Las Vegas real estate, mortgage, appraisal blog

It seems as though the mortgage baillout bill is being pushed through as quickly as possible and although many see it as a way to help others there is something, beyond the IRS keeping tabs on our online purchases, that is making many wary. It seems that part of the bill could cause people to lose their property to eminent domain even easier than now, according to an article on the World Net Daily.

The congressional plan to bail out the U.S. housing and mortgage industries, which could be approved by Congress and signed by the president as early as this weekend, actually endangers Americans' housing, according to the director of the Center for Entrepreneurship at the Competitive Enterprise Institute.

"Of all the unintended consequences of the housing bill that passed the House – of which there will likely be many – one of the most ironic and far-reaching may be this: that whatever security marginal homeowners have from foreclosures, their homes will be far less safe from being taken by a bureaucrat through eminent domain," John Berlau wrote on the organization's website.

The Wall Street Journal says that the bill needs to be enacted as soon as possible but there is even more to make Americans wary.

Some of the details included in the hundreds of pages of the bill are likely to surprise – and concern – Americans. For example, there's a requirement for a new fingerprint registry for those who are associated with the mortgage industry, raising privacy concerns for many.

There's also a provision many are interpreting as allowing the federal government to obtain information about online spending, money transfers and purchases, including ordinary eBay purchases.

Now comes the concern that the new proposal's affirmation of the Kelo decision by the U.S. Supreme Court actually could make the situation worse for homeowners.

That still-bitterly opposed Supreme Court opinion in Kelo v. New London decided in 2005 that the U.S. Constitution allows the taking of private property for private economic development, a decision decried by WND columnist Ellis Washington as "a blatant violation of citizen property rights, also an obvious misinterpretation of the Takings Clause of the Fifth Amendment, which mandates, 'nor shall private property be taken for public use, without just compensation.'"

Berlau explains his worries about the wake of the Kelo verdict, and the new provisions in the housing bailout plan.

"Some states have passed laws protecting property owners by barring eminent domain solely for economic development purposes. But for the many states that still allow this practice, the federal government is often the source of funds for the projects that result in the use of eminent domain. Efforts to bar federal funds to be used on projects that make use of this type of eminent domain have stalled in this and the last Congress," he said.

This should not have been the case and in the original bill there was even wording to protect against this eventuality. "They put in a clause stating, 'No funds under this title may be used in conjunction with property taken by eminent domain, unless eminent domain is employed for a public use.' The clause then adds that 'public use shall not be construed to include economic development that primarily benefits any private entity," he said."

"But this language has vanished from the House bill," he said.

Replacing it is language that "would give governments substantially more leeway to take land."

That provision changes the Senate's prohibition on funds "used in conjunction with property taken by eminent domain" with the looser ban of using funds for a "project that seeks to use the power of eminent domain."

"This new language in the House bill would give property-grabbing bureaucrats an easy way around the supposed prohibition on using eminent domain," Berlau said. "All they would have to do is take property for any reason that Kelo allows, and then come up with another project for the specific use of that property. If land were grabbed for general economic development, as Kelo permits, and then a new project were created for a city to sell this land to developers, this would likely not be a violation of the House bill. After all, the new project isn’t 'seeking' to use eminent domain, it is merely using land that had already been confiscated."

He warned of the potential for the bill to "stimulate a bonanza of state and local property confiscation of the type green-lighted in the Supreme Court's 5-4 deciion Kelo v. New London."

"This new language means … there will be virtually nothing stopping states and localities from using the federal housing grants to help themselves to confiscate housing," he said.

The foreclosure prevention bill being referred to now as the "Housing-Recovery Package" has more in there than most people are aware of. It's not unheard of for items to be tacked onto bills in order for the government to make something happen but this is something we should all be taking notice of. An article by William Johnson explains exactly what is in there that Las Vegas residents as well as every American should be aware of.

There is yet another provision of the senate version of this bill and there isn't much publicity on it as yet. This bill has a provision in it that provides that on line purchases made by a credit card, a bankcard, by any alternative payment process such as pay Pal, eBay, Amazon, Google to file aggregate transaction reports to the IRS when totalling more than $10,000 or when more than 200 tranacstions a year. This then may open the door to more detailed information.

The Bill requires online transactions be reported which include the reporting of the identity of the small business receiving party and their taxpayer information. Many small businesses use their social security number for business filing. This burdens on banks, credit card companies and any financial arrangement company and will be more than onerous. Wouldn't this necessarily translate to the potential for higher costs on on line purchases aside from the issue of possible gathering of consumer purchasing history.

It will be interesting to see what lobbies come forth to oppose this inclusion and if they will be successful in removing this provision from the final bill before passage. I scratch my head in wonder as I ponder what this sort of information acquiring has to do with foreclosures and the attempt to minimize them which was supposedly the intent of the bill. I would also love to know who proposed such a thing in the first place. Getting that legislator some well deserved publicity would be interesting as well. If this sort of thing is so desirable for passage, it should be in a stand alone bill, debated and passed or not passed on its merits. But hiding it in another bill should not be allowed.

We've all heard the stories of people lining up to get their money out of IndyMac, such as in the article in the Los Angeles Times, but now it seems that IndyMac customers aren't the only ones starting to get nervous. Another article in USA Today says that Washington Mutual customers are now starting to get very nervous.

Washington Mutual led the sector's decline, sinking 35% to close at $3.23 a share, after an analyst questioned the thrift's financial viability. Investors also sold off other regional bank stocks, such as National City of Cleveland.

The sell-off followed federal regulators' seizure late last week of IndyMac, a California mortgage lender with $32 billion in assets. The action Monday was the latest sign of widespread anxiety, even panic, about the economy's underpinnings.

"It's not just the equity market that's making investors nervous," says Greg McBride of Bankrate.com. "We're talking about a real estate market that is making homeowners nervous, a job market that is making job seekers nervous."

The problem with people becoming nervous, and especially if people become panicked, is that they will make their own doom filled prophecies come to pass. Although some are still keeping their money in their accounts, others are foretelling another depression.

Richard Bove, an analyst at Ladenburg Thalmann, wrote Monday that while no banks he covers seem at risk of failing, Washington Mutual is "on the edge." The thrift, in a statement, said it's more than "well-capitalized." Capital is vital to banks to cover losses from bad loans. Separately, National City sought to quell rumors about its financial troubles by saying it had not experienced "unusual depositor or creditor activity."

A big danger, McBride says, is that investors' worries about banks "can almost become a self-fulfilling prophecy." Michael Heller, president of Veribanc, a bank-rating firm, agrees that if consumers panic and withdraw money en masse, that could cause banks to fail.

The public's loss of confidence triggered IndyMac's failure, regulators say, with customers withdrawing $1.3 billion from the thrift in 11 business days.

The FDIC has signs posted in every bank but people haven't been paying attention to what it is they really do. This has people with deposits exceeding 100,000 in any one account at the head of those beginning to panic.

Outside an IndyMac branch in Manhattan Beach, Calif., that reopened Monday, about 100 people waited beside four police cars and barricades. Irene Sims had the day off from work, "But I had errands to run, not this." She had $160,000 in the bank, she says, and was there to withdraw all of it: "I hope."

The FDIC insures up to $100,000 in deposits per person per bank, more if you open a joint account or save in a retirement account.

Even though much of depositors' money is insured, "An event of this size is a lot of shock to some people," says John Bovenzi, the FDIC chief operating officer who has been appointed head of the new government-run IndyMac Federal Bank. "They want to see that their money is safe."

Everyone has heard about Starbucks closing 600 stores but the coffee chain is not the only one feeling the pinch. Vacancies in malls and strip malls are on the rise, with more and more stores closing locations. Low-cost warehouse-type and grocery centers are noticing the increase as more americans are narrowing their budgets, according to an article on CNBC.

GAP is looking to give up some of the 40 million square feet of retail space it leases. That's in addition to the growing list of retailers, such as Linen 'n Things and Goody's Family Clothing, which filed for bankruptcy protection.

For the first time since 1980, more space became available to rent at strip malls than was rented out -- about 3.2 million square feet more. Part of the available space came in the form of 5.7 million square feet of new development that came on the market during the quarter.

The extra space translated into falling rents at strip malls, down 0.1 percent to an average of $17.60 per square foot.

"The downward pressure on rent is coming from landlords being very nervous about the idea of losing a tenant when they know that there's a paucity of replacements for that tenant in the current market environment," Chandan said.

Now that retail businesses are being affected many are wondering just how long this will continue. Second quarter of this year was the worst for strip mall owners in 30 years. Hopefully the trend will not continue. For now we can only wait and watch and see.