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Homeownership

Reflection: Obama accused of failing to mitigate the housing crash

(HOMEOWNERSHIP NEWS) Although the Obama administration promised an era of change, the lack of response and accountability after the housing bubble burst in 2008 left millions in debt and without homes.

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Pause for reflection

As we prepare for the inauguration of a new President, it is an understatement to say that the American population is split on quite a few issues. The frustration has led to much reflection on the past years, in order to fully understand where we are as a nation today. However with every new issue that arises, there are more left in the past, some never resolved. An example of this is the detriment of the foreclosure crisis in 2008.

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Movies like The Big Short attempted to break down the narrative of this financial disaster, highlighting the fact that many of the key players to blame never saw the inside of a jail cell. Although the Obama administration promised an era of change, the lack of response and accountability left everyone to think that maybe the rich and powerful really can get away with anything.

Brief breakdown

It is estimated that almost 21 million Americans lost properties due to foreclosure or an associated matter when the housing bubble burst. With every new foreclosure sign hammered into the front lawn of our neighbors, people were left to uproot their lives and find a new place to call home.

It may have not been apparent at the time with so many people suffering great losses, but a large percentage of those affected were families of color. They had been the prime targets for subprime loans, and were known to accumulate wealth in their home equity.

The Atlantic ran a searing story entitled “Obama Failed to Mitigate America’s Foreclosure Crisis,” wherin David Dayen explains how this led to a complete “disintegration of wealth” among these people, which seemed to counter the expectations many had for our first black President.

No justice

Though policies were passed to modify mortgages and funds were allocated to apply some relief, no justice was ever served to punish the banks and companies responsible for the crisis in the first place. Foreclosures continued to take place and banks collected every cent of money from homeowners before their inevitable eviction.

Even with this blatant example of fraud, President Obama and the government did not choose to prosecute banks or executives.

So what is the take away? How can the American public learn from this for future lending?

Unfortunately, it seems that borrowers will never be on the same level as those they borrow from. If the Obama administration planned to restore faith in our democracy in regards to this crisis, then they clearly failed. The apathetic response has been met with surges of frustration from the American public, who can now be sure that the same rules do not apply to everyone.

Power and money will always win out. Unfortunately the chance to prove that statement wrong was ignored.

#Foreclosure

Natalie is a Staff Writer at The Real Daily and co-founded an Austin creative magazine called Almost Real Things. When she is not writing, she spends her time making art, teaching painting classes and confusing people. In addition to pursuing a writing career, Natalie plans on getting her MFA to become a Professor of Fine Art.

Homeownership

If homeownership protections die under tax reform, real estate pros also pay a price

(REAL ESTATE NEWS) The heat is rising on tax reforms, and NAR activates their members to speak up and protect homeownership.

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Treasury Secretary, Steven Mnuchin yesterday offered an “absolute guarantee” that tax reform would be signed into law by the end of the year and warns Congress, “You could blow up the stock market if you fail to cut taxes.”

With these and other statements from the Administration, it is clear that the process is speeding up – supporters and critics are bracing themselves.

That includes the Realtor population.

The National Association of Realtors (NAR) put out a Call for Action to members on this topic today, the first of this year.

Taxes are a convoluted topic, but NAR’s analysis is that since homeowners pay 83 percent of all federal income taxes, and the reforms being debated could result of a 10 percent decrease in home values, middle class homeowners are not being protected.

NAR’s analysis concludes that for homeowners with incomes between $50,000 and $200,000, the average tax hike would be $815.

Our sources note that the current framework being debated keeps the MID (mortgage interest deduction) “in name only,” and a larger number of homeowners will see tax increases with this as well as state and local tax deductions being nixed.

NAR argues the current tax reform framework threatens homeownership as tax incentives are diminished and real estate professional also pay a price (literally).

People on both sides of the political aisle feel disappointed in the threat to homeownership incentives, particularly given that President Trump had drawn a line in the sand at the mortgage interest deductions just six months ago.

According to Doug Yearly, CEO of Toll Brothers, “making changes to the MID would be very bad policy.” He goes on to state,” this country has prided itself on encouraging homeownership, and MID has been around for decades. It’s worked very well.”

Agree with them or not, NAR is urging their members to “Tell Congress – Do not raise taxes on middle class homeowners in order to cut taxes for corporations,” and offers a pre-written letter that can be sent to their Representatives within seconds.

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Homeownership

American marriage is happening later and it’s not why you think

(HOMEOWNERSHIP) Marriage is happening later and later with Americans and economists believe it’s not just about the changing face of relationships; it’s also about money and wanting to wait for financial stability.

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As we know, homeownership is a cornerstone of American family life. Homes provide long-term financial stability as a major investment for homeowners. Furthermore, they also provide a strong environment in which to raise a family; so many of us have fond memories of running around our backyards, or cozying up in the family room.

So, it stands to reason that homeownership and marriage are tied together; many couples will buy a home soon before or soon after they get hitched.

With all that said, some of the following statistics may be alarming, as it points to a trend that may play into the delay of homeownership.

Lots of data gathered over the past few years shows Americans are marrying later and later, if at all, according to a report from The Guardian. Today, Half of American adults are married, compared to 75 percent in 1960. The disparities are mostly consistent with class divisions.

Per the Guardian article, “26 percent of poor adults are married, compared with 51 percent in 1990.” That same study found 39 percent of the modern working class of adults are married, but that number was 57 percent in the 90s.

Education is closely tied with financial status, so an education disparity is also present. Today, 50 percent of adults with a high school are married; that rate was over 60 percent 25 years ago.

As the Guardian puts it, “Young people are increasingly seeing marriage as a “capstone” rather than a “cornerstone” event, a crowning achievement once other goals have been reached, rather than a launchpad for adulthood.”

That achievement is financial stability, and many more Americans are feeling a financial crunch.

There’s data to back this up, too. For example, a poll found “nearly half of never-married adults with incomes under 30k say being financially insecure is a major reason” behind their lack of marital commitment to a partner.

Part of steady income is a steady job, and past Pew Research found 78 of never-married women wanted a future partner to have a steady job.

A decline in manufacturing jobs is contributing to this as well, per some economic research on the subject, which may help to explain how the steepest drops in marriage rates come from the lower and middle class.

It’s not unreasonable to speculate that major living costs factor into that decision as well. For example, with real estate prices going up around the country, especially in major cities with strong job markets, the capstone that is owning a home is pushed farther away from the average American.

If marriage and homeownership are so closely tied together, the delay of one may also contribute to a delay in the other.

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Homeownership

Why a $1,490 home is a complicated purchase

(HOMEOWNERSHIP) Homeownership is still out of reach for some buyers given the down payments and fees, but what if you could buy a place for less than it costs to rent?

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It’s no secret that the housing market is a roller coaster ride of highs and lows. When you hear that a house is listed for sale at $1,490 (really!), your first thought might be, “that price is missing a few zeros;” I thought the same thing as well. It seems like such a ridiculously low price for a home, there must be an error, right? Wrong. There really is a house listed for $1,490.

The 580 square foot home is located in Washington D. C. It has one bedroom, one bathroom, and does indeed cost a mere $1,490 to own. It does, however, come with a few strings attached, according to Realtor.com®.

One major string is that the home is a limited-equity co-op or LEC. Realtor.com® describes this opportunity in a couple of steps with the help of Eva Seidelman, an attorney with the Neighborhood Legal Services Program in Washington, D.C.

First, the tenant of the building were originally renting. They decided to form a cooperative association in 2010 and purchase the building from the landlord by using a low-interest loan from the District of Columbia Department of Housing and Community Development.

This gave the tenants the ability to transform the building from the existing rental units into more affordable co-ops.

This brings us to our next step. In order to live in the building, the person must fall below the co-op’s maximum income limit of $60,839 for an individual, or $69,530 for a two-person household.

Since the medium income in Washington D.C. is around $75,628, a good portion of residents would qualify for this LEC.

Once you’ve paid your $1,490, plus taxes, transaction and broker fees, it doesn’t matter if you get a raise that’s puts you above the income limit, or lose your job completely, as you own the co-op.

Included in that price, in maintenance and repairs for as long as you live there. If you consider the average price to rent is approximately $1900/month and the average home sells for around $570,000, this LEC is a bargain.

As with anything else, it depends on whom you ask.

If you’re looking to build home equity, LECs are probably not for you. The appreciation on LECs remains fairly low, often because they are so affordable to begin with (less money invested, less to appreciate). However, of you’re looking for an affordable home in a less than affordable area, LECs can be amazing opportunities for homeownership.

LECs are a solid option for recent college graduates, people recovering from foreclosure, senior citizens, anyone re-entering the workforces or relocating for work or personal reasons, or anyone on a budget who would rather own than rent.

While LECs are not the spacious mansions of Hollywood Hills, they are a viable option for people looking to own, and given maintenance and repairs are often included, you cannot find a better option for a tight budget.

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