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FDIC Blackhole Bailout
Anyone who says the stimulus measures ever stopped doesn’t know what they are talking about. We actually have several “blackhole bailouts”; bailouts with undefined limits or no limits at all, draining money from the American taxpayer continuously. One would be the endless bailout of Fannie Mae and Freddie Mac, which will require more and more stimulus every quarter as the housing market continues to disintegrate. Another, would be the rarely spoken of bailout of the FDIC, which has been in the red for quite some time now. Just as Fannie and Freddie’s bailout is dependent on the constant default of mortgage loans, the FDIC’s bailout is predicated on the constant default of banks.
Last year, analysts estimated that we would see approximately 140 bank closures in 2010. It is now the beginning of September and already 118 banks have been shuttered, well on our way to surpassing the 140 bank estimate: ShoreBank Among 8 FDIC Bank Closures: Total Of 118 Seized In 2010
Keep in mind that all of these banks are closing while the FDIC is broke! Meaning, every penny the FDIC pays out to insured account holders is supplied by the Treasury, which is also broke! Where do they get the money? Where else? The Federal Reserve issues the money out of thin air. Where is this leading? One of two scenarios: either the Fed ends its printing and the FDIC goes bankrupt, causing a run on the banks, or, the Fed continues to print more fiat until the dollar is rendered absolutely worthless on the world market.
For those who think healthier banking is just around the corner, the FDIC expanded its “secret” list of troubled banks this year to over 800! Bank Failures, Bank Closings, FDIC Receivership | InvestorPlace
This has some of the smarter investors questioning if the bailouts will EVER end. The answer is ‘no’. At least, not until the government defaults, or our currency implodes, which we will discuss in a moment.
What most people don't know is prior to 2008, the term short sale was pretty much unknown by many. It's been an education process for us agents and the banks had few procedures or policies to handle. Our state had to create additional contract addendum's in the last year to address short sales.
Short sales have existed for years. It's like writing off a bad loan. One party doesn't get full payment. That's fine. They write off that bad loan and make it a tax deduction.
However, the party who owes money, ends up getting a 1099 Misc at the end of the year. And they will owe taxes on that shorted amount. Pretty simple. You screw someone over 100K. You end up having to pay taxes on that 100K shorted amount.
But the government thought they were helping people out with the 2007 temporary law that forgave short sales owners. This, in my opinion has even made the housing market much worse. You end up creating more distress properties for sale and this tanks the market even more.
Just go back to the old days (well the law expires Dec 31st 2012). It's a big deterrent to have to sale if you will owe taxes on the shorted amount. Makes people think twice before they try to unload their property.
Short sales have existed for years. It's like writing off a bad loan. One party doesn't get full payment. That's fine. They write off that bad loan and make it a tax deduction.
However, the party who owes money, ends up getting a 1099 Misc at the end of the year. And they will owe taxes on that shorted amount. Pretty simple. You screw someone over 100K. You end up having to pay taxes on that 100K shorted amount.
But the government thought they were helping people out with the 2007 temporary law that forgave short sales owners. This, in my opinion has even made the housing market much worse. You end up creating more distress properties for sale and this tanks the market even more.
Just go back to the old days (well the law expires Dec 31st 2012). It's a big deterrent to have to sale if you will owe taxes on the shorted amount. Makes people think twice before they try to unload their property.
There was a thread here not long ago (seems to have disappeared now, I can't find it) where someone was saying that he was selling short, only because he just didn't want to live there anymore.
I have some serious issues with that. It's one thing to be stuck in a situation where you can't afford your house anymore, but to screw over a lender just because you've decided you want to do something different is a horse of a different color.
Read or listen to my link above to get some ideas on how to answer your question... Many bloggers are making comparisons to the era you reference. Taxes, yes absolutely... But don't forget things like the US govt making the holding of gold as illegal. Over time, governments have seized whatever they felt necessary to maintain the greater good. aka our good ole Oligarchy.
For us, the FDIC simply cannot survive an extended run. Insurance by its very definition has finite limits.
Absolutely. It was never intended to do so. The models did not anticipate the credit bubble economy , the mania of the masses to live substantially beyond their means which drove the economy for a blip in time, that so many would not honor their obligations to repay, strategic defaults and all the rest. If they had, the banks would have had to put a $ for $ into the FDIC reserve which is not condusive to a global economy so dependent upon the extension of credit.
If I recall Hoover raised the top tier income tax rate ( a relatively new concept at the time) to an astonishing 63% on the wealthy. This act also raised corporate taxes by almost 15% and doubled the estate tax. This was before social security/social welfare programs and most certainly did not address health care, another relative newcomer.
Short sales have existed for years. It's like writing off a bad loan. One party doesn't get full payment. That's fine. They write off that bad loan and make it a tax deduction.
However, the party who owes money, ends up getting a 1099 Misc at the end of the year. And they will owe taxes on that shorted amount. Pretty simple. You screw someone over 100K. You end up having to pay taxes on that 100K shorted amount.
But the government thought they were helping people out with the 2007 temporary law that forgave short sales owners. This, in my opinion has even made the housing market much worse. You end up creating more distress properties for sale and this tanks the market even more.
Just go back to the old days (well the law expires Dec 31st 2012). It's a big deterrent to have to sale if you will owe taxes on the shorted amount. Makes people think twice before they try to unload their property.
There was a thread here not long ago (seems to have disappeared now, I can't find it) where someone was saying that he was selling short, only because he just didn't want to live there anymore.
I have some serious issues with that. It's one thing to be stuck in a situation where you can't afford your house anymore, but to screw over a lender just because you've decided you want to do something different is a horse of a different color.
I am experiencing this. First bank approved. The second bank told the seller that they want the full loan paid off. Now the seller doesn’t want to sell the house. So my contract is off.
This house was on the market as a short sale for 7 months.
I love this house and sad to lose it.
How much time the seller has before the bank put the house for foreclosure?
I want to keep track on this house. So I can offer again if it comes back to the market.
I saw another house in different area. The house was under contract with the price approved on short sale for 3 months then it came back to the market with higher price.
How did this happen?
The description of what you are experiencing is not at all what is talked about in that article, nor is it illegal. The second leinholder is perfectly within their rights to ask for payment of the lein in order to approve the sale. They have no obligation to simply drop their lein. Why should they? By refusing to drop it, they are hoping that the senior leinholder will offer up at least a partial payment of the loan, in order to close the sale. From your description, they are being perfectly straightforward, saying they want to be paid and they are not going to simply drop it. The problem here is that the seller is so far underwater that they can't come up with enough money to satisfy the lenders of that money.
Wow. No, that wasn't the one, but you're right about it making the blood boil. If he wasn't just a troll he has a serious psych problem. The one I was thinking of was just a simple case of irresponsibility.
The description of what you are experiencing is not at all what is talked about in that article, nor is it illegal. The second leinholder is perfectly within their rights to ask for payment of the lein in order to approve the sale. They have no obligation to simply drop their lein. Why should they? By refusing to drop it, they are hoping that the senior leinholder will offer up at least a partial payment of the loan, in order to close the sale. From your description, they are being perfectly straightforward, saying they want to be paid and they are not going to simply drop it. The problem here is that the seller is so far underwater that they can't come up with enough money to satisfy the lenders of that money.
Bill, it's not the payment they are demanding, it's the fact they are asking for it off the HUD knowing the first lien holder typically won't approve anything over $X.
Bill, it's not the payment they are demanding, it's the fact they are asking for it off the HUD knowing the first lien holder typically won't approve anything over $X.
Right, but I don't think the OP ever said they asked for payment off the HUD. If they didn't, then no issue. I think the OP was just upset because of the 2nd's demand to the seller for a payment which killed his purchase.
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This 1??
