Homebuilder Bailout: An Updated Analysis

An updated analysis of the homebuilder bailout on tax revenue, courtesy of BoomBustBlog member Christopher Alleva (thanks again for sharing your expertise).

(click to enlarge)

Click here (JCE Revenue Estimates) for the Joint Comittee on Taxation draft revenue pro formas. I can save you the effort of the download - the lion's share of the money goes to builder NOL carrybacks in lieu of to foreclosure buyout credits or direct aid to struggling homeowners.

Comments

[Small TownIndiana]

And would anyone be surprised that the government would bail out the big builders? Democrat or Republican, they will ALL look out for the top dogs, not the average person that puts them in office.......

[JimN]

This is nothing less than another fine example of pork-barrel-spending and how this continues to proliferate boggles my mind. Yes; we need change but its not just the President who has to change but the majority of old and tired senate and congress that needs radical change. Our government has become too fat and too eager to print money for the sake of special interest and it has to stop.

Obama's recent faux pas statement of middle America - what I get from that is he's partially right... but that its really the MAJORITY of American's who disapprove of the way government has acted, not just the President. Support for special interests which the media who intentionally targets with myopic fervor that the MAJORITY of American's are becoming increasingly enraged over. Unfortunately, we're not yet enraged enough to really do something about it and until we make a stand, this sort of thing is going to continue.

[bren]

These "king-size homebuilding companies", created this situation due to greed. They created a frenzy of new home building without regard to the most important function of humanity, cause and effect.
Some one, such as a government official. Has to DIVERT EVERY DOLLAR that is marked for the homebuilders and the banks. Put this money to better use, perhaps a future crisis. One example is alternative energy, we know oil is out of hand. There are many examples. Public officials turn their heads and pretend everything is ok, are they drunk? It is time for a "new market", and in this "new market" there are some mandatory qualifications and skills that will be needed. These mandatory qualifications will include; an active involvment in sensibility, a passion and concern for humanity, and without doubt, will have an awe-inspiring respect for good, honest, hardworking citizens of the USA.

[Justfrustrated]

This Home builder bailout is just selfishness on the Congress and Senate's part! Since the National Association of Homebuilders declared they were halting all political contribution funding, and it just so happens that the NAB is one of the largest contributors. If anyone considers this just a coincidence, I have a few spec home for sale, which have instant equity!!! ;-)

[gordon]

NO WAY SHOULD THIS PASS! Americans should DEMAND A PUBLIC DISCLOSURE OF ALL DETAILS! No way is this $15 Billion giveaway! This involves mortgage companies too! I bet they are paying accountants right now to find every loss possible, this will be $50-100 Billion in tax refunds for the gangsters causing this mess.

[notsosmart]

why is any one surprised this is happening.super bowl,final four, masters golf,etc. is where the stupid americans are. the crooks in our govt. love it. its almost too late now. i feel sorry for my kids & grandkids. it was a great country & it lasted over 200 years.a good run.

[WAKEUP]

NO BAILOUTS, PERIOD. Life is full of risks, some that we can avoid, others that we cannot avoid. Lenders and homeowners alike took these risks voluntarily, in anticipation of a winning (i.e., profitable) situation. Surprise: Life hands out defeats, too. Big surprise: I don't want to pay for others' (short-sighted and greedy) miscalculations. I am aware that most potential house-buyers are not financial wizards. Neither am I. I do, though, recognize a situation in which an asset is GROSSLY overpriced. Sorry. They took a huge, unresearched risk, and it's a loser. I DON'T WANT MY TAX DOLLARS TO BE USED FOR A BAILOUT TO THOSE WHO GAVE IN TO ILLOGICAL URGES, WHATEVER THEIR UNDERLYING MOTIVATIONS WERE. THIS AIN'T MY SPEEDING TICKET, OFFICER, AND I DON'T WANT TO PAY THE FINE, FOR IT.

[TN hick]

remember Uncle Milton .. all dollars vote, just big dollars vote BIG

Small town, it is not middle America that elects, it is the campaign contributions from corporate america that enables the advertising that elects

Jim, the corporate contributions ultimately come from the consuming public, so it is not just the behavior at the polls that will have to change, but also the behavior in the market place

Bren, and who is going to define "qualifications&q... when more than half of the public qualified to vote intuitively knows that through their vote they can use the taxing power of the government to expropriate the wealth of the upper half to subsidize the lower half's lifestyle

frustrated, the bluff worked, didn't it

'nuff said,

[gordon]

WAKEUP- why hav'nt responsible Americans like us started a website to register the millions who need a VOICE AGAINST ALL the BAILOUTS? Is there one? We recognize our kids will pay for this, and I got news for most Americans, their standard of living peaked on July 4th, 2005. All downhill or flat if you're (we're) lucky from here.

[moonscope]

[e-mail] here's My fight and it effects all Loans. Civil Rights Defender needeed!
1. Bank One N.A. standard 6.5 Fixed 180 Month Loan Closed on 5/2001 Credit was excellent, all Bank One Payments used Single detachable next Month Coupon Bill, Supplied with Loan update Statement that included Prompt December 2001 Coupon Payment {First only, never Seconded or Refinanced} Loan Transferred from Bank One with $1,289.85 Escrow Surplus to Homeside Lending on or around 11/1/2001 followed by Three Prompt 2002 Payments that Homeside Lending reduced by $.99 Monthly, equating Ten timely current Payments, later Washington Mutual acquired Homeside Lending {Loan Manager and Payment Address remained unchanged, Letterhead changed to Washington Mutual} Loan Manager released Loan History to Washington Mutual archive’ when Bankruptcy Stay was released 12/15/2005, Washington Mutual archive Department E-Mailed Payment History Loan Manager was Coveting on 12/15/2005. Loan History revealed that Bank One applied Payment, suspended Payment then allocated Payment to reduce Loan Principal only {180 Month Mortgage Term Breach by Coveted reduction amendment} on 12/16/2005 Washington Mutual was informed of impropriety their investigation team written statement defined the actions to be both Bank One “Principal Curtailment” and Homeside Lending errant attempt at Curtailment reversals inadvertent reduction of Escrow, that further damaged Loans Escrow. 2. The Loan Originator “Principal Curtailment” was a Breach of DEED Cover Page, Bold Print requirement of Signed Authorization clause as it relates to Prepayment that specifies, instead of Damage Arbitration all Loan Originator received Funds and earnest Funds returned $12,291.54 Supporting 180 Month Term Commitment DEED Paperwork {but for Insurance, Tax and Inspection Costs relative = $12,291.54 minus $1,289.85 Transferred, minus $1,168.26 County Tax, minus $239.00 PMI, minus $308.00 Hazard Insurance = $10,286.25 amendable} intent to deceive by Loan Managers Coveting of Bank One 2001 Curtailment Compounded Damage to offer protection from Contractual Damage expenses of $10,286.00 in trade forcing My Bankruptcy. 3. Deception became compounded by 2001 errant Escrow reduction before County Tax payment of $1,168.26 that resulted in Escrow Shortage of $515.63 Escrow destruction was furthered in 2001 by Phantom Escrow Surplus of $336.23 to increase 2001 Escrow Shortage to $851.86, {$1,289.85 Transferred and $851.86 Shortage became $2,141.71 missing from Escrow despite Current on all Payments, equates to My real-time assessment} Lender Escrow Damage required Loan Manager to Post 2001 Tax Form 1098 without Funds received and involved Credit Report deception. The resulting point achieved became that if Curtailment became exposed, indiscretions of Falsified Credit Reporting exposure became revealed. 48 Month deception without Judgment resolve transformed insurmountable Damage to Creditworthiness and Mindset now 76 Months with Threat of eminent Foreclosure. 4. Loan Manager Coveted Bank One Loan History “Curtailment” and Coveted the errant Escrow reduction until 12/15/2005 equating {“Escrow Curtailment” My wording} requested supplied Loan Payment History Twice received early in 2002 documented December 2001 Void of Payment Credit. Loan Manager Testified combined “Principal Curtailment,” Escrow reduction “Curtailment” and Phantom Escrow Surplus return, independently created the near $120.00 Escrow Shortage arrear Demand that began 4/2002, absent of Lender improprieties Loan was pristine Current through first Ten Payments. Escrow arrear duration applied from the Eleventh Payment to the Twenty-second Payment. Refinance was attempted but Loan Mismanagement blocked with incomplete Credit Report entry, forcing Bankruptcy protection. Lending Management demanded Escrow Shortage updating prior to additional review of Loan Payment History inquiry results, forced Bankruptcy was the Substance of Core Adversary Law Suit absent of Award, that was denied Appeal, Testified to by Loan Manager as Common Practice defendable, acceptance by Judge exacts Lender Misapplication Protection if Coveted, to Date Payment Credit denied, allowing Theft by Judge Rule. 5. The Loan Originator Breach of DEED Defended as “Common Practice” stands without Merits if Scrutinized pertaining to International Banking, Federally {Constitutional Civil Rights} or in Texas, threatening Theft prosecution Case Law blanket. Loan Originator Bank One N.A. Supplied and Signed DEED OF TRUST Contract before Transferring to Homeside Lending, Washington Mutual acquired responsibility that includes Damage enforcement. DEED clearly defines incidences award Contractually regulating to exact damage, precedent is Clause mutually Signed to commit. Judicial edit of Paragraph by cropping forward substance, alters commitment without authority, granting Superiority to allow Lender Robbery without Theft Prosecution. Secondly Escrow Breach relates to false Credit Report Reporting Damage, false 2001 I.R.S. 1098 Form Damage, Escrow {“Curtailment”} Mismanagement Damage and Phantom Escrow surplus return proves Loan History mutation, all Payments were Current excepting Bank One December 2001 Curtailment, Homeside Lending received first Payment 1/2002, the Homeside Lending Coveted Escrow reduction in November 2001 to second Credited November 2001 with evidenced proof argued in Testimony, Payment History abandonment of December 2001 report to Credit Agencies, blocked refinance forcing Bankruptcy. 6. At Bankruptcy Conformation Hearing Credit for Check Payments was requested / demanded, on the Recorded Court Record Judge ordered Attorney file “Proof of Claim” allocating 60 day “Stay” delaying Conformation, time expired Attorney Quit, including transferring complete Houston Bankruptcy Case-load to Board Certified Attorney I hired. Instantly Attorney sent to Homeside Lending Certified Mail RESPA “qualified written request” for Loan History. Request was ignored, before Core Adversary Hearing Judge under Seal changed Defendant from Washington Mutual to Homeside Lending, allowing Loan Manager to Testify Defending Bank One “Principal Curtailment” as “Common Practice,” Escrow Misapplication as “Common Practice” the Escrow Surplus return, from after Tax Payment Escrow in Arrears, was Defended as inexcusable Escrow misapplication {background of Escrow return from Escrow in Arrears equates not Damages but Creative Bookkeeping Loan History augmentation and Date changing Actions, important to understanding why Loan Manager Testified Escrow was reduced in November to Credit December when Evidenced Real-time Loan History is absent of Credit for December 2001, meaning November was Credited Twice and Credit Report agency was misinformed blocking refinance to protect Curtailments.} 7. Prompt and Current on Loan Payments, Twice real-time Loan History had Coveted Curtailments increasing demand to address Lender imposed Escrow Shortage, refinance was necessitated and followed Home reconditioning Goal time-frame, blocked refinance forced Bankruptcy protection, ignored through “Proof of Claim” requirement, then Attorney RESPA qualified written request was being ignored, so I layperson drafted RESPA “Qualified Written Request” and Posted Certified Mail using California address supplied by Security Exchange Commission relating to Washington Mutual and it was ignored, request was also Posted to Bank One, Bankruptcy Trustee, Attorney, former Attorney, DOJ, CC, OTS and Better Business Bureau, Judge Ruled ignored Attorney Certified Mail RESPA “qualified written request” sent to Homeside Lending inadmissible. My ignored Certified Mail RESPA “Qualified Written Request” sent to Washington Mutual was being ignored so B.B.B. communication assistance was requested, for being ignored B.B.B. expelled chief arbitrator Chair and Suspended Membership for Three Years from Washington Mutual. O.T.S. referred governance to Court Action after also being ignored. 8. My ignored RESPA request received $1,000.00 Judgment Award absent of exposed Coveted Curtailment Damages {Appeal denied} thanks to B.B.B. but request Substance has never been addressed to Date, including Discovery Questions Ignored, including matters Judge took under advisement during Trial ignored in Judgment. Importance of DEED Stipulation argued commanded notation on Judgment, Paragraph was the Main Substance of Core Adversary hearing, exacting the itemization of Loan Originator Damage from DEED Stipulation Contracted, with My offer of simplification suggesting Day-rate Damage to ease Judgment award, Judgment Cropped Paragraph to skip essence relative forward by beginning mid-paragraph altering intent, assumptive reasoning allows Collusion or Preservation of Supplementation by Washington Mutual relating to funding over half of Texas Court Appointed Attorney’s. Reform by Case Law Publishing was intent {by U.S. Supreme Court or Bench Ruling} Preservation of Corporation Document respect and Signature Commitment enforcement is Jeopardized to allowed Theft, under Threat of Foreclosure, argument transforms to Payment Credit Mute by Action of Judicial Rule locking open repercussion interpretations, compromising My Attorney Malpractice forwarding. 9. Homeside Lending argues errant Escrow reduction on 11/15/2001 was preformed on 11/28/2001 claiming used for 12/2001 Loan Payment, the real-time Loan Statements dispute documentation on Loan History. 10. 12/15/2005 Washington Mutual archive Team revealed Loan History proof of Curtailments, Bankruptcy release of Stay was on the same Day. Bankruptcy Court, Core Adversary, Suing Washington Mutual under Seal became Suing Homeside Lending, Attorneys Ignored RESPA Loan History request became Ruled Inadmissible, Trial ended 100 days later Judgment was Signed, Clerk of Courts documents delayed Posting for U.S. Postal delivery, Appeal was filled on Twelfth Day following receive.

[redriver]

A better summary of the coming fiasco has not been said, so I will print it again:

"Be aware that if this provision becomes law, it will incentivize builders to dump assets at levels and prices that were previously imprudent and economically unfeasible in an attempt to reclaim cash in the form of back taxes. This will exacerbate the strain on the financial sector since it is the devalution of real assets that triggered much of this mess in the first place. Property values will drop faster, property value led defaults will accelerate, and MBS and related securities, products and pools will get hit that much faster and harder as well."

From Reggie himself.

My father doesn't think this will pass the house, "its pretty easy to get the senators to vote this way but its harder to get through the house since there are just so many more of those pinheads. This should work in our favor."

TWT