That was a brilliant and insightful comment that effectively rebutted his points.
/s
That was a brilliant and insightful comment that effectively rebutted his points.
/s
First
Lifer
- Jun 3, 2002
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Don't forget that the mortgage interest deduction overwhelmingly benefits high income people who exceed the standard deduction.
- Jun 19, 2000
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It's hardly worth a rebuttal. It's a hodgepodge of thoughts that are loosely tied together and wrapped up in a conclusion that is typical for him. When faced with information his psyche can't deal with, the website is derided. First knows he's right and there is no sense telling him otherwise. Instead of rebutting his post, I had a conversation with the sink strainer that was just as fruitful and far more rewarding.
Please. Your linked piece reveals itself as conspiracy theory right here-
Dom't overlook the thinly veiled race baiting & class baiting against the Poors, as well.
It intends to inflame rather than inform, spin any story into another Obama hate fest for the gullible.
Other sources put it in entirely different terms.
http://www.forbes.com/sites/markgreene/2014/12/01/fannie-and-freddie-make-mortgaging-easier/
Or check out the story from other sources here-
https://www.google.com/search?q=fannie+mae+lending+standards&ie=utf-8&oe=utf-8
Yeh, everybody's got an axe to grind but none of any repute are as as transparently stupid about it as your link.
Vic
Elite Member
- Jun 12, 2001
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What he said is more or less the financial industry consensus.
No one says that loans made to people who couldn't afford it weren't a cause of the housing bust, just that there were many causes and the CRA and other government pressures to make such loans played only a relatively minor role.
My opinion is that the major cause was Wall Street's desire to purchase low quality subprime loan products at inflated prices at the same time that interest rates were historically low, and new technology had revolutionized lending processes. First explained in more detail why Wall Street had such a thirst for paper.
While the government has always strongly supported homeownership, the banks didn't need to be forced to make loans that they knew they could make cheaply, profitably, and sell with virtually no recourse.
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Given the limits on the amount you can deduct from mortgage interest, it mostly benefits moderate income owners.
- Jun 19, 2000
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By all means continue to rationalize why making loans to people that can't afford it is a good thing. I fully understand that you have a big interest in that. Banking is big business after all and you are under pressure to perform the same as people in other big businesses are. You are required to produce.
You two have seized upon a tangential issue and are attempting to make the article, which contained perhaps one sentence in that vein, about that issue. The inference is that it's OK to lend to people that can't afford the loan, including people who have income from unemployment, because it's different this time, to paraphrase your 'argument'. It's typical behavior that I give no quarter to. You cannot make an unbiased argument because you are in it up to your waist. It's your job to make these loans happen. Make sure the T's are crossed and the I's are dotted and sell that baby before the second payment is due. Why in the hell would you care if it's foreclosed upon? It's not your problem at that point and you did everything right. Everything according to the standards and requirements.
The consensus of the financial industry in this regard is one that was contrived out of a need to assuage the ego, one contrived to justify bad deeds done on a huge scale. I've heard people and organization both big and small throughout my life play these fucking games. I never did like them and with every passing day I like them less.
In reading back through this I wonder why I am even responding to a fucking banker. I'm going to need an extra long shower this morning.
The current limit is the interest on the first 1,000,000 in mortgage debt. I'm not aware of too many 'moderate income' people with million dollar homes.
If the goal is increasing home ownership the mortgage interest deduction is a dumb idea. It does little to help those who couldn't afford a house at all afford one, while transferring tax money disproportionately to high income people. It should be abolished.
I'm not high income. I live in a modestly priced home. If it weren't for the interest deduction, I would be very hard pressed to own said home. You really are out of touch with moderate income people son.
Meghan54
Lifer
- Oct 18, 2009
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What limits? Do you mean the $1M cap on mortgage debt before it's not fully deductible? That limit?
Yeah, that's moderate income territory.
Or maybe you meant that you have to add the mortgages of your primary home and second home together to count against the $1M cap?
Yep, moderate income territory.
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You can make 200,000 a year, which is upper middle class, and have a 1 million dollar mortgage. Most 1% own a lot more than a million dollar home.
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Few things on his obvious lack of mortgage knowledge
- The top 1-5er's that I'm sure he is referring to getting ALLLLLLLL dat cash yo... are the last type that would have high interest to generate said mortgage interest. They have assets. They have credit history. Unlike my wife who had little credit and had to start out her mortgage @ 5.00% FHA loan while the common rate was ~3.5%.
- Plenty of people in the top tiers pay outright for their homes. Shocking. I know. Do you honestly think getting a tax return on mortgage interest would ever outweigh not paying interest in the first place?
- Plenty of areas have high cost of living (Silicon Valley being an obvious mention). These people may be paid higher, but it goes to the higher costs of living - and hence - more mortgage interest
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You're right, you would have to own a moderately less expensive home. There's quite a bit of research on what the mortgage interest deduction does, son. It mostly takes people who would be homeowners anyway and has them own bigger homes, it does not usually take people from non-homeowners to homeowners.
$200k a year puts you in approximately the 94th percentile for household income in the United States. If you want to say being in the top 6% of earners isn't high income that's your business.
Only about 30% of people itemize deductions at all, which means at the absolute best 30% of the population benefits from the mortgage interest deduction. Who itemizes? Rich people, generally. Additionally, about 2/3rds of the benefit from it goes to people from the 80th to 99th income percentiles as per here:
http://www.nytimes.com/2012/10/28/r...really-benefits-from-interest-deductions.html
It does not mostly benefit moderate income people by any normal definition of the word.
Says the guy who tried to call me out earlier in this thread and got owned for it, haha. Maybe you should brush up on your mortgage knowledge and your knowledge of the housing crash while you're at it.
The amount of interest they are generating doesn't matter that much as they already exceed the standard deduction, meaning they can fully benefit from whatever interest they do generate. You absolutely don't need high interest RATES to be paying high interest, especially with large loans. Additionally, as income scales into higher tax brackets $1 of mortgage interest becomes more valuable.
Dude, you're clueless. With mortgage interest rates as low as they are and with the mortgage interest deduction there can in fact be many better places to park your money than in your home. If you have a mortgage at 3.5% and know of another investment that returns better than 3.5%, you should absolutely take out a mortgage.
And they accumulate wealth that they can transport to other areas of the country with ease. There's a reason why everyone from NYC retires to Florida or other places like that. You can cash out your house here and live like a king elsewhere. Maybe you're okay with subsidizing that. (and if you are, thanks for the free money!)
I benefit big time from the mortgage interest deduction, but that doesn't mean I can't recognize that it's stupid.
Need I say more? I know you aren't "high income", by any means as far as the type we are discussing here - so thanks for countering your own post...
Got owned? Yeah okay buddy, we have about 5 other people here telling you that you are wrong and one guy comes in saying he has experience in banking. Boy oh boy, those are amazing credentials right there to have knowledge of marketplaces and how/why they fluctuate. Good thing I have industry experience as well
404 ownage not found. The core cause of the mortgage crisis was, in fact, consumers buying homes that they could not afford. Were there other factors? Of course! Bankers were lying about what people were able to afford. Bankers were lying to F&F about people's credit/qualifications (but it all goes back to the original person for thinking THEY could afford it in the first place). I don't care if a banker says "Oh yeah, you can totally afford a $400,000 home on a $40k yearly salary. For sure". That doesn't make it so, and it doesn't pass the blame to the banker.
If I tell you to put a gun to your head am I the sole culprit of you placing the gun to your head and firing the bullet? Or is it partially yours for a lack of thinking, reasoning, research, or thought process whatsoever? Again, people such as yourself obviously have a huge lacking of logic. And it is shining VERY brightly at times like these :awe:
Already exceeded the standard deduction? Where do you pull this shit out of? What gives a top 5%er to already exceed the standard deduction? Do they have 5 kids? Doubtful, plenty have 0. Your statement is completely false. Everyone has to get past the standard deduction.
What is so hard for you to understand? If you are a first time home-buyer and have a larger interest rate due to a lack of credit - paying mortgage interest does indeed help you more.
No, brah, broceritops, you're clueless. With mortgage interest rates low, people such as yourself and I can question whether we should put extra money into retirement (@ approximate return of ~6%). You know, where you don't exactly have funds built up at? You're comparing middle class decisions as if it's what a millionaire would do as well. But nice try.
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dank69
Lifer
- Oct 6, 2009
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I think a bigger problem was that even the ones that could afford them realized that when the bottom fell out and their investment was now worth half of what they were paying for it, it made more financial sense to walk away.
My income is in the top 10% actually, but more importantly because NYS/NYC is a high tax area, the state income tax deduction takes me over the standard deduction all on its own.
Got owned? Yeah okay buddy, we have about 5 other people here telling you that you are wrong and one guy comes in saying he has experience in banking. Boy oh boy, those are amazing credentials right there to have knowledge of marketplaces and how/why they fluctuate. Good thing I have industry experience as well
You specifically tried to get me by saying I didn't have banking experience, and then someone with precisely the type of experience you requested came in and told you that you were wrong. Nice try to shift the goalposts.
There are many threads on the cause of the mortgage crisis. I would suggest you go read them.
They get past the standard deduction through other types of deductions that they would be taking regardless, such as the state income tax deduction, etc. In NYC you need to make about $90k a year to generate enough state/local income tax to surpass the standard deduction.
Not if you don't exceed the standard deduction it doesn't. It also doesn't necessarily help you more because your dollars are taxed at lower marginal rates than wealthier people. Only about 30% of people itemize at all, and considering that somewhere around 65% of US households are homeowners, there are a lot of lower income people who aren't benefiting from the deduction at all.
Again, I already provided a link with figures as to how it works. You've just provided baseless ranting.
Haha right. What I said holds true for anyone and everyone. Broadly speaking, you're a fool if you take money you could get a 6% return on and use it to avoid paying mortgage interest that you pay 3.5% on. Average investment returns can easily exceed an annual rate of 3.5% over a 30 year period.
I don't think you know what you're talking about.
Top 10? Oh boy oh boy me too! Thanks for proving my point, - You are in one of the most expensive cities (hence you're probably not even Top 10% city-wide). You are barely past 6 figures and trying to tell us what millionaires do with their money. Nice try buddy. Maybe next time.
I agree, you definitely should. Thanks for not arguing a single one of my counter points to the situation with a crap-out statement. Just goes better for proving my point.
You mention these things like OH EVERYONE GETS THIS <insert deduction>.
Not everyone has state taxes.
You also aren't always entitled to a state tax deduction. If you're lucky, they pass it at the end of the year - sometimes INTO the next year for the previous year.
You're talking about mortgage interest as-if it's the only factor in tax deductions. Everyone has their advantage, so quit this game of stating these things ONLY benefit the rich. Do the rich have shitloads of kids? Statistics say otherwise, so we better get rid of those since it's not evenly distributed tax credits!
That was just a snowball affect. The snowball wouldn't have taken shape if it didn't start the initial descent (market failure, caused by massive amounts that couldn't pay them).
Vic
Elite Member
- Jun 12, 2001
- 50,422
- 14,333
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Ugh.. the argument here was not if mortgages made to people who couldn't afford them was a cause of the housing bust. We all know that it was. What the OP said is that it was government pressure and programs, like the CRA, that was the reason that lenders made those bad loans. That is simply not the truth. Lenders made those bad loans because private investors (like Wall Street and Countywide aka Indymac) would buy them.
Nor were those bad loans the only reason. Speculation played a huge role. Which is why roughly half of the mortgage defaults during the bust were from borrowers would had the proven ability to make the payments but chose not to (usually because they were underwater).
Nor were those bad loans the only reason. Speculation played a huge role. Which is why roughly half of the mortgage defaults during the bust were from borrowers would had the proven ability to make the payments but chose not to (usually because they were underwater).
Top 10? Oh boy oh boy me too! Thanks for proving my point, - You are in one of the most expensive cities (hence you're probably not even Top 10% city-wide). You are barely past 6 figures and trying to tell us what millionaires do with their money. Nice try buddy. Maybe next time.
What are you talking about? I'm saying that the mortgage interest deduction benefits high income people the most, which is undeniably true. It also has dubious economic utility, which is why it should be abolished.
I have no desire to get in a pissing match over who makes more money with you. Do whatever you want with your money, but don't try to advocate for dumb tax policies and expect no one to tell you that they are dumb.
You shouldn't confuse my dismissal of your ignorance with not addressing your points. It's that they've all been addressed in the past and it's not worth doing again.
43 out of the 50 states have an income tax, and the states that don't have an alternative sales tax measure that people can use as a deduction. It is also hardly the only deduction.
This is a nonsensical statement. I never said that mortgage interest was the only factor in tax deductions, I stated the fact that the mortgage interest deduction primarily helps high income people. That's just a fact.
Whether or not other people of more modest incomes take advantage of other deductions has no bearing as to whether or not we should be giving preferential tax treatment to high income people so that they can buy larger homes. That's a bad idea in my opinion. From an economics standpoint it's a poor use of tax funds. If you think subsidizing high income people and people in high income tax states is a good use of federal funds that's up to you.
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