Rep. Hinojosa says changing Mortgage Interest Deduction ‘Foolhardy”

Rep. Hinojosa: Talk of Changing MID ‘Foolhardy’
The mortgage interest deduction is helping to keep Americans in their homes at a time when many of them are struggling financially, so it would be foolhardy to tamper with the popular tax benefit now, Rep. Ruben Hinojosa (D-Texas) said at a forum in Washington yesterday.

If the deduction is eliminated or changed, “blame will be placed at the feet” of those lawmakers who supported such a “misguided” policy by voters, said Hinojosa, a senior member of the House Financial Services Committee and one of the original sponsors of a House resolution (H. Res. 25) to preserve MID in its current form.

The resolution was introduced in early January and has just under 40 cosponsors, “and I expect many more to sign on” after lawmakers return next week from a recess, Hinojosa said.

“I cannot support a change to MID to a tax credit, for first or second homes, at this time,” Hinojosa said. “I don’t want to test the waters with Americans already nervous about the economy. Home owners expect to use MID, and buyers expect to receive it.”

The forum, sponsored by the Hudson Institute, a public policy think tank, featured analysts who’ve looked at MID from a range of perspectives. John Weicher, director of the Hudson Institute’s Center for Housing and Financial Markets and a former assistant secretary of research at the U. S. Department of Housing and Urban Development, said eliminating MID would create an unsupportable inequity between home owners and owners of rental property.

Right now, rental property owners are supported by the public sector through a number of tax benefits, including deductions for their business expenses and state and local taxes, and the maintenance associated with their property. They also receive favorable capital gains tax treatment and can also lower their taxes through asset depreciation mechanisms.

To thus take away the home owner benefits while leaving the rental owner benefits in place would skew the country’s public priorities in favor of rental housing.

“The home is a place for people to live but it’s also an asset for the owner,” said Weicher, “so the owner is an investor in that asset” in the same way that an owner is an investor in a rental property.

Estimates vary widely on how much MID costs the federal government in foregone tax revenue. The number heard frequently in the media and elsewhere is about $100 billion. That number is probably much higher than the reality, participants at the forum said, because many households facing a curtailed or eliminated MID would simply shift their tax strategy to lower their taxes in other ways through a “reshuffling of their portfolio,” said James Follain, a senior fellow at the Nelson A. Rockefeller Institute of Government.

Follain estimates the federal government would receive only a quarter of what the nonpartisan Congressional Budget Office (CBO) estimates it would receive through change to or elimination of MID. “Others might debate that figure and say the government will get more than 25 percent of the CBO estimate, but there’s a consensus that there will be some asset reshuffling,” he said.

Weicher put the actual savings to government at about $21 billion, “and even that’s an over estimation,” he said.

Donald Haurin, a professor of economics, finance, and public policy at Ohio State University, said there’s an unmistakable linkage between home ownership and improved communities and “social outcomes” such as higher school achievement by children whose parents own their home, fewer teenage pregnancies, and more participation in volunteer activities.

More research is underway, some of it by the MacArthur Foundation, to determine exactly what’s causing those improved social outcomes—whether it’s a function of the type of people who own or whether home ownership itself changes people—but given that the linkage is there, even if not fully understood, lawmakers should have it in mind when they start talking about changing MID.

Haurin said that, as a point of principle, since home ownership benefits the wider community through these improved social outcomes, “a case can be made” to maintain MID, because it’s not just the home owners themselves who are benefitting; the community as a whole is.

Sheila Crowley, president and CEO of the National Low Income Housing Coalition and the most critical of the deduction, said the bigger need for scarce federal resources is the lack of rental housing for the country’s poorest households. Her organization is developing recommendations to convert MID to a credit and to apply some of the savings to the government to the development of subsidized rental housing.

“If we move to a credit and lower the cap [to $500,000 from today’s $1 million on the value of the house that’s eligible for the benefit], we could solve the housing shortage, she said.

In his fiscal year 2010 budget request to Congress, which was released earlier this week, President Obama proposed capping the value of all itemized deductions, including MID, for higher-income households to 28 percent from 33-35 percent. That proposal has been included in each of the president’s earlier two budget requests but has yet to attract congressional support.

— Robert Freedman, REALTOR® Magazine

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Wells Fargo to Accept FHA Mortages with Credit Scores Under 600

Wells Fargo announced that effective January 15, 2011, they will accept Federal Housing Administration (FHA) mortgages for borrowers with credit scores as low as 500. For borrowers with credit scores 500-579 a 10 percent downpayment is required and the downpayment may not be a gift or be part of a downpayment assistance program. For borrowers with credit scores 580-599 a 5 percent downpayment is required and the downpayment may not be a gift or be part of a downpayment assistance program. Borrowers with a credit score of 600 or higher are required to have a 3.5 percent downpayment and a gift is acceptable. For all borrowers, seller concessions are limited to 3 percent.

Call Marty Sievers at Mountain West Financial for a Pre-Qualification for an FHA Loan 909-337-7884

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Don’t Miss this Fun… February 18th thru March 12th

February 18 – 21, 2011


Join us as we transform Lake Arrowhead Village into a Winter Wonderland during Winterfest 2011. It will be four magical days of winter events for the whole family. Ice Carving Contest, World Class “Chilly” Cook-Off, and Live Entertainment on Center Stage. Activities for the Whole Family. For more information and event times please call (909) 337-2533


Lake Arrowhead Resort and Spa 
February 22, 2011

6:00 pm

Come and enjoy an Intimate Evening of Champagne and Cognac Paired with Five Courses. This event will take place in the Magnum Room and has limited seating. Only up to 20 guests so make your reservations early. It’s $65 a person (all inclusive). For more information call (909) 337-4189 or e-mail Darren Parker at


Bald Eagle Count
March 12, 2011

8:00 am

Volunteers Needed to Count Bald Eagles. Eagle counts for this winter have been scheduled for the following Saturday mornings: February 12 & March 12. Mark your calendars now. No experience needed. Volunteers should dress warm & bring binoculars & a watch. Lake Arrowhead volunteers will meet at 8 am at the Sky Forest Ranger Station. Contact Marc Stamer, Wildlife Biologist at (909) 382-2828 for more information

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Real Estate is ‘as Affordable as it Gets’

Real Estate Is ‘as Affordable as it Gets’
Now is a good time to buy real estate, according to data from Moody’s Analytics. Home affordability has returned to pre-housing bubble levels or even fallen below the average in many U.S. markets.

In fact, housing affordability by the end of September had returned to or fallen below the average reached between 1989-2003 in 47 of the 74 housing markets that Moody Analytics tracked.

In September 2010, the ratio of home prices to annual household income had fallen to 1.6–below the historical average of 1.9 between 1989 and 2003. The ratio peaked in 2005 at 2.3.

“Based on incomes, this is as affordable as it gets,” says Mark Zandi, chief economist at Moody’s Analytics. “If you can get a loan, these are pretty good times to buy.”

Some of the most undervalued markets include Cleveland, Detroit, Las Vegas, Atlanta, and Phoenix.

But those cities also are facing high rates of foreclosures and more borrowers defaulting on their mortgages that could decrease values further in those cities before they start to improve, Zandi says.

In Phoenix, for example, “it’s become cheaper to buy than to rent,” Jon Mirmelli, a real estate investor in Scottsdale, Ariz., who rents out foreclosed homes, told The Wall Street Journal. “But the question is: can you qualify for a loan?”

Source: “Home Affordability Returns to Pre-Bubble Levels,” The Wall Street Journal Online (Feb. 8, 2011)

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Winterfest in Lake Arrowhead Village

February 18 – 21, 2011

Join us as we transform Lake Arrowhead Village into a Winter Wonderland during Winterfest 2011. It will be 4  magical days of winter events for the whole family. Ice Carving Contest, World Class “Chilly” Cook-Off, and
Live Entertainment on Center Stage. Activities for the Whole Family. For more information and event times please call (909) 337-2533

How long has it been since you have visited Lake Arrowhead Village?  My cousin Julie Jones-Green spent the week-end with me last month.  She hadn’t been here for years and years.  Naturally we had to go shopping in the Village.  It’s the only time I actually walk through all the stores and then I wonder why, I love those shops!  I looked at the empty stage where all the Summer Concert series takes place.  I have had many a good time there.  Now this morning I hear we are having a Winterfest in the Village.  Chili Cook-Off, Ice Carving, Live Music….  This is a must see, make your plans to come up to Lake Arrowhead Village the week-end of February 18th thru 21st.  If you want to participate in the Chili Cook-Off….. call 909- 337-2533.  See you there!

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Is Beer Becoming the Drink of Choice in Lake Arrowhead?

February 1, 2011

7:00 pm – 9:00 pm

Vino 100 is excited to announce our new Beer Club. Please join us to taste our February beer selection. Cost for this event is $10, which
can be applied to the cost of your membership should you decide to join the club. Please RSVP for this event: (909) 337-WINE. Details of the club membership will be presented that evening.

There are many home beer brewers here on the mountain these days.  My Broker, Steve Keefe, started a tradition a couple of years ago and it’s spreading quickly.  Folks are trying all kinds of ingredients to brew up new tastes.  Some are donating  kegs of their home-brew to events and we even have an annual event here in Lake Arrowhead.  I’ll let you know when the next one happens.  I understand the first annual Brewfest was a huge success.  If you don’t want to brew your own, no worries, go to Vino 100 in Lake Arrowhead Village and join the Beer Club.

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New Home Sales Surge in December

New single-family home sales in December rose to their highest level in eight months and prices were the highest since April 2008, raising cautious optimism for a housing market recovery.

The Commerce Department said sales jumped 17.5 percent to a seasonally adjusted 329,000 unit annual rate after a downwardly revised 280,000-unit pace in November. Economists polled by Reuters had forecast new home sales rising to a 300,000-unit pace in December from a previously reported 290,000 unit rate. Compared to December a year earlier, sales were down 7.6 percent. Overall 2010 sales dropped 14.4 percent to a 321,000-unit rate.

Economists saw the gains as significant.

“Clearly we are seeing stabilization in new home sales and this data suggests some upward momentum that we have seen in existing home sales. What is important to realize is even in a period of softer new home sales, inventory continues to decline, said Dean Maki, chief U.S.. economist with Barclays Capital in New York.

“The level of inventory is at its lowest since the 1960s,” Maki said. This suggests the big declines in housing starts are now behind us and housing starts should be on a gradual trend in 2011.”

Brian Bethune, an economist with HIS Global Insight in Lexington, Mass added: “It’s meaningful to the extent that there is a pattern of numbers showing increases. It’s a sign that there is a turnaround. Things are definitely perking up, but there is a question whether it’s sustainable.

Read the latest report from the National Association of REALTORS®: December Existing-Home Sales Jump

Source: “New Home Sales Surge in December,” Reuters (Jan. 26, 2011)

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