Charges Republicans fear: Tax Theft

By York Van Nixon III

In a New York Times op-ed, David Stockman, former director of the Office of Management and Budget under President Ronald Reagan, gives a scathing appraisal of Republican economic policies.  He bluntly says, “If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing.”  Mr. Stockman’s view is supported by fellow Republican and former Fed Chairman Alan Greenspan. In an interview last Sunday on “Meet the Press,” when asked about the Republican claim that tax cuts pay for themselves, he answered flatly, “They do not.” Mr. Greenspan is referring to their inability to generate revenue and jobs. This is evidenced by results of the Bush tax cuts for the wealthy, which will cost taxpayers about 3.9 trillion dollars in lost revenue when they expire this year. Despite opinions of economists against tax cuts from both parties, GOP leadership continues to tout benefits of tax cuts to the wealthy.

Ignoring well-respected economists’ negative outlook for the continuation of supply-side and “trickle-down” economics, millions of loyal Republicans cling to a fiscal conservatism espoused by party founder Alvan Bovay but never fully realized by any president. Success has been limited to promises of “Read my lips: no new taxes.” History proves otherwise. The facts speak for themselves. And when they do, those of GOP leadership are silenced by the possibility of their uninformed supporters becoming aware of Republican smarmy equivocation and prestidigitation with American tax dollars.

 The Center on Budget and Policy Priorities has this to say about GWB’s tax cuts: 

• The Bush tax cuts have contributed to revenues dropping in 2004 to the lowest level as a share of the economy since 1950, and have been a major contributor to the dramatic shift from large projected budget surpluses to projected deficits as far as the eye can see.
• The tax cuts have conferred the most benefits, by far, on the highest-income households — those least in need of additional resources — at a time when income already is exceptionally concentrated at the top of the income spectrum.
• The design of these tax cuts was ill-conceived, resulting in significantly less economic stimulus than could have been accomplished for the same budgetary cost.  In part because the tax cuts were not as effective as alternative measures would have been, job creation during this recovery has been notably worse than in any other recovery since the end of World War II.

 The last paragraph in Mr. Stockman’s op-ed can not be more foreboding, if Democrats fail to find a way of garnering enough honest GOP votes to save the American standard of living:

The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing — as suggested by last week’s news that the national economy grew at an anemic annual rate of 2.4 percent in the second quarter. Under these circumstances, it’s a pity that the modern Republican Party offers the American people an irrelevant platform of recycled Keynesianism when the old approach — balanced budgets, sound money and financial discipline — is needed more than ever.

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Question: Has there been one bill offered by Republicans since President Obama was elected that does not further erode the diminishing wealth of the middle class? Please post

Race: Weapon of Mass Destruction

By York Van Nixon III

Resistance to diversity should be on all airlines’ “no-fly” list. Warning signs should glare along every concourse of human interaction against building walls putting homeland security in peril instead of pathways to tolerance. Today’s instant media is quick to season our senses with salt and pepper images rather than positive medleys reflecting the spectrum of human potential. At some point this country will become fed up with tidbits and equivocated strands of pseudo-news—masquerading as fact—and grit its teeth to sit down as open-minded Americans to table hostility for fellowship.

It’s time to convene a summit on diversity in our United States. We can not afford to allow shadows of racial hatred from the bitter days of intolerance to blind us to what Dr. Martin Luther King called “… the content of character.” Physiognomic cues of modern day men and women are now little more than vestiges of fading clanship. What is of value lies beneath a mask that is more gossamer than opaque, when there is the will to look with more than ones eyes. Recent clamorous acrimonies surrounding “race-baiting,” dragging from society’s underbelly, should be a clarion call to every man and woman of conscience to question what they read, but more importantly, to listen to what sings from their heart. Too many of us wear the clothes of an egalitarian in plan sight, only to disrobe to temptations of intransigence in the privacy of our minds. This is a curious paradox in that color does not exist in darkness. Intolerance is just another shade on the palette of bigotry.

Incendiary epithets, on placards waving from fringes of the Tea Party movement and NAACP proclamations, are the death rattles of ethnic identity. These final discordant forays may be the swan song of race. Despite recent spates of intolerance being fodder for news, ethnicity is dying in this country. But, there are those unwilling to pull the plug, fearing they may be left with little more than their individual accomplishments and failures. To stand naked before the world is difficult, when identity is crafted from group persona.

Let the countdown begin to obliterate intolerance today. The clock to confrontation is running down. As midterm elections near, opposing sides bereft of issues may resort to guerrilla tactics by exploiting what some consider too delicate to discuss in public. Like religion, an often eschewed topic around polite dinner tables when guests are around, race is frequently the course left on the plate. Avoidance may be difficult to swallow when America is hungry for resolution.

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If you were asked to be on a panel to discuss diversity, what would be the topic at the head of your list? Please post your comments below:

Need for 2nd stimulus grows as GDP declines

By York Van Nixon III
 

U.S. Gross Domestic Product (GDP) has become a Sisyphean stone rolling back on the toes of the Obama Administration. Calls for a second stimulus echo pains of a middle class being crushed in the wake of reckless spending and laissez faire controls left by the past administration and its complicit Congress. With “jobs” likely being the message politicians will be hearing during the campaign, even Republicans may agree the first recovery is too small to get the economy over its recession hump.

According to the Bureau of Economic Analysis, an agency within the Dept. of Commerce, real GDP increased at a 2.4 annual rate in the second quarter. This is a 1.3% decline of the 3.7% annual pace reported for the first quarter of 2010. If the U.S. economy continues at the second quarter rate, prospects of improvement to unemployment will dim and exacerbate overall recovery.

Those blaming the current administration for current woes may be ignoring realities of remediation and common sense. For example, if you hire a contractor who does a shoddy job, correcting the problem usually costs more and often takes twice as long to complete. The same can be said about our economy. When George W. Bush came into office, our GDP was 6.4 percent, along with a public debt of 5,656 trillion dollars. The day President Obama took his seat in the Oval Office, GDP was -1.7 percent and our public debt was 12,311 trillion dollars. Our current public debt is 13,257 trillion dollars. Those saying Mr. Obama has doubled our debt are repeating misinformation. Our national debt has risen a few billion less than one trillion since he came into office. (Data alluded to are public information from government agencies and not equivocations for those lacking the time to read the facts.)

According to How the Great Recession was Brought to an End, by Princeton Professor Alan S. Blinder and Mark Zandi, Chief Economist for Moody’s Analytics, TARP and the stimulus package were successful in averting an economic climate not seen since the Great Depression. The effects of TARP did forestall a complete collapse of our financial system. And the economic recovery plan appears to have stopped a free-fall; but it was not large enough to spur rapid recovery in personal wealth.

As Americans mull over choices this November, it behooves them to do a little homework. Being that most people have access to an internet with reliable information, depending on politicians to spew facts instead of misinformation may lead to a period some refuse to admit was an economic and social failure.

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Question: Is your representative in Congress telling you the truth of the past and present administrations? Please post your comments below.

Republicans say “to hell with Sherry Sherrod”

By York Van Nixon III

In the classic Laurel and Hardy film, “Them Thar Hills” is an uproarious “tit for tat” scene where Oliver Hardy runs around with his pants of fire. The movie ends with him jumping into a well to extinguish the flames. But unknown to him, the well has been filled with hooch by moonshiners mistaking the duo for revenuers. The resulting explosion leaves Ollie buried in the ground with his legs flailing in the air. RNC Chairman Michael Steele may have the same end with his fundraiser in Beverly Hills next month, if he continues to fill the dais with explosive personalities like Andrew Breitbart. The smoldering issues surrounding GOP efforts for inclusiveness, notwithstanding their version of Sam Greenlee’s Dan Freeman (Mr. Steele) sitting by the door sans livery, the Republican Party along with its fringe groups like the Tea Party movement appears to be pre-announcing their intention to nix Neapolitan ice cream from their dinner menu. In the minds of some, it’s vanilla or nothing else.

The $1,000 plate “Election Countdown” bash being held at the Beverly Wilshire on August 12, 2010 will give new meaning to slap-stick comedy. They’ll need to laugh at the top of their voices to drown out the jeers from any person seeking resolution to the problem of diversity in this country. Perhaps Sarah Palin will dampen the din with demonstrations of her deftness in firing her moose-hunting shotgun at Democrat posters of jackasses during the floor-show. If that fails to garner applause, they could always have Andrew Breitbart run the projector while they drink champagne and watch edited reruns of former USDA employee Shirley Sherrod’s speech.

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Question: Is there any doubt on where the GOP stands on diversity, in light of their feature guests?

Please post your comments below.

Petworth is sizzling!

It’s hard to believe the thermometer. Yesterday, temperatures around the Washington Metropolitan Area averaged 90 degrees. Do we need to rename spring to early summer? Probably not yet, although some global warming theorists predict palm trees may one day replace the Sakura cherry trees around the Tidal Basin. The idea of an annual Palm Tree Festival does not really do it for me. So, let’s be optimistic in the scientific community’s ability to find a practical alternative to climate-warming fuels before we become a two-climate planet. In the meantime, there can be no denying the frenetic pace of our local real estate market. Record sales are being reported across the city.

One market in particular, Petworth, is showing sales from the past six months that are approaching levels reminiscent of 2004-2006. This well-established neighborhood, in upper Northwest Washington, D.C., is reporting sales of more than 111 homes being sold since October, of which 30 went to new owners in the past month.

But despite signs of a return to market normalcy, as quickly as they are being sold, homes are being replaced with new listings. There are 89 properties for sale in Petworth as of Wednesday. Prices range from a one-bedroom condo for $99,999 to a beautiful four-bedroom Wardman rowhouse around Grant Circle for the low price of $649,900. In addition to homes being offered at an arm’s-length, there are 18 bank-owned and short-sale properties available from $99,999 to $430,000. Many of these homes can be purchased through HomePath.Com.

As you consider whether or not now is a good time to buy, keep in mind the $8,500 first-time buyer tax credit will expire at the end of April. Purchasing one of these homes with a FHA loan requiring only 3.5% down should tell you now may be the best time to become a homeowner, and stop paying the mortgage for your landlord.

If you are interested in what is available in another neighborhood, please feel free to contact me with your questions: york3@ReadyForOurHome.Com

Bank on changes

One thing is worse than being late to a party is showing up early. Since the collapse of real estate, potential homeowners and investors have been vexed with the conundrum of buying now when rates are low, or waiting until a bottom has been declared as interest rates rise in response to our virulent deficit. In other words, if you buy now, there is a chance the value of your property may decrease before you have your house-warming party. On the other hand, if you wait until you believe property values are at their bottom, interest rates on a 30-year mortgage, which are now 4.97 percent, may rise as high as 9 percent. How does one decide? Well, besides flipping a coin—you can consider the facts.

First of all, consider this: our Federal Government is scheduled to wind down its involvement in buying mortgage-backed securities in March. If that happens, it will shift the secondary market from GSEs (Fannie Mae and Freddie Mac) to private industry and sovereign-wealth funds of foreign countries. Good luck with that one! As much as the Obama Administration and Congress wish to be out of housing—the truth is they are stuck. Private banking lacks the reserves to hold billions of dollars of mortgages on their books for any extended period of time without replenishing their pools with fresh money. And across the water, foreign banks and governments are still reeling from having eaten billions in worthless securities sold at a discount on Wall Street. Given the choice, one should expect the European Union to keep its money on their side of the Atlantic, particularly while it is struggling to bale out one of its members—Greece. A second helping of greenbacks now from the United States will likely cause something more pernicious than indigestion. A response of monetary xenophobia should not come as a surprise to any rational mind.

So where is the money going to come from? Monetary manna will likely fall from the same heaven it has always come—the pockets of American taxpayers. The bottom line, if you will, is if the Federal Government seriously backs off, any hope of a near-term recovery will be lost. Despite our government’s desire to shift its attention to jobs, it will have to find a way to do both or face “double-dip recession.

The likelihood of stall in the economy is being suggested by some watchers of the economy outside of government. Besides their concern with the lack of job recovery, many analysts suggest that there is a “shadow inventory” of houses yet to be placed on the market. This next wave of properties will be the result of approximately 3-5 million mortgages that fail meeting the requirements for loan modification. While the number may be too high, depending on which analyst you follow, one does not need a MBA in finance to understand the correlation between unemployment and mortgage delinquency.

We should expect to hear details of a second stimulus within days. Unless the new infusion of money is able to create millions of jobs overnight, areas susceptible to high unemployment will see new For Sale signs being hoisted on REO properties.

Despite the slight rise in unemployment in Washington, D.C. as reported last month, home prices west of the Anacostia River should remain flat with pockets of appreciations in neighborhoods like Dupont Circle, Logan Circle, and Adams Morgan, where unemployment is comparatively low.

Caution should be exercised if you are considering buying properties outside of the aforementioned areas. In some, the potential of a 20 percent correction could wipe out equity for years. The only way for you to limit risk is to have a strong appraisal contingency written in your purchase agreement.

Thing are getting better. Until regional improvement occurs, make sure you do your homework. If you do not have the time to research a potential property, hire someone to do it for you. A few hundred dollars invested in hiring a real estate professional is cheaper than losing your life-savings in a property that starts to depreciate after you close the front door.

York Van Nixon III
Licensed Real Estate Broker, Appraiser and Mortgage Broker

Nex Millennium Realty and Financial Services

Beat the bill collector

For those with secure jobs and steady incomes-kudos! But for the unfortunate people robbing Peter to pay Paula, there are some things you can do to slow and even eliminate calls from blood-sucking collectors. There is nothing wrong with earning a living off the hard times of someone in debt unless you have a conscience and eschew pulling the wings off a butterfly.

As more people face foreclosure, many will have to choose between making a mortgage payment to stave off losing their home and paying the bills for their consumer debt like credit cards. Do not be intimidated by tough-talking hatchet men for creditors. There are strict rules for them to follow. Your not knowing the law can allow them to deny you government protected rights.

The first thing to do when you get a call from a bill collector is never go on defense. One of the first ploys debt collectors use when they call is to disregard proper phone etiquette. They usually call and address you by your first name without first identifying themselves. Do not let them get away with demeaning you or giving information about the collection company. Instead, make their impropriety your opportunity to put them on their heels. Remind them what proper phone behavior is and your unwillingness to be called by your first name except by friends and family.

After the bill collector recovers and shows respect, he or she will usually read their script which usually includes something like the following “for quality purposes, this conversation is being recorded.” This is where you really can stop them dead in their tracks. In most states and the District of Columbia, you have the legal right not be recorded. Make them aware you are knowledgeable of your rights. Most collection companies are unable or unwilling to turn off their recording systems for one call. If the collector tries to continue, simply tell them they are violating your rights which can cost them $1,000 for every instance. When you ask the caller for his or her name, you can be sure they will hang up faster than you can repeat the request.

Another way to stem annoying calls from collectors is to use the words “cease and desist.” Those two words tell the blood sucker you will only communicate with them by mail. If they do not stop the call at that point, it is your right to hang up. If they call again, make sure you get their name and number. Their callling after being told not to call you is a direct violation of the law.

For those receiving calls from collectors at work, a solution could not be easier. Tell the slime-ball on the other end of your company’s strict policy of no employee receiving calls on their business phone about personal finances. The law requires a collection company to immediately place you on their not-to-call-at-work list. There are very stiff fines for any company crossing the line. Having a little knowledge about how the game is played can allow you to send bill collectors running with their tails between their legs.

While any debt you incurred is a legal responsibility, these are tough times. If you are like 10 million other people in this country suffering from circumstances beyond your control like our whole economy, then it behooves you to spend more time trying to rebuild your financial well being than talking to people without a shred of compassion for your situation.

For more detailed information on your rights, please visit the Fair Debt Collection Practices Act to get the comprehensive low-down on beating the bill collector.

York Van Nixon III
Licensed Real Estate Broker, Appraiser and Mortgage Broker

Nex Millennium Realty and Financial Services

Suggested winter reading: MISSING STEPS

We can stem foreclosures

My Friday article in Examiner.Com reported the spirit of the holiday gesture by Fannie Mae, Freddie Mac and Citigroup to forestall foreclosure on some unfortunate families until January. While I do not to discount what they are doing, where is it written you can only be charitable around Christmas or any other holiday celebrated at the end of the year?

We often forget the Season for Giving is to remind us to care about our fellow-man or woman everyday of the year. It is easy to delude ourselves in thinking our self-worth can be summed by the receipts from the possessions around us. Thinking like that should only be forgiven for children who are still in the “Me, Me” stage of development. I am not privy to your innermost thoughts, but I feel confident, if given the choice and opportunity, most of us would gladly extend a helping hand to a stranger.

There is something magical in giving. Can you remember the last time you did something for a perfect stranger? It may not have been recent, but I wager you can almost feel the gratification in easing the pain or discomfort of someone who just happened to appear in your life and perhaps you never saw again. The memory is still with you, and we can be sure the person on the receiving end of your generosity, whether it was money or time, will never forget your face.

The moratorium on foreclosures will end for perhaps countless people in January. Before that happens I ask each of you to propose a way of helping people in foreclosure whom have exhausted every remedy offered under President Obama’s Home Affordability and Stability Plan. Let’s hear your idea for making better the tragic situation of millions across the country.

I propose the District of Columbia allow residents of our city to donate $100 or more to a mortgage-rescue fund. Those displays of generosity would be deductible from your 2009 tax liability. Furthermore, a similar deduction should be allowed to anyone on their Federal Return as well. It certainly makes more economic sense than “Cash for Caulkers.”

Locally, monies from such a fund could be collected by the DC Examiner and then deposited into an emergency mortgage fund administered by the District of Columbia Housing Authority. This would not be a giveaway to our government. Monies they receive would have to be earmarked under the auspices of a bill passed in the City Council. Perhaps our local government would take it a step further by issuing bonds to further underwrite this rescue program, which would have the added effect of stabilizing the real estate market. With less houses on the market, a balance of buyers and sellers would be quickly realized.

Here is a factoid: if every resident in the District were to donate just one dollar, it would pay one mortgage payment for 400 families in the city. Just think what one-hundred dollars from everyone could do? Well, it would be enough money to buy one-quarter of all houses in foreclosure in the District of Columbia.

Share your ideas so we can make a difference for those worrying about where their children will be sleeping next month. Good ideas are just as valuable and needed as money for this grass-roots effort to reach those in despair. Success in our city could become a blueprint for similar programs across the country. Congress has failed to help many of the voters who sent them to Washington. It is time for The People to take matters in their hands and show legislators what can be done.

Here is another factoid: It would cost approximately 1.3 trillion dollars to buy every home in foreclosure across the United States. That is less than what it cost us to lose a war in Iraq. That is also less than what has been spent bailing out Wall Street which refuses to lend to needy borrowers. The cost to buy every home in foreclosure is less than the proposed cost to buy all of the “toxic-assets” of Fannie Mae and Freddie Mac.

If the Federal Government would agree to a national deduction it would for once give taxpayers a real voice in how their tax dollars are spent.

Please post your ideas in the comment section. If you prefer, please feel free to contact me at mailto:york3@ReadyForOurHome.com

York Van Nixon III
Licensed Real Estate Broker, Appraiser and Mortgage Broker

Foreclose on loan modification: Time to try something different

When someone makes a promise, it is wise to not hold your breath. The announcement from the White House on Friday there would be something of substance coming out on Monday turns out not to be a lifeline to struggling homeowners facing foreclosure. Instead, it is more akin to throwing a life preserver attached to a cobweb to a drowning man.

Looking for cover, instead of the White House taking flak for doing more of nothing, the Treasury Department was given the task of telling sweating homeowners the Federal Government would work elbow to elbow as banks do what they are suppose to do-protect their money by denying loans that have the possibility of not being repaid. To do otherwise would be as inane as to ever think the Home Affordability and Stability Plan would work.

Unfortunately, loan modification continues to be little more than lip service to the problem. For banks to modify any loan there needs to be at least two factors verified. First, the borrower must provide proof of their ability to repay the new loan. After that is documented, an appraiser has to determine for the bank whether or not the modified loan is more than 125 percent of the estimated market value of the subject property.

So far, the bulk of the borrowers still in trial modification fail to meet one or both of the requirements for a loan medication. Unless the borrower is able to find a good paying job in a market with 17 percent effective unemployment, their chances of saving their home are about the same as winning the lottery. At this point, whether or not their home is worth the loan amount is academic. But if they do meet the income requirements, their fate is in the best estimate of an appraiser, who must take into account the number of vacant houses and homes in foreclosure. Considering the million-dollar Errors and Omissions policy appraiser must carry when working for banks, the prudent ones are opting on the side of caution by ‘low-balling” values to avoid being sued until the real estate market reaches a bottom.

When the White House convenes its next economic summit, it should make sure real estate brokers and appraisers are around the table. To date, most of his advisers have been Harvard MBAs. Perhaps having too much education is a disadvantage when trying to understand how a real estate market is made. Bailing out banks restored confidence in their ability to keep the doors open. Now is the time to tackle housing from the bottom up.

York Van Nixon III

Nex Millennium Realty and Financial Services

YorkVanNixonIII.Com

Is now the best time to buy a home? Rates are an all time low.

On Wednesday, Freddie Mac, the sister GSE of Fannie Mae, released its Primary Mortgage Market Survey®: The 4.78 rate for the 30-year fixed mortgage tied the low reached in April 2009. Prior to the first quarter of this year, the 30-year had not been at that level since 1971. According the latest report from the FDIC, cheap money from the Fed continues to provide an optimum environment for banks, but lending is down 2.78 percent, a low not seen since 1984. Although banks are able to borrow from the discount window at .50 percent, unless the Fed is willing to give them an early Christmas present by buying up the bulk of their toxic-debt, it is likely most banks will continue to only originate mortgages to the most qualified borrowers( credit scores of 750 or higher).

On the other side of the equation are home prices. Like rates, they are an all-time low. But unlike interest rates, which are expected to rise by the third quarter of 2010, the price of real estate may not have reached bottom. There may another 20 percent correction before a market- floor is established.

Beginning in 2010, 3 to 4 million homes are expected to be added to the 1.5 million properties already in foreclosure. This large increase will be the result of two factors. One will surely be the homeowners who failed to qualify for loan modification. The rest will be the unfortunate families who will face foreclosure because their ARM (adjustable rate) will expire in the first-quarter. Their choice will be paying the new higher rate or trying to qualify for a new loan. Considering the current rate of unemployment, many will fail to qualify because of their inability to provide documentation of their employment.

Just like the Christmas gifts you will be buying in a few weeks, homes will likely be cheaper after New Year’s Eve. Now may be a good time to make a pre-resolution: Be patient in 2010. Doing so may save you tens of thousands in lost equity. If you have not done so yet, get pre-approved for a mortgage. When the time is right, be ready to find your dream home at a cushy price. And don’t forget the first-time buyers tax credit has been extended until April. Conditions could even get better for buyers if things get worse for present owners.
Unfortunately (depending on your situation), the likelihood is high. When you buy champagne for the holidays, remember to save one at the back of refrigerator for the settlement of your new home that will probably cost you less each month than paying rent. Now, that will be something to really celebrate!

York Van Nixon III
Licensed Real Estate Broker, Appraiser and Mortgage Broker