Houses are in foreclosure and more are heading that way it seems. At this point most writers begin providing a history of events leading to home owner woes – but they generally fail to get the story right. The woes are due to three things – people buying too much house and engaging in speculation, too many people taking variable rate mortgages with teaser rates and the sudden increase in the price of oil. The last item probably had the largest impact because this is what caused our economy to crash – but that would take a series of writings to explain and I digress.
One thing that can be done to help our economy and home owners both is to make it more affordable for people to refinance their homes. The cost of an appraisal is now about $400 - $450. Why? New banking rules (thanks Congress and President Obama) increased the complexity of banks getting appraisals. But here is the rub. An appraisal shouldn’t be this expensive unless there has been a major change to the property. Besides, if you get two appraisals they are likely to differ by several percent points. A common five percent difference is $10,000 on a $200,000 property.
Next is the mortgage tax (think of this as a “sales” tax). If you take out a new mortgage in Brevard County, the taxes are one percent of the total value of the mortgage. If you refinance an existing mortgage (one you already paid the tax upon) you pay the tax again. This one feature alone frequently makes refinancing uneconomical. Simply refinancing a $200,000 balance will cost you $2,000 in just taxes.
Rates are at historical lows. With good credit you can refinance into a 30 year mortgage and get a rate under five percent – maybe as low as 4.5 percent. A 6.5 percent mortgage on a $200,000 loan has a monthly payment of $1264.14. The same mortgage at 4.5 percent has a $1013.37 payment. That reduction would help struggling families.
Unfortunately, to get that 25 reduction in monthly payments one must refinance – which is almost as painful (and expensive) as buying a new home. Refinancing means new closing costs, new title searches, paying mortgage taxes, buying a new appraisal, and more. All of these add thousands to the cost of refinancing – and frequently make refinancing uneconomical. The question is, why all the pain? Refinancing a car is easy, simple, quick, and rather painless usually. Why is refinancing a house so expensive?
Most home loans are standardized. And a loan is just a contract. Therefore there is actually no reason a bank and a home owner could not agree to simply lower the interest rate and make a modification to the existing contract instead of destroying and remaking a new contract (i.e. totally refinancing). The laws just make this painful (and non-profitable for closing companies, attorneys, loan officers, and counties and states).
One thing Brevard County and Florida can do to help its home-owners is to either reduce its mortgage tax rate or set up a tiered tax rate whereby the seller pays a reduced rate to refinance the existing loan balance (say 0.1 percent) and pays the full one percent on any additional money borrowed. This would make it easier to refinance mortgages and greatly help home-owners – and our economy. And it is the right thing to do.
Sunday, September 5, 2010
Wednesday, September 1, 2010
Under Attack
If you follow the news at all you know that President Obama has sicced Attorney General Eric Holder on Arizona for daring to pass a law that makes being in the state of Arizona illegally a crime. Now think about that for a moment. The President of these United States (has joined with Mexico and) attacked (in the courts) one of these fifty United States for daring to make it illegal to be in that state if you did not legally enter the USA or if you have stayed beyond the time you are legally allowed to be in the USA.
Now that is bad enough right? I mean the President of the USA siding with a foreign government to sue one of the fifty states he is elected to represent and protect. This is an unheard of act during my life time.
This unprecedented action is astonishing (to say the least). But in the immortal words of Billy Mays “BUT WAIT” there’s more! President Obama has now filed suit via Eric Holder against Arizona Community Colleges because – are you ready for this – because “non-citizen job applicants were required to present green cards.” Yes, folks, that’s right. Because Arizona Community Colleges tried to follow the law and require non citizens to prove they had the right to work in the USA Eric Holder is suing the colleges. And yes, one of the primary reasons for this lawsuit is that one Zainul Singaporewalla, (a non-native permanent US resident) was asked to show his green card and could not.
Okay, I hear some of you yelling (okay thinking) that the college engaged in discrimination! You are almost right, there is discrimination going on here but (as I shall explain later) it is not the type discrimination you are thinking. There is this little known law (well, little know if you exclude every single green card holder and their spouse) that mandates green cardholder have their green card upon their person at all times. Read that again. Green card holders are required by law to have their green card with them at all times. But wait, there’s more! It is also illegal for the Arizona Community College (or any employer) to hire illegal aliens (or illegal immigrants or undocumented aliens or undocumented immigrants or misplaced citizens of other countries or… you get the drift).
Remember that discrimination thing I mentioned earlier. Let me now explain why President Obama and Eric Holder are both guilty of discrimination. There is this other little know law that prohibits selective enforcement of the laws. Yet that is precisely what we have here. President Obama via his surrogate Eric Holder is suing the Arizona colleges. Yet they are not filing criminal charges against Zainul Singaporewalla for violating the federal law that mandates he will keep his green card on his person at all times. Seems like this is pretty clear discrimination and pretty clear selective enforcement and a crystal clear violation of the federal law.
Maybe Arizona will say enough is enough and file a counter suit against Holder and President Obama for selective enforcement of the law (and failure to protect the state of Arizona from illegal immigrants), Now that would be an interesting case – and I would love to read the response by Holder and his crony Justice Dept to this clear allegation of misfeasance and discrimination.
Now that is bad enough right? I mean the President of the USA siding with a foreign government to sue one of the fifty states he is elected to represent and protect. This is an unheard of act during my life time.
This unprecedented action is astonishing (to say the least). But in the immortal words of Billy Mays “BUT WAIT” there’s more! President Obama has now filed suit via Eric Holder against Arizona Community Colleges because – are you ready for this – because “non-citizen job applicants were required to present green cards.” Yes, folks, that’s right. Because Arizona Community Colleges tried to follow the law and require non citizens to prove they had the right to work in the USA Eric Holder is suing the colleges. And yes, one of the primary reasons for this lawsuit is that one Zainul Singaporewalla, (a non-native permanent US resident) was asked to show his green card and could not.
Okay, I hear some of you yelling (okay thinking) that the college engaged in discrimination! You are almost right, there is discrimination going on here but (as I shall explain later) it is not the type discrimination you are thinking. There is this little known law (well, little know if you exclude every single green card holder and their spouse) that mandates green cardholder have their green card upon their person at all times. Read that again. Green card holders are required by law to have their green card with them at all times. But wait, there’s more! It is also illegal for the Arizona Community College (or any employer) to hire illegal aliens (or illegal immigrants or undocumented aliens or undocumented immigrants or misplaced citizens of other countries or… you get the drift).
Remember that discrimination thing I mentioned earlier. Let me now explain why President Obama and Eric Holder are both guilty of discrimination. There is this other little know law that prohibits selective enforcement of the laws. Yet that is precisely what we have here. President Obama via his surrogate Eric Holder is suing the Arizona colleges. Yet they are not filing criminal charges against Zainul Singaporewalla for violating the federal law that mandates he will keep his green card on his person at all times. Seems like this is pretty clear discrimination and pretty clear selective enforcement and a crystal clear violation of the federal law.
Maybe Arizona will say enough is enough and file a counter suit against Holder and President Obama for selective enforcement of the law (and failure to protect the state of Arizona from illegal immigrants), Now that would be an interesting case – and I would love to read the response by Holder and his crony Justice Dept to this clear allegation of misfeasance and discrimination.
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