How the $8,000 Tax Credit Cost Home Buyers $15,000

[The Rabbi]

It's gone? Where'd it go?

Hint: It went into the economy.

Actually, it was just added on to our debt.

Indeed! There was an 8,000 transfer of money from cash reserves to consumers repaid at some of the lowest interest rates in history.

The consumers then took that money and used it to purchase goods and services - adding that money to the economy, removing it from reserves (Or, of course, having it monetized)

Wow, moron post of the day.
For starters, there are no gov't "reserves." We are running a deficit. All that money had to be either borrowed from someone else, crowding out other uses for that money, or raised from taxes, crowding out other uses for that money.
The consumer did not take the money and purchase goods and services. He purchased an asset, namely a house. When that house goes down in value, the money given disappears.

It is as if someone had a crazy old uncle who gave him $50k as a downpayment on a house. The clueless nephew (you, for example) buys the house. Within 18 months prices have declined and you are in foreclosure. The equity disappears. Where is uncle's $50k? Gone.
Same here.

 

[8537]

Actually, it was just added on to our debt.

Indeed! There was an 8,000 transfer of money from cash reserves to consumers repaid at some of the lowest interest rates in history.

The consumers then took that money and used it to purchase goods and services - adding that money to the economy, removing it from reserves (Or, of course, having it monetized)

Wow, moron post of the day.
For starters, there are no gov't "reserves."

That will come as quite a shock to the governments who took part in loaning us the money.

The consumer did not take the money and purchase goods and services. He purchased an asset, namely a house. When that house goes down in value, the money given disappears.

The 8K could not be used as a down payment.

It is as if someone had a crazy old uncle who gave him $50k as a downpayment on a house. The clueless nephew (you, for example) buys the house. Within 18 months prices have declined and you are in foreclosure. The equity disappears. Where is uncle's $50k? Gone.
Same here.

a decline the value of a house doesn't send someone into foreclosure. Failing to make payments does.

try again kiddo.

 

[OohPooPahDoo]

a decline the value of a house doesn't send someone into foreclosure. Failing to make payments does.

It can if the owners bought a house with no real down payment and now they've lost their jobs and need to sell and move to another city to work. Had they put down a significant down payment they wouldn't be in such a pickle though.

 

[8537]

a decline the value of a house doesn't send someone into foreclosure. Failing to make payments does.

It can if the owners bought a house with no real down payment and now they've lost their jobs and need to sell and move to another city to work. Had they put down a significant down payment they wouldn't be in such a pickle though.

Indeed, that would be an example of a foreclosure due to a failure to make payments.

The 8,000 tax credit didn't change the minimums for downpayments (which were zero before the crisis and not much above that even now).

 

[OohPooPahDoo]

a decline the value of a house doesn't send someone into foreclosure. Failing to make payments does.

It can if the owners bought a house with no real down payment and now they've lost their jobs and need to sell and move to another city to work. Had they put down a significant down payment they wouldn't be in such a pickle though.

Indeed, that would be an example of a foreclosure due to a failure to make payments.

The 8,000 tax credit didn't change the minimums for downpayments (which were zero before the crisis and not much above that even now).

Indeed - but had the owners had a bigger down payment, they would have been able to sell at a lower price and get out of their obligation to the bank debt free (and with a little extra left hopefully). Because they had no real down payment, to sell at the market price means they will still owe the bank money, and banks don't like that.

 

[8537]

It can if the owners bought a house with no real down payment and now they've lost their jobs and need to sell and move to another city to work. Had they put down a significant down payment they wouldn't be in such a pickle though.

Indeed, that would be an example of a foreclosure due to a failure to make payments.

The 8,000 tax credit didn't change the minimums for downpayments (which were zero before the crisis and not much above that even now).

Indeed - but had the owners had a bigger down payment, they would have been able to sell at a lower price and get out of their obligation to the bank debt free (and with a little extra left hopefully). Because they had no real down payment, to sell at the market price means they will still owe the bank money, and banks don't like that.

I agree completely, and I'd certainly support increasing the required down payments. Until banks and the GSE's warm to the idea, however, it won't happen.

 

[OohPooPahDoo]

Indeed, that would be an example of a foreclosure due to a failure to make payments.

The 8,000 tax credit didn't change the minimums for downpayments (which were zero before the crisis and not much above that even now).

Indeed - but had the owners had a bigger down payment, they would have been able to sell at a lower price and get out of their obligation to the bank debt free (and with a little extra left hopefully). Because they had no real down payment, to sell at the market price means they will still owe the bank money, and banks don't like that.

I agree completely, and I'd certainly support increasing the required down payments. Until banks and the GSE's warm to the idea, however, it won't happen.

No one should be able to buy a house with less than a 10% down payment - or equity in excess of 10% in other property equal to that amount that the bank can put a lien on. While this might place a barrier on low income folks I think the advantages far outweigh the disadvantages. Instead of looking for ways to give poor folks loans with no down payment we ought be looking for ways to encourage them to save their own money to get that down payment together.

 

[MaggieMae]

The government's recent $8,000 cash incentive for first-time home buyers has proved even more costly for recipients than for taxpayers, according to data released Monday. Typical buyers have lost twice as much to price declines as they received from the program.

Interesting that you post this today. I just got my latest property assessment from my county in the mail today and my property value has dropped yet again, for the second time in three years.

Doesn't that mean you'll at least owe less property taxes?

 

[Steve Hanson]

Man, if you didn't have money for a down payment and couldn't document that you have sufficient income to PAY THE MORTGAGE, INSURANCE, AND TAXES maybe you shouldn't have bought a fucking house.

If you can't afford it, don't buy it.

 

[MaggieMae]

The tax credit saved the housing industry.

Believe me, I know from personal experience.

And the tax credit was the brainchild of Republican Senator Johnny Atkinson of Georgia.

But don't let the facts interfere with your mythology.

There is no Senator named Johnny Atkinson.

But don't let the facts interfere with your mythology.

He obviously meant Johnny Isakson. Picky picky picky.

Southern Political Report

 

[OohPooPahDoo]

Man, if you didn't have money for a down payment and couldn't document that you have sufficient income to PAY THE MORTGAGE, INSURANCE, AND TAXES maybe you shouldn't have bought a fucking house.

If you can't afford it, don't buy it.

Most folks who get into this mess could afford it fine when they bought it.


Why the heck isn't the home loan market set up more like the real estate market itself? In the real estate market there are agents to represent buyers and sellers, and the agent is supposed to represent the interest of their client. With the home loan market there's no one to represent your interests but yourself, its you vs. the bank. Would be great if you could get a buyers-side loan agent to help you select a bank to get the loan from, do the footwork for you, and help you understand all the legal mumbo jumbo - just like with a buying agent with the actual home.

 

[MaggieMae]

There is no Senator named Johnny Atkinson.

But don't let the facts interfere with your mythology.

Sorry, Johnny Isakson. Been a long day...

Johnny Isakson, US Senator

I know who you meant. I just don't like you because you're a whining little dick bag.

^This coming from "Dont Taz Me Bro." Just sayin'.

 

[Steve Hanson]

Man, if you didn't have money for a down payment and couldn't document that you have sufficient income to PAY THE MORTGAGE, INSURANCE, AND TAXES maybe you shouldn't have bought a fucking house.

If you can't afford it, don't buy it.

Most folks who get into this mess could afford it fine when they bought it.


Why the heck isn't the home loan market set up more like the real estate market itself? In the real estate market there are agents to represent buyers and sellers, and the agent is supposed to represent the interest of their client. With the home loan market there's no one to represent your interests but yourself, its you vs. the bank. Would be great if you could get a buyers-side loan agent to help you select a bank to get the loan from, do the footwork for you, and help you understand all the legal mumbo jumbo - just like with a buying agent with the actual home.

I guess not. They had no safety cushion. Living on the edge it's real easy to get pushed over it.

 

[MaggieMae]

Good point.

GM is doing quite well and is in line to be the number one auto company in the world again.

Obama and Congress saved the economy with the bailout and the stimulus package.

'challenged' is to light a word for your condition.

Hardly.

When an economy is in a deflationary spiral, the government must be the demand of last resort. Congress and Obama recognized that fact and turned things around.

Saved us from a second Great Depression.

There was no cash (except maybe in Swiss Banks or the Caymens), no credit, paper assets were worthless. The only way an infusion of money to save our economy and end a coming run on banks worldwide was for the US Government to do it. Did it stink that it was necessary? You bet.

 

[OohPooPahDoo]

'challenged' is to light a word for your condition.

Hardly.

When an economy is in a deflationary spiral, the government must be the demand of last resort. Congress and Obama recognized that fact and turned things around.

Saved us from a second Great Depression.

There was no cash (except maybe in Swiss Banks or the Caymens), no credit, paper assets were worthless. The only way an infusion of money to save our economy and end a coming run on banks worldwide was for the US Government to do it. Did it stink that it was necessary? You bet.

Being able to go to the bank and withdraw any or all of their funds on all but a dozen or so weekdays out of the year is something folks take for granted. They don't seem to understand that the big evil bank doesn't actually have their money.

 

[MaggieMae]

Yes it did help slow the fall.

The truth of the matter is that it likely did NOT slow the fall. Rather, it is more likely that sales were made EARLIER than people had planned but I have a glaring suspicion that the actual number of sales over a longer period wou8ld be the same. If you are going to buy a house then you are going to buy a house and the measly 8K is not going to change your mind. The only thing that 8it will do is motivate you to buy NOW rather than waiting 6 months or so. That is EXACTLY what happened with car sales. People that were going to buy a car anyway went ahead and bought one earlier. That is why the sharp increase was followed by a drastic decrease in sales.

But it put money back into circulation at the time, which was the point.

 

[Steve Hanson]

Good point.

GM is doing quite well and is in line to be the number one auto company in the world again.

Obama and Congress saved the economy with the bailout and the stimulus package.

'challenged' is to light a word for your condition.

Hardly.

When an economy is in a deflationary spiral, the government must be the demand of last resort. Congress and Obama recognized that fact and turned things around.

Saved us from a second Great Depression.

Turned things around? Lay off the koolaid Bro.

 

[Truthmatters]

Maybe you should go back and ask all the republicans who were talking about how great the economy was back in 2006 OPPD?

 

[MaggieMae]

Man, if you didn't have money for a down payment and couldn't document that you have sufficient income to PAY THE MORTGAGE, INSURANCE, AND TAXES maybe you shouldn't have bought a fucking house.

Ah here we go with the titillating blame game. I kinda thought that's where you were headed.

CNBC probes financial crisis in House of Cards | Reuters

a chilling CNBC documentary detailing the Wall Street-fueled events that made the current global economic collapse an unavoidable calamity...a ticking time bomb replete with bait-and-switch villains and stoked by pure blind denial.

CNBC correspondent David Faber has gathered an impressive collection of those who participated in and provoked the financial nosedive, several of whom clearly are purging their own demons in agreeing to go on camera. It makes for some unusually raw television that's more bracing than any 10 so-called reality shows.

As Faber spells it out, the crisis seems in hindsight to have been glaringly preordained, casting the subprime mortgage lenders as the snake-oil salesmen of the 21st century. They agreed to loans for those with credit ratings below 500 points, asking for no documents and fraudulently filing papers that listed incomes three and four times higher than reality.

Faber pins down former Federal Reserve Chairman Alan Greenspan, who has been accused of setting the table for the collapse with his persistent reductions in the prime rate. His apology is leavened here by his assertion that this was a once-in-a-century situation no one could see coming -- and that not even he understood some of the shenanigans being carried out in the financial markets.

Watch the documentary here (if you dare). Of all the similar documentaries and reports, this one remains the best, with interviews straight from the mouths of a few of the snakeoil salesmen.

Hulu - CNBC Originals: House of Cards - Watch the full episode now.

 

[The Rabbi]

Maybe you should go back and ask all the republicans who were talking about how great the economy was back in 2006 OPPD?

Unemployment rate: <5%
Inflation rate: <2%
Gas price: $2.59

Yeah. Team Obama would kill to get those kinds of numbers today.
What was your point, witless one?