President Bush’s plan to take funds from hardworking taxpayers and give it to irresponsible lenders and borrowers is receiving mixed reviews. The St. Petersburg Times reports:
“President Bush extended a helping hand Friday to thousands of homeowners caught in the financial bind of escalating mortgage rates.”
“It's a limited offer to people with good credit and steady jobs, but it's a sign that the federal government can no longer ignore the growing tide of foreclosures - nationwide but especially in Florida - that has thrown the financial markets into turmoil and depressed real-estate sales.”
“‘What the president did today is provide the opening shot in what will be an extended debate that ultimately will result in some real money being put to work,’ said stock analyst Dick Bove of Lutz, who follows financial companies for the brokerage Punk Ziegel.”
“‘The relief the president is proposing today is very targeted,’ said Wachovia Bank economist Mark Vitner. ‘Congress comes back in session next week, and this is an issue that's likely to have wide bipartisan support.’”
“He said Bush is doing the right thing by not offering help to investors.”
“‘In Florida and California, unfortunately the speculators need to be hurt,’ Vitner said. ‘That's the only way we're going to restore affordability. If we don't make housing more affordable in Florida, people can't afford to move there.’”
“Some other points of the president's plan will require congressional action. He is lobbying for Congress to expand FHA's role in housing by reducing the 3 percent down payment requirement and raising the insurance limit, which varies depending on the location and the type of property. The FHA insures the mortgage against default, which means a lender can offer the borrower a lower interest rate. Borrowers pay an insurance premium.”
“Bush also wants Congress to change the tax code to help borrowers who are able to negotiate a reduction in their mortgage debt. Currently, debt forgiveness is treated as taxable income unless the debt is canceled through bankruptcy.”
The Palm Beach Post reports on local reaction:
“‘Locally, I don't expect the proposal from the White House to have much impact on area homeowners,’ said Jim Sahnger of Palm Beach Financial Network in Sewall's Point.”
“‘As many subprime borrowers who originated loans in the past few years did so at elevated home prices,’ he said, ‘many will be unable to qualify, as they won't have enough equity for the (president's) program.’”
“President Bush on Friday announced a three-part plan aimed at helping homeowners facing foreclosure.”
He also pledged to seek oversight of the lending industry, a proposal that earned a big round of approval locally.
"For someone to give me a massage, they have to go to school for six months and pass a state licensing exam," said real estate analyst Jack McCabe of Deerfield Beach.
"A mortgage broker? Nada," McCabe said. "It's time we learned from our mistakes that we seem to keep repeating when the dollar signs are abundant."
The Herald Tribune reports on cutbacks by a local homebuilder:
“Lennar Corp., the big Miami home builder that reported a $255 million loss in the most recent quarter, has trimmed more than 60 additional positions from its Southwest Florida division, bringing it to its pre-housing-boom levels, an executive said.”
“The cuts this week included Rob Allegra, the division president of Lennar Sarasota/Manatee, who has been the face of the home builder locally for more than a decade.”
“Another 20 or so employees were told this week that their jobs had been eliminated in the company's Sarasota-Manatee division while 45 in the home builder's Fort Myers and Naples region were cut.”
“Added to the roughly 90 workers that Lennar -- Southwest Florida's largest home builder -- has trimmed since the beginning of the year, the most recent layoffs bring the total to more than 150.”
“‘This has been a difficult time for us,’ said Darin McMurray, Lennar's regional vice president, on Thursday. ‘Any time you have this weakness in the market it does affect employment.’”
Michell Stadler has decided to cancel her subscription to the Sun-Sentinel because she would rather not read about any negative housing news. The Sentinel printed her letter:
“I'm sad to say that I've just canceled my daily delivery of the Sun-Sentinel after 21 years of loyal readership. It was a difficult decision for me as it was a pleasant morning ritual for me to read the news over a cup of tea. I realized that your newspaper has caused me great anxiety with your sensationalized version of the local news. Can we put any more negative press on the front page about the housing market? Is it your business writer's objective to send people off the edge and make buyers even more reluctant to buy? Does he froth at the mouth waiting for the monthly statistics to be released? What is the purpose of his venom-spewing articles taking over half the front page? – Michele Stadler, Fort Lauderdale.”
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6 comments:
Hilarious bit about the lady that cancelled her subscription to Sun Sentinel. Maybe they should start printing a "Happy Times" newspaper that only reports good news and ignores anything bad. There apparently seems to be a large market of delusional people out there that want to just bury their heads in the sand.
Regarding the proposed bailout, I don't think it will even make a dent in the local market. It's merely a political PR maneuver. You can't save the Titanic by strapping some water-wings to it.
And I predicted that someone would bring up the idea of elinimating the "debt forgiveness" tax that results from short sales or foreclosures. Here's my take on that plan:
The flip side to doing that (eliminating the tax penalty) is that you'll have EVEN MORE people walking away from their mortgages, since there will be essentially no penalty to doing it.
Thus, foreclosures will soar even higher and more banks will go under, tightening lending standards even more. That will result in property values going down even more. And as more property values go down, more people will be defaulting on their payments. And so on.
It's a never-ending downward spiral that is impossible to stop at this point. Any part of the problem you try to fix will create a new problem somewhere else.
Anon,
Good point, I had not considered that it would encourage short sales.
The Devil is in the details. It will be interesting to see what, if any real relief comes from this.
Whereas I can empathize with many homeowners who were caught in the panic and jumped in for fear they would be forever priced out of the market, I certainly don't think doing anything to shore up prices in S Fla is going to benefit the people of S Fla in the long run, and it will only slow down the deflation of the bubble, and prolong the pain of a slow market.
"I'm sad to say that I've just canceled my daily delivery of the Sun-Sentinel after 21 years of loyal readership"
-Michele Stadler
Figures that she's a real estate agent:
http://www.eliteforservice.com/about_me.html
Stadler probably didn't mind the Sun Sentinel pumping air into the housing bubble for three years. They were delusional and so was she.
Welcome to Reality, lady.
Paul Owers, the real estate writer for the Sun-Sentinel, is the worst RE reporter in the state.
Hopefully, as the Sun-Sentinel is forced into continued job cuts, his neck will be one of the next on the chopping block.
It's about time the Sun-Sentinel hire a real estate reporter that actually understands real estate, instead of a hack like Owers. Or, perhaps they should send him to take some college classes on his writing topic.
Of the three local daily papers, the Sun-Sentinel has been the most concerned about losing their real estate ad dollars. They continue to quote industry shills like Ron Shuffield and Mark Zilbert and other lying cheerleaders.
That's what I find really amusing about Stadler's gripe. The Sun-Sentinel has been BY FAR the worst of the three major South Florida papers in reporting the truth.
They has consistently been the biggest cheerleaders of the boom from the beginning.
Now, that there is no more "good" news to report, they on rare occasions run a tiny fluff piece about troubled home-borrowers. Of course, those articles are always filled with quotes from cheerleading realtor that claim that prosperity is right around the corner.
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