a border town. People live in Juarez, but work and send their kids to school in El Paso, or the live in New Mexico and work in El Paso. Either way the city doesn't get any of that money back into the system.
Oh well only 4 years and 10 months till I move back to PA, but who's counting.

[fscrig75]

One problem that I notice with forclosed home is that the bank stops taking care of them once they take control of them. The house goes to sh*t and who really wants to buy a house that isn't maintained.
And that leads into the domino effect, one house gets trashy, kids party there, homeless move, than another house goes the same way. If they would force the banks to maintain those homes it might help with getting them sold.

[WrenchMonkey]

If they would force the banks to maintain those homes it might help with getting them sold.

There ya go...

Robert

[Ecomike]

That might be right, haha, I really don't know the ins and outs of apartments. But the apartment rates here are crazy, I lived in Colorado Springs before more to El Paso. The rates are about the same as they are in the Springs.
But we still run into problems since we are a border town. People live in Juarez, but work and send their kids to school in El Paso, or the live in New Mexico and work in El Paso. Either way the city doesn't get any of that money back into the system.
Oh well only 4 years and 10 months till I move back to PA, but who's counting.

What is your appraised value and total annual property taxes? Or what is the actual tax rate this year for all the tax jurisdictions?

Mine is about 1%, so I pay about $300 a year in total property taxes on a $30,000 house (880 sq ft, in poor condition, cracked slab, flood zone, etc.)

[fscrig75]

Last year it was appraised at 145K and I paid about $3500, and thats with the homestead exemption, whatever that is. From what I've read in the papers, El Paso has the worse property tax rate in Texas and its one of the poorest city's in the state.

[RichP]

I don't buy it...

People average what, 12, 15k miles a year? At 20mpg, that's six or seven hundred gallons of gas. So what was $6-700 a year is now $2-2500.

$1,800 a year increase is only $150 a month, over the course of what, seven years?

Even if your income didn't improve at all in seven years (which would suggest you're doing something wrong), that kind of expense increase might cause you to quit eating out, start buying the cheap toilet paper, whatever.

$150 a month in gas is not enough to drive you out of a $250,000 home.

Period.

Robert

Think again, my commute when I worked in NJ was 165 miles a day round trip, at 20mpg avg thats 8 gallons per day, gas up every two days, at $1.00 a gallon thats $16 x 3 = $48 x 52= $2496 a year. Now up that gas to $4 or $9984 per year for that commute. The only time I ever got a $8,000 a year raise was when I changed jobs.
I use the 3x per week to cover one day of commuting and two days of running around doing stuff at home or trips to family dinners in NJ on weekends.
My sister lives in Rockaway NJ, for their 3500sq ft house on a 1/4 acre they pay $15000 a year in property taxes, it's almost as bad as Long Island.

For Pa, Pa is whats called a 'non referendum' state, property taxes and school taxes are separate and the school boards have no restrictions on raising taxes our only control we have is who gets elected, they built 3 new schools, used out of state contractors from Texas and Oklahoma and paid more per square foot than NYC using union labor, bribing city officials and dealing with theft of materials, the normal NYC stuff. Our great and magnanimous democrat Governor, Ed Rendell gives all the state money to Philadelphia, Pittsburgh and Harrisburg, none of it ever reaches other areas. Now the SOB wants to sell the PA turnpike to foreign investors from Spain so he can 'raise funds' for some BS. He and his cronies have also tried to toll interstate 80 after it was built with federal funds.

[WrenchMonkey]

Think again, my commute when I worked in NJ was 165 miles a day round trip...

Sorry, but that's so far from typical as to be irrelevant to any general discussion.

Most people do not commute 165 miles a day, 43,000 miles a year.

I will concede that you were hit hard by the increase of gas prices, but you have to agree that your situation is not the cause of the so-called "mortgage crisis."

Robert

[RichP]

Sorry, but that's so far from typical as to be irrelevant to any general discussion.

Most people do not commute 165 miles a day, 43,000 miles a year.

I will concede that you were hit hard by the increase of gas prices, but you have to agree that your situation is not the cause of the so-called "mortgage crisis."

Robert
I disagree, most people who live in NE Pa work in NJ or NYC, PA jobs pay crap, $10 an hour is considered 'high wages' up here. I've NEVER worked at a job that had less than a 65 mile one way commute except in the Navy.
As for hit hard, nope, I took a lower paying job in Allentown and a 22/44 mile a day commute. When I work in NYC I stay at my families house in NJ where we have a bedroom and take the train in after a 7 minute commute to the train station. The downside of that is it keeps me away from home 5 nites a week. The closer you get to where the jobs are the higher the cost of living.
Most people moved out here to improve their environment then got the short end when gas prices hit them in the pocket book.
Lets face it, when you buy a house you buy the most you can afford and then some based on the assumption that you will continue growing your income over the years. I've seen countless people buy houses they can't afford to furnish just to get a bigger house that they grow into. Outsourcing, green cards, loss of blue collar jobs changed all that pretty quick. Now it's the reverse, you usually find a job at a lower rate than the last one so it's spiraling down now instead of up like it has been since the 40's.

[WrenchMonkey]

If you have a "good" job, with no reasonable housing within 65 miles, it's not a good job.

If you find a "good" place to live, with no decent-paying jobs within 65 miles, it's not a good place to live.

Sorry. I don't know what else to tell ya...

Robert

[Ecomike]

Sorry, but that's so far from typical as to be irrelevant to any general discussion.

Most people do not commute 165 miles a day, 43,000 miles a year.

I will concede that you were hit hard by the increase of gas prices, but you have to agree that your situation is not the cause of the so-called "mortgage crisis."

Robert
I commute 80 miles a day round trip, which is just a short trip half way across Houston.

Back to the school tax issue. Some of you keep referring to school taxes as if they were not property taxes, are they not based on property values?

Here we get a list of about a dozen property tax jurisdictions, and school taxes are just one of those taxing jurisdictions. Each jurisdiction sets their own tax rate, and the rates are applied to the appraisal districts market value which they determine and set on the real property (land and buildings).

[Ecomike]

Last year it was appraised at 145K and I paid about $3500, and thats with the homestead exemption, whatever that is. From what I've read in the papers, El Paso has the worse property tax rate in Texas and its one of the poorest city's in the state.

Then your property tax rate is about twice what mine is.

On another note, in my opinion people have been buying way more house recently (since the mid 1990s) then should have bought due to low interest rates (compared to the 20% interest rate home mortgages that were around when I bought mine in 1980-81). Buying too much house has the got ya of higher property taxes and higher homeowners insurance costs.

[WrenchMonkey]

...people have been buying way more house recently (since the mid 1990s) then should have bought due to low interest rates (compared to the 20% interest rate home mortgages that were around when I bought mine in 1980-81). Buying too much house has the got ya of higher property taxes and higher homeowners insurance costs.

Christ-a-mighty, I agree with Mike...

The other half of those higher property/school taxes is the teachers' unions insistance that the solution to a poor education system is always more money. Look at per-pupil spending over the last couple decades...

Robert

[Ecomike]

Christ-a-mighty, I agree with Mike...

The other half of those higher property/school taxes is the teachers' unions insistance that the solution to a poor education system is always more money. Look at per-pupil spending over the last couple decades...

Robert

We don't believe in unions in Texas!

[Ecomike]

Christ-a-mighty, I agree with Mike...

The other half of those higher property/school taxes is the teachers' unions insistance that the solution to a poor education system is always more money. Look at per-pupil spending over the last couple decades...

Robert

We have let uncontrolled free enterprise and mass merchandise marketing turn our kids, the new generations, into consumption demons, debt demons, and out of control credit consumers, and we have failed to force the school systems, like High schools and Intermediates schools, to teach basic financial principles to those youngsters that are not lucky enough to have fiscally conservative parents teaching them.

[WrenchMonkey]

We have let uncontrolled free enterprise and mass merchandise marketing turn our kids, the new generations, into consumption demons, debt demons, and out of control credit consumers, and we have failed to force the school systems, like High schools and Intermediates schools, to teach basic financial principles to those youngsters that are not lucky enough to have fiscally conservative parents teaching them.
Christ-a-mighty, I agree with Mike... Again.

That's it... I think I'm going to bed...

Robert

[red91]

Ha this will get worse...

I know people that are letting their homes go into forclosure so that they can "trade up".

Those people need to go to jail, period.

[Ecomike]

Ha this will get worse...

I know people that are letting their homes go into forclosure so that they can "trade up".

Those people need to go to jail, period.

How does that game work?, or how is it played?

[red91]

How does that game work?, or how is it played?


if you have enough equity in your home you use it as leverage against a much better home and then default on the first.

Just don't use the same lender...

[WrenchMonkey]

if you have enough equity in your home you use it as leverage against a much better home and then default on the first.

Just don't use the same lender...

All you'd accomplish is losing the equity.

Why wouldn't you just sell it, even if its below value, to at least get some money out of it, and preserve your credit?

:dunno:
Robert

[red91]

All you'd accomplish is losing the equity.

Why wouldn't you just sell it, even if its below value, to at least get some money out of it, and preserve your credit?

:dunno:
Robert


Flooded market, skitish buyers, and NOT that much equity in it.

Around here houses aren't selling, period.

Hell there are people walking away from their houses now simply because they aren't worth what they paid for them. So their saying, screw this....
Why should "I" have to take the loss...let the bank take it.


Nothing like "responsible" home owners....

[JNickel101]

I'm surprised more people haven't started setting fire to their homes to collect the insurance money on it....

[RichP]

Flooded market, skitish buyers, and NOT that much equity in it.

Around here houses aren't selling, period.

Hell there are people walking away from their houses now simply because they aren't worth what they paid for them. So their saying, screw this....
Why should "I" have to take the loss...let the bank take it.


Nothing like "responsible" home owners....

That happened in NJ back in the 90's, when IBM closed a large office building in Bergen county, took close to 2500 executive and management high paying IBM jobs, houses that were selling for $500,000+ dropped to $150,000 literally over nite when they made the announcement. When IBM closed it also took out branch offices of banks, furniture stores, all the support stuff, total waterfall effect including the computer support companies. The company I worked for lost $150,000 a year in maintenance contracts. A guy in my guard unit who was a branch manager for National community bank said people were just walking in and dropping off their house keys, alarm codes, then just walking out.
It took 10 years but the market finally recovered and the homes are back up where they were. I imagine it was similar in Texas when Heylmyer closed TI and moved their factories and production overseas and laying off 50,000 people in less than 3 months, the stockholders made 10% that year. Of course TI pretty much dropped off the map after that, I guess they are still in business but I don't see their chips or equipment around anymore.

[WrenchMonkey]

Flooded market, skitish buyers, and NOT that much equity in it.

Around here houses aren't selling, period.


But if you don't have any (or much) equity in the cheap house, the bank is never going to let you use it as collateral (which what I assume you meant by "leverage") towards a new, expensive house...

I see how you could (try to) buy a new house, then just default on the old one to avoid the hassle of selling it.

I just don't see how that's "using" the one towards the other.

Robert

[Ecomike]

That happened in NJ back in the 90's, when IBM closed a large office building in Bergen county, took close to 2500 executive and management high paying IBM jobs, houses that were selling for $500,000+ dropped to $150,000 literally over nite when they made the announcement. When IBM closed it also took out branch offices of banks, furniture stores, all the support stuff, total waterfall effect including the computer support companies. The company I worked for lost $150,000 a year in maintenance contracts. A guy in my guard unit who was a branch manager for National community bank said people were just walking in and dropping off their house keys, alarm codes, then just walking out.
It took 10 years but the market finally recovered and the homes are back up where they were. I imagine it was similar in Texas when Heylmyer closed TI and moved their factories and production overseas and laying off 50,000 people in less than 3 months, the stockholders made 10% that year. Of course TI pretty much dropped off the map after that, I guess they are still in business but I don't see their chips or equipment around anymore.

TI is still huge, I think they are the largest scientific calculator maker around. When was this anyway, 1980s?

[WrenchMonkey]

When was this anyway, 1980s?
That happened in NJ back in the 90's

:D
Robert

[RichP]

TI is still huge, I think they are the largest scientific calculator maker around. When was this anyway, 1980s?

Might have been really late 80's, I was at bellcore as a member of technical staff, when he came on board as CEO and replaced Rocky Morano who was from NJ Bell, the bell operating companies cycled CEO's thru on 5 year cycles, Rocky retired. Heilmeyer came on board and the first thing he did was was cut the work force by 50% right off the bat, 12,000 to 6,000 over nite, well, three months anyway, then started hiring green cards to fill the vacancies he created.
He was the only CEO I ever saw that had an armored limo and armed body guards and in NJ armed body guards take quite a bit of doing considering that they did not even allow retired police to carry.
I made it thru all three cuts till they had an 'affirmative action' cut where they took all the 40-50 year old white guys and let them go.
In my opinion we need to put the US of A's house in order first, we need to stop companies from moving every single job they can save a buck on from moving it overseas and then bringing their products back into the country like it was made here. Until that changes we will continue to go downhill.

[Boatwrench]

If you have a "good" job, with no reasonable housing within 65 miles, it's not a good job.

If you find a "good" place to live, with no decent-paying jobs within 65 miles, it's not a good place to live.



This is the best point of the whole thread.