|
.
5 March 2007 ANND Communication: HRI Legal Resource and Assistance Center Subject: Communities in Crisis: Pushed Beyond the Economic Limit Dear Colleagues, The systemic stress caused by subprime/prime mortgage challenges (Millions of foreclosures loom, NPR, 2 February 2007), used to leverage real estate prices across the United States, has refocused attention on exploitation of current hyperinflated market prices. Delinquency rates on these risky home loans are rising, subprime lenders are going belly up at an alarming rate, criminal probes of some lenders are under way (the trial lawyers must be salivating at the prospect of a whole new class of class-action suits), and front-page stories are proliferating almost as fast as you can get a no-money-down, no-questions- asked mortgage...... Mortgage debt rose by $4.7 trillion from the end of 2000 through the third quarter of 2006, according to the Fed's Flow of Funds report. ``We created as much debt in housing in the last six years as we did in the prior 50,'' Carson says. -- As Housing Goes Bust, Lenders Become Predators?: Caroline Baum, Bloomberg, 6 March 2007. But, as the Appraisal Institute recently testified to Congress, appraisers are under increasing pressure from lenders, mortgage bankers and real estate agents to "hit their number" when appraising property...... The problem is so widespread, that more than 8,000 appraisers – roughly 10 percent of the industry – have signed a petition asking the federal government to take action. -- Appraisal fraud: your home at risk: Appraisers say they're being pressured by lenders to inflate their estimates of home values, CNNMoney, 2 June 2005 -- Financial Crimes to the Public: FBI 2005 Report - Mortgage Fraud. The sector is known as subprime mortgages, which pumped $640 billion into the economy through facilitating home purchases and refinancings in 2006, according to trade publication Inside B&C Lending. That's nearly twice the level of this kind of lending seen as recently as 2003.....the Center for Responsible Lending, forecast recently that 19 percent of subprime mortgages originated during the past two years will end in foreclosure. "This rate ... exceeds the worst foreclosure experience in the modern mortgage market, which occurred during the 'Oil Patch' disaster of the 1980s," the group said in a report issued in December. -- Subprime woes: How far, how wide?, CNN, 5 March 2007. "Federal bank regulators have released a "guidance" telling issuers of subprime loans that they need to change the way they offer mortgages to borrowers with poor credit. From now on, lenders who offer adjustable rate mortgages will have to consider whether the borrower can afford the higher payment that results when interest rates go up. Currently, some lenders are basing lending decisions on the "teaser" rate, and not on where the rate might go." -- New Federal Rules on Subprime Loans Issued, NPR, Mar. 6th. We need to calculate what percentage of the $4.7 Trillion mortgage debt statistic was attributed to loans that are now defined as predatory, based on the new federal guidelines/ rules. The systemic economic adjustment (in the context of a multi year correction) must include a redefinition of Fair market Value as the price to sell in today's market with variables such a housing glut/foreclosure crisis. Once again: Wickpedia: The definition of "fair market value" is found (in the specific context of U.S. tax law) in the United States Supreme Court decision in the Cartwright case: The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.[1] [1] United States v. Cartwright, 411 U. S. 546, 93 S. Ct. 1713, 1716-17, 36 L. Ed. 2d 528, 73-1 U.S. Tax Cas. (CCH) ¶ 12,926 (1973) (quoting from U.S. Treasury regulations relating to Federal estate taxes, at 26 C.F.R. sec. 20.2031-1(b)). An emergency economic strategic plan needs to address all variables that will impact the consumer level during this systemic transition. Regarding senior citizens, who have been caught in this trap, Tax Freeze Homestead Exemptions need be addressed and adjusted to accommodate the challenges caused by this hyperinflationary period. Related: -- Asset Protection: Concepts and Strategies for Protecting Your Wealth: Discusses the history of asset protection. -- Hartford, Conn., Mayor Proposes Property Tax Reform to Counter Rising Home Values: Harford Courant, 19 March 2006. -- Concerns over property tax mount in New Haven, Yale Daily News, 24 March 2004. Looking forward to your feedback. Stephen M. Apatow President, Director of Research and Development, Humanitarian University Consortium Center Email: s.m.apatow@humanitarian.net Internet: www.humanitarian.net Back to Communities in Crisis: Pushed Beyond the Economic Limit Copyright © 1994-2007 Humanitarian Resource Institute.
All rights reserved |
