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Bailout interim boost. What do YOU think?

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so tell me

This is an email I received from a friend of mine,  Christy Quick.  What do you think?

So I’ve been thinking so much about all the bailout programs and how it will probably take so long before the actual implementation will have an impact on the general public.  I have given this a lot of thought and I have a suggestion that may help the situation.  This may sound incredibly simpleton, but I want to get your thoughts on my idea.  Here goes:

So what if mortgage lending institutions stopped reporting to the credit bureaus?  Say they could make it retroactive that anyone that’s had a foreclosure in the past 18 months or are currently late on their mortgage payments would not be “dinged” on their credit.  Think how many people would miraculously become “credit worthy” again.  After all, once it is reported that they have late mortgage payments or worse yet, a posted foreclosure, they are (technical term here) effed royally – and will be for years to come.  As a result, their lines of credit are reduced or cut off entirely and their interest rates got hiked higher than Paris Hilton’s mini skirt.  There are countless people that stop making credit card payments (even though they have the ability to pay) simply because they know their credit score is already in the toilet.  So there’s basically no incentive to keep paying on that credit card (in the short term).  It’s certainly a slippery slope … but the fact of the matter is that there are so many people out there that are in good standing with their remaining creditors, but simply because of a foreclosure or pending foreclosure they have all been categorized as being not credit worthy.

As you know, this affects their ability to do almost everything!  These people will have to pay higher interest rates when buying a car (if they can secure financing). They will have to pay higher interest rates on credit cards and therefore may be less likely to carry balances on them.  And certainly, it affects the most basic of spending habits including buying smaller consumer goods such as TVs, clothing, holiday gifts, etc.  What do you think?  Do you think it is even reasonable to consider something so basic?  As always, Russ, you’re such a good sounding board.  All the best and Happy Thanksgiving.  ~Christy

Russell has been an Associate Broker with John Hall & Associates since 1978 and ranks in the top 1% of all agents in the U.S. Most recently The Wall Street Journal recognized the Top 200 Agents in America, awarding Russell # 25 for number of units sold. Russell has been featured in many books such as, "The Billion Dollar Agent" by Steve Kantor and "The Millionaire Real Estate Agent" by Gary Keller and has often been a featured speaker for national conventions and routinely speaks at various state and local association conventions. Visit him also at nohasslelisting.com and number1homeagent.com.

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12 Comments

12 Comments

  1. Benn Rosales

    November 26, 2008 at 8:18 am

    I have actually predicted that a debt forgiveness will come in early to mid February, and if not then, by the end of Summer. I believe it will cover mortgage, auto, and credit cards and will for a period of time retroactively to present.

    It’s been talked about already, mentioned on the campaign trail, and I hear rumors that dems are looking at it as part of a stimulus plan.

    Could it, would it, should it? I don’t know, but it was a suggestion built around the Paulson plan as a consumer bail out.

  2. Benn Rosales

    November 26, 2008 at 8:23 am

    PS If someone doesn’t sort out the Big Three Credit Reporting Bureaus and require better accuracy, I’m not sure how you can build an economy around credit scoring that it’s leaving out a huge segment of the consumer base.

    I’m absolutely for Gov. intervention into the credit industry on a massive scale with heavy regulation- for example, if there’s a doubt, it’s not reported, if it’s really two years or more old, it’s not reported, and if the claim is incomplete, it’s absolutely not reported.

  3. Matt Stigliano

    November 26, 2008 at 8:51 am

    I have to agree with Benn’s idea that the credit bureaus need a swift kick in the…well, they need fixed. The idea of credit agencies selling collections off every few years to the next agency and keeping the collection fresh on your report is damaging and downright spiteful if you ask me.

    I like the idea of a “forgiveness” as it may help those consumers that got left behind. All the help in the world was too late for them, they already had lost their homes. The fact that a foreclosure can hike up interest rates on you doesn’t help you. It sends you deeper into the hole. I understand the theory of risk based credit, but the fact is it can be very damaging to someone who’s already (obviously) experiencing some problems. You just lost your home and now your credit card rate spikes? That’s not going to solve any problems.

    Of course, my problem with this kind of idea is that a) it will be abused by people (if the rumor gets around that its going to happen, people will be more likely to “forget” a few payments – knowing they will be “bailed out”) and b) to be honest, not everyone deserves the help – some people made this mess for themselves, without thinking ahead, without understanding the basic principles of the need to pay your mortgage payments and need to be able to afford them in the long term, with outright lies on loan applications (sometimes at the bequest of the lenders and others involved).

    Its a matter of weighing the options really. I think something needs to be done to help and although I hate to see the wrong benefits come out of it, I don’t think this is a bad idea. I’m going to give it some more thought and see where that takes me. Sometimes my gut tells me one thing quickly, but then I look at the bigger picture and see some things I may have missed.

    Great post Russell, I hope to see what everyone else thinks. Could result in a very lively discussion.

  4. Brian Brady

    November 27, 2008 at 1:48 am

    What about those of us who didn’t…

    1- buy a home we couldn’t afford?
    2- extract equity for a brand-new Hummer out of that affordable and appreciated house?
    3- worked extra hard to pay off our credit card bill monthly?
    4- diligently saved 10% of our paychecks?
    5- spent hours poring over research reports, learning how to invest our money?
    6- checked our credit for mistakes every 6 months.

    Does our financial prudence count for anything or was our timing for frolicking just off?

  5. Benn Rosales

    November 27, 2008 at 7:57 am

    Brian you get a 900 fico with a super cool low teaser rate so you can do it all over again…

  6. YourMortgagePlanner

    November 27, 2008 at 12:23 pm

    In Basic terms your Credit Score is your Grade!

    Not referencing an individual’s credit history for future credit worthiness, would essentially be the same as not referencing an individual’s education. I would most certainly want someone who didn’t pass 7 grade algebra working for NASA, I am confident Google would have no problem hiring the individual for an algorithm search position.

    I was taught if you can’t afford it you don’t need it, credits purpose was not a tool to help individuals keep up with the Jones, it is a tool for leverage.

    Why were at it lets release all convicted Rapist and Murders, give them a Fresh clean start!!

  7. Missy Caulk

    November 28, 2008 at 10:41 am

    In the Old Testament there was a Year of Jubilee, where all debt was forgiven. It happened every 50 years, just saying…..

  8. Christy Quick, Phoenix Realtor

    December 6, 2008 at 10:45 pm

    I have refrained from giving my further two cents until there was a good amount of dialogue in different areas. First, I’d like to say “really??”… having murderers and rapists in the same category as debt forgiveness. All I can say there is Wow. No offense … but wow. And Brian (I’m in awe of you actually and always seems to learn something valuable from you). But what you get in return for your diligence is a balanced economy. More people buying homes from you. The stocks that may be in your portfolio seeing positive gains again. More stores in our communities staying in business. And hasn’t our society always been based on those that are more fortunate (both financially and mentally) helping those that aren’t? Don’t get me wrong. I see a huge backlash coming mid 2009 by the people that didn’t miss payments, that didn’t overspend, that still have high 700s credit scores, etc., etc., etc. But by doing nothing (i.e., not type of credit reform) will leave at least (from what I can see) 50% of the population not credit worthy. That will continue problems with the auto industry, the electronics industry … even basic luxuries like not having to put down a security deposit when you need electricity in the apartment someone just moved into. I’m not saying my idea is necessarily the best. But I don’t see why it’s fair that just because someone let their house go into foreclosure, that now their Citibank credit card with a $7,000 balance needs to hike their interest rate to nearly 30%. I believe it’s going to take a lot of small initiatives put together to make a big bad problem smaller. Thanks for all your comments. It’s always nice to see all sides of a situation. ~C

  9. Benn Rosales

    December 7, 2008 at 8:42 am

    “I believe it’s going to take a lot of small initiatives put together to make a big bad problem smaller.”

    Left to the businesses themselves, this will not happen, which is why I predict that their will be something out of congress in regards to credit scoring- if not, the bar will simply be to high for the have nots or little, or even the in the middles.

    The gouging has already begun…

  10. Ken Jansen

    July 28, 2009 at 5:18 pm

    ROFL higher than Paris Hilton’s miniskirt…

    Seriously, I think changing the credit rules would just prolong the pain in the market. We need to rip the band-aid off and get on with life. Banks need to get rid of the houses they are sitting on and let the market forces work. People would still rather live in Tampa FL or San Diego CA than Olathe KS and will still pay a pretty penny to do so. Would could always let an extra 100,000 folks into the country to increase demand for housing and increase consumer spending. 🙂

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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job openings

Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

#JobOpenings

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Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.

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Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

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