Sunday, November 24, 2013

Eminent Domain idea spreading

Robert Hocket, a supporter of this idiotic idea, stated last week that 20-25 municipalities in approximately 11 states (including CA, NJ, WA, OH, NY, and FL) are looking into using eminent domain to seize and rework mortgages.

He also recently wrote a paper about the idea, ironically titled "Paying Paul and Robbing No One", that a muncipality can simply force a lender (the MBS trust in this case) to accept less than the face value of a loan, and then give the borrower a break on the balance. The theory being that because the borrower is underwater, he deserves a break - while in the real world, most of us would ask him to post additional collateral if we were the lender.

Richmond CA, the first mover, has already sent offer letters to buy loans to Trustees and Servicers. A Federal judge ruled that the second suit surrounding this particular city's effort is too early to call. The Trustees' suit highlights that the purported goal of MRP is to make the loans more affordable, but modifying into current rates would actually force payments 19% higher, therefore making them MORE likely to default. Of the 624 mortgages MRP has offered to buy, the vast majority are CURRENT on their payments, 63% were originally cash-out refis, 53% have already received modifications (average payment is $1499 and average WAC is 3.05%), and losses to the MBS Trusts that Fannie Mae owns would total $17mm.

The best quote so far is from the mayor of Richmond CA, Gayle McLaughlin, who said  “We are offering to take the loans for fair market value and that’s what this is all about. To threaten redlining to our community, when they have already suffered clearly massive injustices, it’s just setting us
back.” She is offended that lenders have basically said we won't lend in your city anymore (i.e. redlining) if you don't honor lending contracts in your city anymore... mmmmkay.

*most of this is taken from a few BBG articles, except where stated otherwise. Sorry no links.

Wednesday, November 6, 2013

Blockbuster death knell continues as remaining physical stores close

They have 300 stores remaining in the U.S. and they're closing all of these down. The best takeaway from the article is the quote from the CEO:

"consumer demand is clearly moving to digital distribution of video entertainment,"
 Yeah, it isn't "moving" it has "moved". What he fails to realize is that the movement is also away from cable and satellite providers such as DISH (the parent company of Blockbuster) as well. Roku and Apple TV products are letting people completely unhook.

Our household unplugged our DiSH a little over a year ago, and now instead of seeing what is on or recorded, we get to flip through a broad menu of options to choose from - want to watch the entire series of The Walking Dead in a single day? No problem, you can watch the first three seasons on the Amazon Prime channel for FREE (this channel is free if you already have Amazon Prime, which we do for other reasons) or on NetFlix which costs $7.99/mo, the current season costs around $15 or you can wait til post-season and its free too. Want to watch virtually any sitcom - Hulu, free. We spend around $40 per month now on streaming TV, mostly for premium content (i.e. HuluPLUS - $7.99/mo, more episodes are available with Plus; Netflix) and movies on demand (even ones in the theatre right now). Movies on demand that are out on Redbox (which has a channel on Roku) are a $1-2 more than at the physical location, but you spend multiples of that in time and gas, so net savings - plus many of those movies are also on other channels for free.

Sorry for the mission creep. Most of the Blockbuster stores that are closing are small corner retail stores and outparcel units in strip centers. Some common uses that have popped up since the bankruptcy has been pawn shops (i.e. LaFamilia in FL), cell phone retailers (for half, or less, the footprint), Game Stops, medical (i.e. freestanding emergency rooms, minute clinics, etc.), and restaurants. There is a blogger in Atlanta who has documented many of the stores' transitions there that is worth a quick peek.

Friday, November 1, 2013

Tax Question

I know I'm behind on posting, and I'll get back on it ASAP.

Important personal question I want to put out to the masses. I filed my taxes on October 15th, but failed to send in the check. I realized it pretty quick and remedied that, but they slapped with interest that amounted to 30% and 36% annualized, on the balance. I think they're going to give me a pass at the end of the day, but my question is... How can the state Department of Revenue charge a 36% interest rate when the same state's Statutory Maximum Interest Rate under their usury statute is 16%?

Surely someone has brought this up before, and I don't have a lot of experience being late on my taxes, so what's the catch?

UPDATE: The IRS does this as well, apparently. The interest rate for filing late is 5% per month, or  79.6% annualized. This seems like it would violate every states' usury law, and is extremely harsh. I'm sure it normally gets negotiated, by is it legal?