Apr
30
Government Tax Foreclosure Properties Nyc
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The Real Solution to the Credit Crisis: strategies to Increase the Savings Rate and Prevent State Budget Deficits
The Real Solution to the Credit Crisis:
Strategies to increase the savings rate and prevent state budget deficits
There has been much debate about how the credit crisis started and which bailout package would seem to be the most effective way to devise a solution. Should we set aside funds for the homeowners facing foreclosure? What about the banks that are teetering on the brink of collapse? Many of us would agree that we need both approaches to be put into affect in order to quell the current financial engineering disaster. However, there are more sound strategies that would be able to fit the task. First, the minimum wage needs to be increased so that households can have more disposable income and therefore be able to purchase assets and increase spending. Second, there must be a wider array of down payment savings programs for low income households that will enable them to purchase a home within their means. Third, state governments must be aware that the solution to their current fiscal dilemma is to increase their tax base by the means of down payment assistance programs.
Trickle Up Economics
Many supplied side economists suggest that cutting taxes will spur productivity and growth, increase employment and result in higher tax revenues. However, what we have seen is an increase in deficits at both the federal and state levels since the late 80’s. [1] This is the result of wishful thinking that goes against any teachings within the field of macroeconomics. Macroeconomics textbooks inform students of a balanced budget theory that states if there is an increase in government spending, there must be an increase in taxes.[2] The United States as well as many other governments hasn’t implemented such a theory in quite some time if at all. However, what I have seen is immense spending on part of the federal government which has been fueled by credit lines from foreign countries. If the federal government wants to spend money and cut taxes at the same time, they should do so as any sound business manager would, seek a return on its capital.
An effective strategy to achieve this return on capital is to have the U.S. government decrease the corporate tax rate in a carrot and stick fashion in order to increase the minimum wage. For example, companies that pay $7.15 an hour and pay a 35% corporate tax rate should see a 15% tax rate and the minimum wage for the employees become $14.30 an hour. This is the same concept as the financial bailout package for Wall Street. However, this time dollars will be put directly into the hands of consumers and not “trickle down” to them eventually. Instead, the dollars will trickle up the economic ladder filling the tax coffers of the federal, state and local governments.
Moreover, this increased wage will enable the workers to deposit more funds into savings accounts. This will be beneficial to the banks because it will provide them with much needed deposits at a time when many have suffered terrible losses. Instead a run from banks, there will be runs to the banks which will help return confidence in the banking system. Banks will once again be flushed with cash and be ready to lend money to worthy customers.
What can states learn from HSBC Bank
I paid a visit recently to a local HSBC branch on Staten Island because I was interested in their First Home Savings Program. The program works as follows: potential homeowners are required to save a fixed amount of money every month for a period lasting up to two years. After the saving period, homeowners that have established a good payment history with the bank will see their initial contributions matched at a ration of 4 to 1 which is limited to $7500. The catch you ask? Homeowners must borrow from HSBC. By doing so, HSBC invests $7500 in down payment assistance in which the bank will recover over twenty times that in interest charges over the life of the mortgage.
Therefore, states can use this same strategy that has worked for HSBC and implement it in order to increase the tax base. For example, Frank is interested in purchasing a home but doesn’t have enough for a down payment. New York City steps in and says they will match dollar for dollar of the amount saved which will be limited to say $10000. Now Frank purchases a $200,000 home. New York’s property tax rate is about 12.139% as of 2009. As a result, the funds that the state invests in the form of down payment assistance will in effect crease a return of $24,278 / $1,000 = $24 x $50 = $12000(yearly tax bill).[3] Over the course of thirty years, the property owner will have paid an estimated amount of $36000. However, real estate prices usually increase at a rate of inflation every year which is estimated to be 3% annually. This means that the state will recoup more than five times what they initially invested with the down payment assistance. In addition, homeowners will see their wealth increase and as a result be able to increase their spending. By doing so, local business make more money and hence pay more taxes which further enriches the state.
Damage control
The recent credit crisis has caused massive damage on the cities tax base because of all the foreclosures. This is why we need such a plan implemented as soon as possible. There are already talks of massive cuts to social programs as a result of the budget shortfall. Governor Patterson recently made a trip to Washington to ask for funds to close the $47 billion dollar budget gap that is expected to hit within the next four years.[4] Further erosion of home prices will only throw salt on the already gaping wound of the cities housing market. However, the strategy suggested above can enrich the lower income households and help move them up along the upward mobility ladder.
The increased minimum wage will no doubt increase consumer spending levels. Since consumer spending accounts for seventy percent of Gross Domestic Product, there will be enormous percentage increase in these levels. Along with this increased spending comes increased revenue from sales tax on items purchased in the state. Therefore, states will not only reap windfall property tax revenues but also from sales taxes as well. Business will be able to hire additional workers because of the increased business and expansion will once again seem a possibility for small business. The cycle can keep repeating itself until wealth has been restored to the middle class.
The increase in spending levels resulting from an increase in the minimum wage will help boost both large corporations’ and small business’ bottom line. Since the stock market is a forward looking mechanism, stock prices will appreciate dramatically. Investors will once again be able to count on their retirement nest eggs to ensure that their golden years will be just that. Therefore, the increase in both consumption levels and consumer confidence resulting from an increase in the minimum wage is just what the economic doctor should prescribe to eradicate the flu that has plagued the markets. .
[1] Nouriel Roubini, Supply Side Economics: Do Tax Rate Cuts Increase Growth and Revenues and Reduce Budget Deficits? Or Is It Voodoo Economics All Over Again? Stern School of Business, New York University, 1997.
[2] Robert J Gorden, Macroeconomics 10th Edition, Northwestern University, 2006.
[3] NYC Department of Finance and Taxation, 2008.
[4] Rick Karlin, Gov. Paterson outlines more budget woes. Timesunion.com, 2008.
About the Author
Frank Lorenzo is a recent graduate from the College of Staten Island. He majored in Economics and minored in Political Science. Currently, Frank is employed as a Fraud Investigator with the City of New York.
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Apr
30
Land Foreclosure Foreclosure Listings
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Buying Greenville SC Real Estate Foreclosures, REOs, and Bank Owned Properties, Listings, and Homes for Sale
Normally before a Greenville South Carolina foreclosure is listed on the market, it first goes to the auction on the courthouse steps. In the past, the banks could almost always unload any of these foreclosed properties at the courthouse auction because the bank only needed to recover the outstanding balance on the mortgage.
Although today’s foreclosure buyers can still purchase some of these homes below market value, however, the bad loans that were made in the past years have made it difficult for most of these homes to sell at the auction. In most cases the homeowner owes more on the property than it is worth, and the bank needs to recover as much or more than the market value of the property, which means that majority of these homes will not sell at the auction.
When a property does not sell at the auction, it is said to become an REO (Real Estate Owned) status by the bank. At this point, the bank would evict the homeowners, get a BPO (Broker Price Opinion), and list the property with a real estate agent. Some of these foreclosure properties are in good condition, and sometimes some lenders would make some updates like, new carpets, paint, sometimes replace appliances, and then try to sell it at market value. But, in majority of the cases, these homes are sold as-is, and they are usually in need of repairs and/or updates.
Greenville SC foreclosed properties that are in good condition and are priced right usually sell quickly, and some of them actually receive multiple offers. The ones that don’t sell fast just sit vacant. Since the bank has no hope of getting any mortgage payments, the longer it sits, the more motivated the bank gets.
If you are interested in purchasing a foreclosure, REO or short sale property in Greenville County, and are considering the value, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale. Victor Amadi can help you with all the necessary homework before you proceed with an offer.
Feel free to contact me for help buying an Upstate foreclosed property, or to get a free list of foreclosed homes in your price range.
As your Simpsonville SC and Greater Greenville residential Realtor, I am committed to staying up to date with local information, education, and technology. My intention is to be an invaluable real estate resource. So, whether you are buying or selling real estate in Simpsonville SC, Greenville SC, Greer SC, Easley SC, Mauldin SC, Fountain Inn SC, Pickens, Powdersville, Taylors, or other Upstate SC areas, I have the tools, knowledge, experience, and resources necessary to make your experience an enjoyable and successful one. I can also help you avoid foreclosure, find Foreclosures and Short sale Properties, listings and Homes for Sale. Call me at 864-525-0201 so we can discuss how I can help make your next real estate transaction a success.
About the Author
Victor Amadi is a Greenville SC Residential Real Estate Expert, who specializes in helping Home Buyers find the best possible home and get the best possible deal. He also specializes in utilizing some of the best marketing tools to help home sellers get their home sold fast and for top dollar.
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Apr
30
California Foreclosure Free Listings
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Foreclosures?
How do you find them, how do you buy one and what do some of the terms mean? I was browsing around on yahoo realestate and noticed homes for sale with a loan balance of as low as $2k dollars. Does this mean all you have to pay is the remaining balance of $2000. I m confused please help.
I am also looking for sites that have free listings of foreclosures in cypress and buena park, california. Thank you for your help. 
I am not sure what you are looking at. Foreclosures do not sell for 2k, they sell pretty close to the market rate. They are driving the market rate down, but they are still in it.
The foreclosers are in the MLS, listed as REO. Have your agent print you up a list.
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Apr
30
How Foreclosure Affects Credit Rating
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My bank is sending me paperwork on a deed in lue of foreclosure, which I haven’t seen yet. What happens now?
My ex won’t buy or sell or rent. How bad will this affect my credit rating? And does he really get to live there free for a year or more (such as a regular foreclosure)?
Ex is not on mortgage, but on title.
I was never married to the man….Thank God!!! House has been for sale for the last year and a half, but ex has refused to lower asking price and the one offer we did receive he refused.
No doubt your credit rating will be affected by this foreclosure. Even if the foreclosure does not appear appear on your credit report the number of months you were late will appear.
Now when the bank send this document to you they are asking if you agree to leave the place without any damages on your part.
They are further saying that they will take the property in-lieu of the foreclosure.
So you have to sign this document saying you agree and will leave upon their request.
Is your ex, I assume that is husband, on the mortgage? If he is he has to sign also. If not he will not have to sign. If he is on the mortgage and refuse to sign. I suggest you sign and return it to the lender with a note saying your ex refuse to sign this document. They will have to deal with them, though your credit report will now reflect a foreclosure
If he refuse to leave the house he will be eventually be served with an unlawful eviction.
I hope this has been of some use to you, good luck.
“FIGHT ON”
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