[SK in CV]

[quote=SD Realtor]I can understand the logic… it is simply a kick the can down the road policy…

[/quote]

No. It isn’t. Kick the can would be reducing the interest rate or deferring interest and not adjusting the principle balance. Adjusting the principle balance turns (or at least may turn) an underwater loan into a good loan. Permanently. I don’t suspect there will ever be widespread principle adjustments, either as a result of legislation or otherwise. Even if congress were to reinstitute the cram-down provisions of the bankruptcy law, as applies to personal residences, it still wouldn’t happen very often. Even though maybe it should. But this doesn’t necessarily create only a temporary fix. It may very well be a permanent fix for some borrowers.

[SK in CV]

[quote=SD Realtor]I can understand the logic… it is simply a kick the can down the road policy…

[/quote]

No. It isn’t. Kick the can would be reducing the interest rate or deferring interest and not adjusting the principle balance. Adjusting the principle balance turns (or at least may turn) an underwater loan into a good loan. Permanently. I don’t suspect there will ever be widespread principle adjustments, either as a result of legislation or otherwise. Even if congress were to reinstitute the cram-down provisions of the bankruptcy law, as applies to personal residences, it still wouldn’t happen very often. Even though maybe it should. But this doesn’t necessarily create only a temporary fix. It may very well be a permanent fix for some borrowers.

[SK in CV]

[quote=SD Realtor]I can understand the logic… it is simply a kick the can down the road policy…

[/quote]

No. It isn’t. Kick the can would be reducing the interest rate or deferring interest and not adjusting the principle balance. Adjusting the principle balance turns (or at least may turn) an underwater loan into a good loan. Permanently. I don’t suspect there will ever be widespread principle adjustments, either as a result of legislation or otherwise. Even if congress were to reinstitute the cram-down provisions of the bankruptcy law, as applies to personal residences, it still wouldn’t happen very often. Even though maybe it should. But this doesn’t necessarily create only a temporary fix. It may very well be a permanent fix for some borrowers.

[SK in CV]

[quote=SD Realtor]I can understand the logic… it is simply a kick the can down the road policy…

[/quote]

No. It isn’t. Kick the can would be reducing the interest rate or deferring interest and not adjusting the principle balance. Adjusting the principle balance turns (or at least may turn) an underwater loan into a good loan. Permanently. I don’t suspect there will ever be widespread principle adjustments, either as a result of legislation or otherwise. Even if congress were to reinstitute the cram-down provisions of the bankruptcy law, as applies to personal residences, it still wouldn’t happen very often. Even though maybe it should. But this doesn’t necessarily create only a temporary fix. It may very well be a permanent fix for some borrowers.

[SK in CV]

[quote=pri_dk]
Is it the government’s job to decide who should win and lose in the marketplace, or is the government’s job to use taxpayer money optimally?

We are in a situation where the financially optimal alternative is not the most “fair.” What sucks about it is that it is impossible to do anything to make it fair – the damage is already done. But that’s where we are, and we have to make the tough decisions.

[And this is *not* a left/right D/R thing. It’s about making the right decisions based upon objective facts.[/quote]

You make some real good points here. I think the government’s job is to maintain a stable dollar and to help maintain a stable economy. A stable residential real estate market contributes to both. This policy would help provide stability to the market. (I’m sure there are those that will argue that it only puts off the inevitable. Maybe so. But it also could help delay enough foreclosures until the more inevitable employment paradigm shift occurs, and the inevitable next severe residential real estate drop never happens.)

And of course it shouldn’t be a partisan thing, but of course it is, because so few will evaluate the actual proposed policy before looking at who proposed it.

The example you outlined also makes sense for the lender, (whether a GSE or not) except that I would take exception to some of your wording here:

[quote=pri_dk]So by doing the loan mod, you are down at most $100K, and likely less than that.[/quote]

Not wrong, but I think the wording is a bit awkward. The lender is already down more than $100K before the mod. If the mod is successful, that loss is cut in half. It’s good, logical, sound, business strategy. But having dealt with lender asset management departments through three real estate cycles, I doubt it will ever gain much traction.

[SK in CV]

[quote=pri_dk]
Is it the government’s job to decide who should win and lose in the marketplace, or is the government’s job to use taxpayer money optimally?

We are in a situation where the financially optimal alternative is not the most “fair.” What sucks about it is that it is impossible to do anything to make it fair – the damage is already done. But that’s where we are, and we have to make the tough decisions.

[And this is *not* a left/right D/R thing. It’s about making the right decisions based upon objective facts.[/quote]

You make some real good points here. I think the government’s job is to maintain a stable dollar and to help maintain a stable economy. A stable residential real estate market contributes to both. This policy would help provide stability to the market. (I’m sure there are those that will argue that it only puts off the inevitable. Maybe so. But it also could help delay enough foreclosures until the more inevitable employment paradigm shift occurs, and the inevitable next severe residential real estate drop never happens.)

And of course it shouldn’t be a partisan thing, but of course it is, because so few will evaluate the actual proposed policy before looking at who proposed it.

The example you outlined also makes sense for the lender, (whether a GSE or not) except that I would take exception to some of your wording here:

[quote=pri_dk]So by doing the loan mod, you are down at most $100K, and likely less than that.[/quote]

Not wrong, but I think the wording is a bit awkward. The lender is already down more than $100K before the mod. If the mod is successful, that loss is cut in half. It’s good, logical, sound, business strategy. But having dealt with lender asset management departments through three real estate cycles, I doubt it will ever gain much traction.

[SK in CV]

[quote=pri_dk]
Is it the government’s job to decide who should win and lose in the marketplace, or is the government’s job to use taxpayer money optimally?

We are in a situation where the financially optimal alternative is not the most “fair.” What sucks about it is that it is impossible to do anything to make it fair – the damage is already done. But that’s where we are, and we have to make the tough decisions.

[And this is *not* a left/right D/R thing. It’s about making the right decisions based upon objective facts.[/quote]

You make some real good points here. I think the government’s job is to maintain a stable dollar and to help maintain a stable economy. A stable residential real estate market contributes to both. This policy would help provide stability to the market. (I’m sure there are those that will argue that it only puts off the inevitable. Maybe so. But it also could help delay enough foreclosures until the more inevitable employment paradigm shift occurs, and the inevitable next severe residential real estate drop never happens.)

And of course it shouldn’t be a partisan thing, but of course it is, because so few will evaluate the actual proposed policy before looking at who proposed it.

The example you outlined also makes sense for the lender, (whether a GSE or not) except that I would take exception to some of your wording here:

[quote=pri_dk]So by doing the loan mod, you are down at most $100K, and likely less than that.[/quote]

Not wrong, but I think the wording is a bit awkward. The lender is already down more than $100K before the mod. If the mod is successful, that loss is cut in half. It’s good, logical, sound, business strategy. But having dealt with lender asset management departments through three real estate cycles, I doubt it will ever gain much traction.

[SK in CV]

[quote=pri_dk]
Is it the government’s job to decide who should win and lose in the marketplace, or is the government’s job to use taxpayer money optimally?

We are in a situation where the financially optimal alternative is not the most “fair.” What sucks about it is that it is impossible to do anything to make it fair – the damage is already done. But that’s where we are, and we have to make the tough decisions.

[And this is *not* a left/right D/R thing. It’s about making the right decisions based upon objective facts.[/quote]

You make some real good points here. I think the government’s job is to maintain a stable dollar and to help maintain a stable economy. A stable residential real estate market contributes to both. This policy would help provide stability to the market. (I’m sure there are those that will argue that it only puts off the inevitable. Maybe so. But it also could help delay enough foreclosures until the more inevitable employment paradigm shift occurs, and the inevitable next severe residential real estate drop never happens.)

And of course it shouldn’t be a partisan thing, but of course it is, because so few will evaluate the actual proposed policy before looking at who proposed it.

The example you outlined also makes sense for the lender, (whether a GSE or not) except that I would take exception to some of your wording here:

[quote=pri_dk]So by doing the loan mod, you are down at most $100K, and likely less than that.[/quote]

Not wrong, but I think the wording is a bit awkward. The lender is already down more than $100K before the mod. If the mod is successful, that loss is cut in half. It’s good, logical, sound, business strategy. But having dealt with lender asset management departments through three real estate cycles, I doubt it will ever gain much traction.

[SK in CV]

[quote=pri_dk]
Is it the government’s job to decide who should win and lose in the marketplace, or is the government’s job to use taxpayer money optimally?

We are in a situation where the financially optimal alternative is not the most “fair.” What sucks about it is that it is impossible to do anything to make it fair – the damage is already done. But that’s where we are, and we have to make the tough decisions.

[And this is *not* a left/right D/R thing. It’s about making the right decisions based upon objective facts.[/quote]

You make some real good points here. I think the government’s job is to maintain a stable dollar and to help maintain a stable economy. A stable residential real estate market contributes to both. This policy would help provide stability to the market. (I’m sure there are those that will argue that it only puts off the inevitable. Maybe so. But it also could help delay enough foreclosures until the more inevitable employment paradigm shift occurs, and the inevitable next severe residential real estate drop never happens.)

And of course it shouldn’t be a partisan thing, but of course it is, because so few will evaluate the actual proposed policy before looking at who proposed it.

The example you outlined also makes sense for the lender, (whether a GSE or not) except that I would take exception to some of your wording here:

[quote=pri_dk]So by doing the loan mod, you are down at most $100K, and likely less than that.[/quote]

Not wrong, but I think the wording is a bit awkward. The lender is already down more than $100K before the mod. If the mod is successful, that loss is cut in half. It’s good, logical, sound, business strategy. But having dealt with lender asset management departments through three real estate cycles, I doubt it will ever gain much traction.

[SK in CV]

[quote=flu]

SK,

What are the “other ways”?

-Curious kitty.[/quote]

I said “may”. I’m thinking maybe the only foolproof way would be to pay all cash so there’s no problems with the lender. Set up a pretty standard grantor trust with a fictitious name, (ABC Trust) and name an attorney or someone else as the trustee for the recording of the purchase, so your name doesn’t show up anywhere on the records. Then after the purchase is recorded, substitute yourself as the trustee. I can’t think of any reason that wouldn’t work.

[SK in CV]

[quote=flu]

SK,

What are the “other ways”?

-Curious kitty.[/quote]

I said “may”. I’m thinking maybe the only foolproof way would be to pay all cash so there’s no problems with the lender. Set up a pretty standard grantor trust with a fictitious name, (ABC Trust) and name an attorney or someone else as the trustee for the recording of the purchase, so your name doesn’t show up anywhere on the records. Then after the purchase is recorded, substitute yourself as the trustee. I can’t think of any reason that wouldn’t work.

[SK in CV]

[quote=flu]

SK,

What are the “other ways”?

-Curious kitty.[/quote]

I said “may”. I’m thinking maybe the only foolproof way would be to pay all cash so there’s no problems with the lender. Set up a pretty standard grantor trust with a fictitious name, (ABC Trust) and name an attorney or someone else as the trustee for the recording of the purchase, so your name doesn’t show up anywhere on the records. Then after the purchase is recorded, substitute yourself as the trustee. I can’t think of any reason that wouldn’t work.

[SK in CV]

[quote=flu]

SK,

What are the “other ways”?

-Curious kitty.[/quote]

I said “may”. I’m thinking maybe the only foolproof way would be to pay all cash so there’s no problems with the lender. Set up a pretty standard grantor trust with a fictitious name, (ABC Trust) and name an attorney or someone else as the trustee for the recording of the purchase, so your name doesn’t show up anywhere on the records. Then after the purchase is recorded, substitute yourself as the trustee. I can’t think of any reason that wouldn’t work.

[SK in CV]

[quote=flu]

SK,

What are the “other ways”?

-Curious kitty.[/quote]

I said “may”. I’m thinking maybe the only foolproof way would be to pay all cash so there’s no problems with the lender. Set up a pretty standard grantor trust with a fictitious name, (ABC Trust) and name an attorney or someone else as the trustee for the recording of the purchase, so your name doesn’t show up anywhere on the records. Then after the purchase is recorded, substitute yourself as the trustee. I can’t think of any reason that wouldn’t work.

[SK in CV]

Probably getting a bit off topic here, however…

[quote=Shadowfax]
Foreign corporations do have to register, but only if they are conducting business. owning a residence is not “doing business” in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.[/quote]

I’ll take your word for it that owning a house (or a piece of vacant land for that matter) doesn’t qualify as “doing business”, and if we’re assuming that the property is a personal residence, we’ve got the imputed income issue of fair rent for the property. That would qualify as doing business, whether rent is actually being collected or not. If it’s a piece of rental property, same thing, collecting rent would be “doing business”.

Another issue is that corporations aren’t entitled to the personal residence tax exclusion ($250K for single, $500K for married), so any gain would be fully taxable at corporate rates. And for either rental property or personal residence (though inside a corporation, i’m not sure how it could be anything but rental property if someone is living in the house) a corporation would pay at full rates, there’s no lower tax for corporations for capital gains. That’s also a problem with selling the whole corporation. The buyers wouldn’t be entitled to adjust the basis of the asset upon sale. Doesn’t matter what they paid for the corporation stock, the gain would still be computed based on what the corporation paid for the property (adjusted for any depreciation, whether taken or not). Which is one of the many reasons that anyone with good advisors would ever buy a corporation whose only asset is a piece of property. There is just no upside and plenty of downside.

And we have the whole issue of the 3.5% california withholding on the gross sales price, when the property is sold. Can’t get around it if the seller is a foreign corporation, like you can if it’s the sale of a primary residence.

Conclusion is, that if the goal is protecting privacy on the purchase of a personal residence, a corporation is NOT the way to go. There may be a way to do it. But this isn’t it.

[Author]

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