LuxuryBlurb
Posts Tagged ‘Obama’
Saturday, November 19th, 2011
 Posted by Leonard Steinberg on November 19th, 2011
As our beloved government teeters on the edge of another major meltdown with the ‘super-committee’ due to formulate a solution to our budget crisis by the middle of next week (something that could cause radical ramifications throughout the markets, especially the credit markets…. think housing), maybe its time for all of us throughout this country to re-direct the anger recently demonstrated by the rather un-focused, semi-kooky and often misdirected OCCUPY WALL STREET to a newer, more focused, more pertinent movement: OCCUPY WASHINGTON DC!
Yes, we Americans are sick and tired of the games Washington plays: remember lots of the bad behaviour and criminal activity associated with the Great Recession happened in great part because of certain action and in-action by government. Now of course they are all blaming one another, even though they are all to blame. Pretty much all government activity seems to boil down to 2 things: 1) money and 2) re-election.
Both the Democrats and Republicans are playing political games at the expense of the country: Republicans delusional pandering to those who receive un-warranted tax breaks while a vast majority of ‘the 1%’ pay their fare share is disgraceful. Remember just because the tax rate is the same for all does not mean all earning the same income pay the same taxes: the same is true for real estate taxes where the disparity between very similar properties is often very different. Democrats on the other hand need to acknowledge that we are spending much more than we earn: raising the retirement age and a host of other common-sense budget cuts are practical and essential, not cruel, and willing this committee to fail to blame the Republicans for the gridlock so that Obama can be re-elected is reckless at best.
I never thought I would see the day when I’d agree with Sarah Palin, but this week her editorial in the Wall Street Journal struck a chord…..and it may explain why we have the housing mess that ultimately caused the financial meltdown that we are still suffering from. In her article she shows how Congress, the lawmakers of our country, obey a different set of laws than the vast majority of us mere voters (and taxpayers!)…. Here are some examples:
Insider Trading – using government information not available to the public at large to predict which companies’ stocks will rise or fall.
IPO Gifts – While it is illegal for members of Congress to accept cash gifts from interested parties, there is no restriction on their being offered initial public offerings in firms, which can be very profitable.
Self-Serving Earmarks – Some members of Congress have submitted infrastructure earmark requests for their districts that appeared to increase their value of their real estate holdings.
Encouraging Campaign Donations – Palin calls this “subtly extorting campaign donations through the threat of legislation unfavorable to an industry.” She may know about this subject first hand with the oil industry in Alaska?
The insider advantages to being a Washington player are obvious, and the hypocrisy pretty astounding as witnessed this week by Newt Gingrich. Ms. Palin cites in this article that 47% of Congressmen are millionaires compared to 1% of the US…..very telling, but also somewhat hypocritical when she has parlayed her career from a lowly beauty-queen/sportscaster to a career politician of almost 20 years…..and now more recently she dumped low-paying government realizing the value of her time in ‘the club’, transitioning from governor to a very highly paid book writer, speaker, activist and correspondent for FOX TV, certainly roles that would not pay as well were it not for her lengthy political career.
Maybe it is time for us to OCCUPY WASHINGTON DC: This government is obviously in need of a major overhaul, and the loudest possible message should be sent to end the political game-playing that is taking place at the expense of 99,99999999999% of the country that have to foot the bill.
Some may wonder why a real estate blogger would be writing this political post: let’s face it, there won’t be much of a real estate market if we do not fix this government….fast!
Saturday, November 19th, 2011
 Posted by Leonard Steinberg on November 19, 2011
Republican presidential candidate Newt Gingrich, certainly one of the most eloquent, informed and intelligent of all the Republican candidates, is now embroiled in a rather major embarrassment: After consistently and repeatedly blaming Freddie Mac and Fannie Mae for the Housing Bust that still wreaks havoc on our economy, it has been revealed that he and his firm acted as an advisor to both entities, raking in fees estimated to be somewhere between $ 1,5 and 1,8million. Oops!
Before Gingrich was hired, Freddie Mac paid $2 million to a Republican consulting firm in the hopes of killing legislation that would have regulated and
trimmed both companies. The legislation died without coming to a vote in the Senate. But the danger of regulation wasn’t dead, so Freddie Mac hired more consultants, Gingrich among them. Fannie Mae and Freddie Mac had traditionally purchased a small number of subprime mortgage loans, which involved borrowers with credit problems who could not qualify for cheaper prime loans. But starting in the late 1990s many firms started purchasing subprime loans, and Fannie and Freddie followed suit.
Some argue that it wasn’t Fannie’s and Freddie’s fault that a bubble formed around mortgage values, then burst; some even argue that it wasn’t the banks’ fault either…..although that is extremely hard to believe. Many lay the biggest blame on the U.S. Congress, both sides of the aisle, that pressured these and other institutions to make credit easily available to anybody for purposes of purchasing a home, regardless of actual credit worthiness. This availability of absurdly easy credit inflated markets and property values to bubble proportions, indebted a large proportion of American households beyond their capacity to ever recover, and set the stage for the inevitable explosion. It also allowed the politicians to claim to their constituencies that they were actually doing something besides collecting a paycheck, and thereby increased their chances of re-election.
It is not and never was the legitimate role of government to manipulate credit markets to increase home ownership levels. I will however say that the blame for the housing crisis is shared by many: Freddie Mac, Fannie Mae, the US Congress (all of them!), the banks that encouraged loans to highly unqualified buyers, the banks that made loans that were designed to make buyers default by excessive rising interest rates, the bankers that sold loans knowing they were junk and betting against them then, the Federal reserve, presidents Clinton, Bush and Obama, mortgage brokers for forcing up the purchasing power of buyers, appraisers for over-valueing properties artificially, real estate brokers for encouraging buyers to over-extend themselves, buyers who speculated, buyers who used their homes as ATM machines drawing funds from their home equity for vacations and Ferrari’s, buyers who knew they could not afford what they were buying but bet they would earn more in a few years, our education system (and parents)for not educating people to be more responsible with their money…..the list goes on. And now back to Newt….
Mr. Gingrich, for someone as intelligent and informed as you are, it is simply not believeable that you were unaware of what you were doing as part of this meltdown, and worse, it’s really hypocritical of you to lambast all the other guilty parties while not admitting your share of the blame. Unlike some of your couterparts, we simply don’t believe the facts are twirling around in your head…..you are smart, and have an outstanding memory. The US voters don’t (which could work to your benefit considering Conservatism does not only apply to fiscal policy).
During the 2008 campaign, Gingrich suggested in a Fox News interview that presidential candidate Obama should return contributions he had received from executives of Fannie and Freddie……that was good advice then, and its good advice now. Just come clean: admit you thrived off this dirty ‘system’ too and repent. The truth may set you free and maybe you can inspire all other guilty parties, and there are many, to do the same. Lord knows the world has forgiven you of a host of worse sins, although self righteousness is way up there.
Wednesday, September 8th, 2010
The Obama administration is about to define ALL single persons earning $ 200,000.00 or more or ALL couples earning $ 250,000.00 or more rich: It is time we stand up to this sheer stupidity.
Yes, these incomes would definitely qualify you as rich in Oklahoma City or a small town in Vermont, but it is VERY far from rich in a city such as New York City. It may indeed be necessary to raise taxes on the rich, but it is even more important, if we are to be American, to be fair. A BIG CITY FEDERAL TAX CREDIT is long overdue. Big cities drain national resources significantly less than smaller cities. They are much more efficient. but they are much more expensive to live in as well. Housing costs are often double, triple or even qudruple that of smaller cities and towns. Food, education, pretty much everything is more expensive. Yet Washington is incapable of recognizing this fact? Thats a national disgrace!
New York City residents should stand up for their rights now and demand a re-definition of the term ‘rich’ to take into account city-by-city cost of living immediately.
“A New York couple who earns $ 250,000.00 a year can afford an apartment that costs about $ 750,000.00 if they were to obtain a mortgage,” says Leonard Steinberg, managing director of Prudential Douglas Elliman and leader of the LUXURYLOFT team. “Where in New York City can you find a RICH PERSON’S apartment for $ 750,000.00? In Manhattan especially, earning $ 250k per year does not make you rich by any standards. Washington is completely out of touch with the real world.”
The ‘Bush tax cuts’ are set to expire at the end of 2010. Regardless of the increase in the tax rates, this is what we suggest:
1) Introduce a BIG CITY Federal Tax Credit based on the city you reside in calculated by the differential in cost of living. IE: Those earning $ 250k in Tupelo, Mississipi should not pay the same tax rate as those living in Manhattan.
2) Identify the large tax avoiders, those with access to the most ‘sophisticated’ accountants and lawyers who often pay taxes at half the rate the rest of us do, while earning ten times more.
3) Why ZERO estate taxes for just one year: revoke this stupid law that amounts to a windfall for a lucky few (at the expense of all of us) and introduce lower estate taxes for all…..or use the lost estate tax revenue of 2010 to pay down the national debt!
4) Raise the retirement age to adjust for the fact that we are living longer.
5) Make everyone pay SOME Federal taxes…even if its a little. No-one should get a free ride. We should all contribute. That way more people would vote too.
6) Cut the waste. Introduce more tech-based efficiencies to government. Fire corrupt government employees + jail them with double time.
7) Corporations and private equity are sitting on $2.5 TRILLION dollars in cash, but they are not hiring. Provide tax credits for hiring. Every individual employed, becomes a contributor to the economy by not only consuming and spending, but also reducing their need to tap into federal funds (our tax dollars) to foot their unemployment bill. Its cheaper than keeping them un-employed…..by far.
 Re-evaluate illegal immigrant reform now: Charge all illegal immigrants a one-time fee ($ 250?) to become legal. 11 million x $ 250 can help to pay down the deficit. 11 million consumers, paying taxes (if they are collected!) will help fuel the economy. Make learning English a pre-requisite for citizenship. 1 common language unites a country and eliminates the cost of bi-lingual government (it costs BILLIONS every year!).
9) Don’t focus on raising tax rates! Focus on collecting the taxes owed. Our constitution is quite clear about us all being created equal, no?
Tuesday, August 17th, 2010
 While politicians bury their heads in the sand and focus on pointing fingers for blame, building mosques and Bristol Palin, the single largest problem our economy is dealing with is still housing. Until we have a solid plan in place to clean up the housing mess and a solidly revised plan for the future of financing housing, the chance of future financial meltdowns remains strong and certain. We MUST remove politics from this debate: voters should insist on it. The lax laws governing qualifying for housing financing has cost this country way too much. And both parties are to blame for this in their embarrassing quest for power.
Reuters reports that the Obama administration called for “fundamental change” at Fannie Mae and Freddie Mac, but a long, politically explosive debate lies ahead on the future of the bailed-out mortgage finance giants and U.S. housing policy.
U.S. Treasury Secretary Timothy Geithner on Tuesday raised basic questions with housing industry leaders about the U.S. government’s long-standing role in subsidizing and supporting the $10.7 trillion housing market.
“It is not tenable to leave in place the system we have today,” Geithner said at a conference hosted by the Treasury Department almost two years after the government seized Fannie Mae and Freddie Mac to save them from collapse.
Since then, the two firms have received nearly $150 billion in taxpayer bailout money and have been placed in conservatorship, sharply restricting their past activities.
“We will not support returning Fannie and Freddie to the role they played before conservatorship, where they took market share from private competitors while enjoying the perception of government support,” Geithner said.
“We will not support a return to the system where private gains are subsidized by taxpayer losses.”
The conference, with some of the mortgage sector’s top lenders and investors, is billed as a “listening session” for the administration to gather ideas as it develops an overhaul plan by January. No major changes are expected before 2011.
“It’s safe to say there’s no clear consensus yet on how best to design a new system,” Geithner said. “But this administration will side with those who want fundamental change.”
With Congress focused on elections in November, federal spending coffers depleted and nerves on edge about changes that could trigger another housing crash, lawmakers looked likely to move slowly on overhauling housing finance, analysts said.
Enthusiasm in some quarters for removing government from housing finance was certain to collide with the political reality that housing subsides, such as the mortgage interest deduction, are deeply entrenched facets of U.S. economic life.
The problems and costs of Fannie Mae and Freddie Mac were not addressed in the sweeping Wall Street reform legislation approved by the U.S. Congress in July — a yawning gap in the Democratic bill that Republicans have sharply criticized.
Bank and mortgage-backed securities investors are watching warily as the administration weighs options, ranging from full nationalization at one extreme to privatization with no government support at the other, and alternatives in between.
Geithner said there is a strong case for a carefully designed government guarantee for mortgages, and that a key question will be whether the private sector can provide a form of insurance or guarantee on its own.
“The challenge is to make sure than any government guarantee is priced to cover the risk of losses, and structured to minimize taxpayer exposure,” Geithner said.
A government guarantee is considered essential to at least one major investor — Bill Gross, co-founder of bond-trading firm Pacific Investment Management Co. Gross told the housing conference participants that a government guarantee is needed to keep mortgages affordable.
Geithner also said government should reassess how it promotes access to affordable housing.
Shaun Donovan, secretary of Housing and Urban Development, told the conference the government’s “footprint” in housing finance needs to be much smaller than it is today.
Fannie Mae, Freddie Mac and the Federal Housing Administration now back 90 percent of new U.S. home mortgages, he added.
Geithner stressed a smooth transition period so as not to disrupt the fragile housing market. “As we go through this transition, it is important that consumers maintain access to credit at attractive rates,” he said.
Fannie Mae and Freddie Mac both jumped into subprime mortgages during the housing boom in the early 2000s in an attempt to broaden home ownership — with disastrous results.
Participants at the conference included executives from Wells Fargo and Bank of America, as well as Lewis Ranieri, who helped develop the model for the private mortgage-backed securities market that was central to the housing bubble that burst in 2007-2008.
The conference occurred a day after U.S. home-builder sentiment unexpectedly fell for a third straight month in August to its lowest level in nearly 1-1/2 years, according to a survey that added to evidence of slowing economic recovery.
A stubborn housing crisis is likely to weigh on voters already concerned about a sluggish economy headed into November elections.
Across America, the average congressional district has more than 9 percent of its mortgages delinquent by 90 days or more, according to a study by Deutsche Bank. That’s more than 2-1/2 times the delinquency rate on election day in 2008
Wednesday, July 28th, 2010
 In this morning’s Wall Street Journal, it is reported that New York and the rest of the country, is experiencing the return of the JUMBO MORTGAGE…..Not long ago, many big banks were turning away New Yorkers seeking jumbo mortgages. This summer, however, banks are competing for the business, creating a wealth of new products and attractive options for borrowers.
Jumbos are mortgages that are too big to receive government backing through Fannie Mae, Freddie Mac or the Federal Housing Administration. The size limits for jumbos vary by region, but in the tri-state area they are mortgages that exceed $729,750.
During the mortgage crisis, many big banks eliminated their jumbo lending operations. Others retained the operations, but scaled back the number of loans they originated, partly by raising down-payment requirements—some were as high as 40%—and tightening credit standards so much that many borrowers couldn’t qualify. But that’s changing fast.
“There are many more players in the jumbo market” than last year, when jumbo lending was dominated by smaller regional banks, said Melissa Cohn, president of Manhattan Mortgage Co. In recent months, several large banks, including J.P. Morgan Chase, Citibank and Wells Fargo have expanded their jumbo lending.
And while the push into the jumbo market is occurring nationwide, banks are particularly attracted to the New York area, said Keith Gumbinger of HSH Associates, a publisher of consumer-loan information in Pompton Plains, N.J. “If you’re going to be in the jumbo business, this is one of the best audiences,” said Mr. Gumbinger, noting the large concentration of wealth in the region and the relatively low default rates in the wealthier ZIP Codes.
Gibraltar Private Bank & Trust, based in Coral Gables, Fla., has been particularly competitive, offering jumbo loans as large as $10 million. “It’s a clear differentiator that we are aggressively lending to the affluent in New York,” says Chris Damian, Gibraltar’s chief lending officer. “We’re doubling our lending staff in the New York market by year-end, which is an indication that this market is booming.”
Interest rates on jumbos typically are higher than rates on smaller mortgages, but the gap has narrowed in the past year. Overall, jumbo mortgages offered in the New York area on a 30-year jumbo loan have declined to 5.59% as of last week from an average of 6.35% a year ago and to 5.13% from 5.91% on a 15-year jumbo loan, according to HSH.
But several small local banks are offering jumbos under 5%. For example, on Monday, Valley National Bank was advertising 30-year jumbos at 4.75% and 15-year jumbos at 4.5%, according to the bank’s website.
The cost of adjustable-rate jumbo mortgages is also falling. On Monday, Apple Bank lowered its rate on a five-year adjustable rate mortgage to 4.25% from 4.5%. A few banks, including J.P. Morgan Chase, are offering rates as low as 3.75% for borrowers making a down payment of at least 20%.
Down-payment requirements are easing. Wells Fargo said late last week it will lend $1 million to borrowers with down payments of 15% as long as they have strong credit.
“Big banks are jumping back in to the jumbo mortgage market because the default rate is relatively low on these mortgages historically,” said Richard Martin, a senior vice president at DE Capital Mortgage LLC, an affiliate of Wells Fargo Home Mortgage. Generally speaking, lenders restrict the size of loans so that monthly mortgage payments are no more than 35% of a borrower’s gross income, he said.
Small and regional banks often try to compete with bigger lenders by appealing to different market segments. Gibraltar’s $10 million loan limit is one of the highest in the area.
Astoria Federal Savings & Loan tries to offer lower rates than its competitors while Apple Bank is the most lenient when it comes to loans associated with new condominium developments. U.S. Bancorp, based in Minneapolis, has the lowest down-payment requirement: just 10%.
Many regional banks are more flexible than the big banks and don’t have a minimum credit score that covers all borrowers, preferring to grant jumbo loans on a case-by-case basis. For example, at Hudson City Savings Bank, which services primarily New Jersey, Connecticut and parts of New York, a determining factor is whether jumbo-loan candidates are consistent in paying their existing mortgage.
“We determine a track record by primarily looking at how borrowers repay their [previous] mortgage debt,” says Tom Laird, chief lending officer at Hudson City Savings. “We want to make sure their income level can carry a jumbo mortgage.”
LUXURYlesson: “Again we are reminded of the resiliency of the Manhattan luxury market”, says Leonard Steinberg, head of the LUXURYLOFT team and managing director of Prudential Douglas Elliman. Making Jumbo mortgages more easily available will widen the list of potential buyers who have till now remained on the sidelines. We reported several months ago in LUXURYLETTER how we saw smaller and out of town banks starting to compete with the ridiculously slow and often unexplainable behaviour of larger banks who were turning down super-qualified buyers for no good reason at all. This is an important indicator showing the un-locking of the credit markets. If a real miracle were to happen, Washington may also acknowledge that the cost of living in Manhattan is significantly greater than other parts of the country and adjust our tax code accordingly: No, Messrs. Obama, Pelosi, Reid: $ 250,000.00 per year in Manhattan does not make you rich!”
Monday, July 26th, 2010
 The financial regulatory reforms signed into law by President Obama last week are intended to accomplish a number of things. But one potential effect that probably wasn’t designed into the legislation is a leveling-off of the economic rollercoaster ride the city’s economy has taken as the financial services sector’s fortunes have risen and fallen in recent years. Financial services in recent years has generated more payroll taxes in the city than any other in recent years, so it stands to reason that the sector accounted for more than two-thirds of the $2.9-billion decline in payroll taxes here in 2009. The newly enacted Dodd-Frank bill could lessen that volatility, which should rein in profits for Wall Street firms in the short term but should stabilize revenues in the long run.
Now that the legislation is signed, there is less uncertainty, which is good for the economy. Markets generally adjust well when they know exactly what they are dealing with. And a more stable environment fuels the confidence necessary for a solid real estate environment. It probably will ease the extremes on the very high end, although we should not forget that some great fortunes are made in any market conditions and there is always a shortage of the very best in Manhattan luxury real estate.
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Well put! A couple with 2 to 3 children can hardly make ends meet living in Manhattan on an annual joint income of 250K before taxes. The new tax would discriminate against the Manhattan middle class, the very group Obama promised to protect.
A Big City Federal Tax Credit is a starting point plus extending the Bush tax cuts for 2-3 years to implement a program that is fair to all.
In addition, write to your congressman, it can help.