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In order to keep up with the nature of free, spirited debate, I wanted to place the chat feature at the top of the homepage. This ensures people can come here and share their views on anything they wish and not have it be related to any specific discussion. Here, people can share ideas, links, and views "unmoderated" and an their own pace. To me, this makes The Elephant in the Room blog truly a place for debate.

Thursday, January 10, 2013

January 10, 2013 - Morning Headlines

- With more than 2,200 cases of hospitalization, this season's flu epidemic is shaping up to be one of the country's worse (CNN):

- After a meeting with gun violence victims groups and before a meeting with the NRA, Vice President Joe Biden said that Obama could act with regards to gun legislation (Fox News):

- New, first-of-their-kind government regulations being unveiled by the Consumer Financial Protection Bureau, will further regulate the mortgage industry in an attempt to prevent the lax lending practices that led to the housing bubble and subsequent burst (CBS News):

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  1. I really really hope POTUS doesn't use his EO power. This should be an issue that reasonable people can get together on (or perhaps not judging by some of the feedback I've seen here where some folks find it utterly unreasobale to lock their guns up when they're not around to safeguard them). I would love to see the EO charter changed. I would like to see a system where ALL EO's go to popular vote during the following election cycle after it is enacted.

    1. This president's use of EO has been essentially ruling by fiat, thereby bypassing Congress to shove through his own agenda. He, all by his lonesome, enacted the Dream Act - in direct violation American immigration law, by EO.

      ['perhaps not judging by some of the feedback I've seen here where some folks find it utterly unreasobale to lock their guns up when they're not around to safeguard them']

      'They' are NOT talking about 'locking guns up when you're not around to safeguard them'.. which 'I' have no problem with.

      'They' are talking about out-right bans... which btw, have NEVER worked.
      'They' are talking about MORE 'gun free' zones.
      'They' are talking about federal registration.

      'We' have read world history, which tells 'us' registration, at the federal level, leads to confiscation, a scenario that 'they' have also floated.

      'They' are busy whipping up 'assault rifle' hysteria, while 'they' have ZERO idea what an 'assault' rifle even IS.

      FACT:'Assault weapons' are BANNED in Connecticut (as well as MANY other states).
      FACT: The shooter(s) DID NOT use an 'assault weapon' in the CT OR Aurora massacres.
      FACT: The weapon(s) were SEMI automatic rifles of a type COMMONLY USED for HUNTING.

      FACT: FULL auto - which is the CLOSEST anyone can come to a 'definition' of 'assault weapon'(commonly called machine guns) - which fire as long as the trigger is depressed - are ALREADY BANNED and/or tightly regulated/restricted.

      IMO 'they' watch too many violent Hollyweird movies and are basing their hysterical rhetoric on what 'they' see on the 'silver screen' - rather than the TRUTH of the actual FACTS.

      'I would like to see a system where ALL EO's go to popular vote during the following election cycle after it is enacted.'

      I have a better idea: How about we FOLLOW the CONSTITUTIONALLY MANDATED system of the THREE BRANCH Checks and Balances that OUR FOUNDERS decreed?

    2. While I again agree that I don't like the use of an EO for this particular instance (or really, many of them at all), EOs are still perfectly constitutional. Many laws Congress passes even specifically allow for executive changes in certain areas, as the POTUS may see fit.

      There’s always a fine line here of course, and it certainly is worth the debate on when, where, how, and what should be done with executive orders.

  2. Good Morning LME -

    You're the numbers guy, maybe you can explain this to me.

    Re: 'New" mortgage 'rules' - These two items jumped out (to me)

    "Lenders will be required to verify and inspect borrowers' financial records."

    We bought our first home in 1972, when I was 18 and have owned five since. In EVERY case, we've had to provide literal stacks of paperwork, give access to records of ALL our outstanding AND paid off debt, etc. etc. BEFORE the loan was approved. In all but the first home - which was under the old *231I program - a 20% down payment was required - up front.

    *For those to young to remember, 235I was a program where, at the beginning, your mortgage was offset to reflect 33% of your income and adjusted annually as your income rose - for a MAX of five years - if need be. The down was 10% and entire loan amount was paid by the BUYER, some of the principal was simply shifted to the BACK end of the note - to accommodate the lower income levels of young home buyers. As their income grew, their payment was raised accordingly.

    It was a $19,000, 10 yr old, 3 bdrm/1 bath - 850 sq ft tract home and in less than two years, ours was up to the full boat. If we'd paid out the loan to term, it would have added about seven months to the end of the note.

    Which is why I question this:

    "They generally will be prohibited from saddling borrowers with loan payments totaling 43 percent of the person's annual income."

    Throughout the years, to determine whether - or not - we can afford a particular home - we've consistently used the 33% model of mortgage payment to income; we include the cost of home owners insurance and property tax in that base number.

    We've been around awhile, our finances are stable and our credit rating is good.

    To me - that 43% model looks like asking for MORE trouble in the housing market.

    1. Dara - Good morning!

      First, let me say, as a free market guy, it's up to the customer, the borrower, to know alllllll the components of a loan before they sign on the bottom line. That being said, I'm vehemently opposed to these regulations. I don't think the government should exist to "protect" people from themselves and their own free choices, regardless of how "good" or "bad" they are. Not only do these regulations destroy personal incentive and responsibility, they ultimately cost Americans, and in my opinion, the benefits of the "protect" rendered do no outweigh the costs incurred. All these regulations do is add more cost to the bottom line of lenders which, in turn, put this on the consumer.

      As far as the specific numbers, I've studied personal finance both academically and in practice, and I will say that I'd love to see the math and the actuaries recommendations that came up with a number such as 43%. Why this number? And why the need for MORE financial disclosure, especially since you properly declared, it's already done. To me, this is all another example of the government stepping in, saying it's going to "help" and "protect" people, all while increasing power, increasing costs, and reducing freedoms. But hey, if people feel protected, helped, and sustained by the government, the love and trust it more... and in my opinion, that's always a dangerous proposition.

    2. Thanks LME

      Yes, as Reagan said: The most dangerous words - 'We're from the government and we're here to help.'

      The article didn't say where they got the 'magic number'. Based on our circumstances throughout the years, I wouldn't feel comfortable with a mortgage payment that garnered a steady 43% of our income.

      We've 'learned' to hate 'bills' - but we're not 'rich' enough to pay cash for a home. We stay at or below the 33%, do 20-25% down on a 15 yr. mortgage and send extra to the principle each month; it's worked out fine for us for the past 40+ years : )

      Anyway, that percentage seems (to me) too high and yet another recipe for future housing market disaster - especially if you had kids (who ALWAYS seem to incur unexpected and unplanned expenses), wanted to have a savings program in place (for rainy days ; ) etc.

      Thanks again.