Comments on: Hope Now Alliance: Not to be confused with Apocalypse Now Mortgages.

By: Ruben

Ruben — Tue, 29 Jan 2008 00:58:01 +0000

Debt Relief Act to avoid the 1099 IRS for small real state investors.

With all respect;
As a millions of ordinary people of this country, during the boom of real state market I had acquired few real state properties, investing all my savings and credits, with the hope to make some profit. Now I am trap with these properties because the prices have fall down drastically. I can give my part to re start moving the economy of this country, how? I can put these properties in the market for shore sale and some one is going to buy it right away, but to do that it would be very good to extent the Mortgage Forgiveness Debt Relief Act to avoid the 1099 IRS form for investing properties too. This IRS 1099 is holding back to millions of ordinary people, small real state investor people to sell their few properties and therefore moving the economy forward in this real state market, which is the important sector in the recovery of our economy. Extending or adopting another law as the Mortgage Forgiveness Debt Relief Act for small real state investors, also can avoid many bankruptcies and foreclosures in the country. If there is not another chance many of them will go for chapter 7 or 13 anyway, in order to avoid de deficiently judgment or the IRS 1099.

Thank you very much to give us the opportunity to send our concerns to be taking into consideration for policy decisions which will benefit our people and our country.

Ruben

By: Schahrzad

Schahrzad — Wed, 05 Dec 2007 10:33:44 +0000

Is Paulson’s plan limited to properties that are owner occupied, and which have equity? Are the investors on board?

These are unanswered questions.

By: Ms. Kukumente

Ms. Kukumente — Wed, 05 Dec 2007 05:05:10 +0000

Jim at Law. The first thing about this program that came to my mind was that it was not aimed at the subprime borrower. The subprime borrower is toast. This proposal is clearly meant for the Alt A resets. It will be painfully interesting to see how this plays out.

By: drhousingbubble

drhousingbubble — Wed, 05 Dec 2007 04:46:50 +0000

There are many good points being brought up. It is very clear that this program is specifically geared for primary homeowners who can make their current payment, but will be forced out if rates adjust. This is a tiny subset of subprime borrowers. We already know that nearly half of subprime borrowers default even before any rates reset and many never contact their lenders. The irony in all this is many of these owners and lenders for the first time are dealing with “real world” income and documentation. So how can they adequately forecast how things are going to happen if a vast number of loans are fraudulent to begin with? There was a study at the height of the bubble by the Los Angeles Times showing that those who went stated income, over 60 percent “fudged” their numbers. Of those that fudged, they overstated their income by 50 percent. If we look at the Treasury markets you would think that we are already in a recession. The markets are predicting drastic rate cuts but this won’t do much because we are reaching a critical point that $1 of credit does not produce $1 of change in the economy. We seriously need to start talking about cram down legislation and accepting the fact that housing is overpriced. If we can acknowledge that one piece of reality, then we can come to the table with substantive proposals. Right now lenders, builders, and Wall Street are still hoping that this housing market will bounce back in a few months. Their entire system depends on this going on forever. Housing in the last few years was the asset that allowed Wall Street to speculate and trade as if it were a commodity. Take a look at the CDS markets and you’ll realize that this is much larger and structural. Only radical change will allow us to have any semblance of future progress. Otherwise it is a slow bleed for many years. When I used to bring up Japan and how they dropped rates to get this 0, many people pushed this off by saying “the US isn’t Japan” or “our system is more complex” and their market was in the dumps for over a decade and is only starting to slowly recover. Debt is debt folks. Economics has global fundamental rules. If you drop rates, more credit flows in the economy. We can argue the minutia of land or other global circumstances but we can learn some lessons by examining what they did wrong. Is this the path we want to take? Seems like the Fed is going this way. Or do we want to face up to those responsible and correct the problem with some hard but reforming agendas?

By: drhousingbubble

drhousingbubble — Wed, 05 Dec 2007 04:04:54 +0000

And so the nitpicking of the proposal begins:

“A large part of that plan, it’s been widely reported, is to broadly rework adjustable rate mortgages (ARMs) for all borrowers who qualify and freeze their interest rates before they jump to unaffordable levels.

But investors in mortgage-backed securities, who buy the loans wholesale from lenders, aren’t exactly jumping on board.

“You have contracts in place guaranteeing investors a fixed rate of returns,” said Jim Carr, Chief Operating Officer of the non-profit advocacy group, National Community Reinvestment Coalition. “They have no immediate incentive to give up those returns.”

Ultimately a mortgage rate freeze would result in higher home prices, according to Peter Schiff, president of retail investment brokerage Euro Pacific Capital.

“The [investor] will say, ‘Wait a minute. The government can come back in a few years and alter contracts based on economic emergencies,’” he said.

Investors will want a higher return from their securities, and charge more for that added risk. “Because of government intervention, people will pay too much for their houses.”

Paulson freeze: Will investors agree?