Just What The Hell Is Fair?

Loan Modification TroubleAfter a couple months off, time to get back at it.  The election is right around the corner and we have to stand on every high rock and shout about how the left wants to take your freedom.

But that’s not what this post is about, per se.  Rather, today I want to talk about fairness.

We hear Obama talking about how he wants “…millionaires and billionaires to pay their fair share.”  Never mind that the top 10% of income earners pay in the neighborhood of 70% of all federal income taxes.

The “fair share” argument is absurd on its face.

Still, Obama and his leftist minions persist.

Well, here’s a real story about fairness.

Today, I’m going to open the kimono a little, with a real life example…

My wife and I did everything right.  When we got married, we both owned our own homes.  I had a condo and she had a small town house.  The year we married, we both sold our respective homes so that we would have enough to buy our new “family” home together.

When we bought our house – the house I am writing from today – we made a 30% down payment.

Still, we took a big loan – we got a 30 year fixed rate at 6 3/8%.

The mortgage lender gave us various options for us to get a lower payment.

We declined.

We figured that 6 3/8% is great historically and we’ll be set for as long as we need.   Our payment will never get bigger.

Our monthly payment is $3,000.00.

Fast forward 7 years.  Today, we are one of the few people with equity in our home.  We’re on top by about $55,000.00, according to area comps, and various market estimates.

Here’s the problem:  Both my wife and I are self employed.  Although we have always paid our mortgage on time, we don’t show the income necessary to get a new mortgage.

I went online to look at new houses recently.  I found a beautiful four bedroom house in a golf community.  This house is right on the golf course  – long a dream of mine.  The house is listed for $500,000.00.

If I sold my house and had $55,000.00 in cash, I could put a 10% down payment on the new house.  At today’s interest rates, my payment would be around $2,200.00 – $800.00 LESS than my current payment on my 30 year fixed loan.

You’d think any bank would jump at the chance to secure a new loan with an old customer, secure 30 new years of a loan that would be less risky, in terms of the amount we’re responsible for each month.

Guess what?

No chance in hell.

First, because we’re self-employed, we show a much smaller income due to various write-offs and expenses.  Second, with only 10% down, banks won’t even talk to us.

Forget about the new house on the golf course.  How about just refinancing the $359,000.00 left on our existing mortgage?

Nope.

Again, self-employed, not enough bottom line take home.  It’s as if the banks are oblivious to how self-eployment actually works, but I digress.

We did everything right…

  • We got a 30 year fixed rate, when we could have saved $1,000 a month with some gimmick
  • We put down the maximum down payment of over 30%
  • I opted to start my own business in the face of a layoff back in 2009

The result?

A big F*#k You from the banks.

I don’t even fault the banks.  I fault the government.  If they had not stepped in with their absurd plot to put low income deadbeats into homes they couldn’t afford, none of the housing problems would have happened in the first place, save for ordinary market cycles.

And all those people who sold short, defaulted on payments, used government programs to refinance…all those assholes are sitting pretty.  We did it right and played by the rules, and we’re stuck with an interest rate twice what it should be.

I suppose we’re okay.  Since we make good decisions and work hard, we’ll always be alright.

But you know what?  This shit ain’t fair.

 

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Comments

  1. John Doe says:

    You’re faulting the same government that has absurd tax deductions and right offs for people like you. “self-employment” is such a joke. You can pay virtually zero taxes year after year and still reap all the rewards of society.

    It would be nice to see your actual effective tax rate. That is what the term ‘fair’ means. Millionaires and Billionaires can sleaze their way through life on ridiculous tax loop holes contributing 10-20% of their income to taxes, yet are so rich they’re making money on stock pile of money they already have through interest.

    Meanwhile, middle class families have ETR of 20-35%, with no million dollar bank roll earning themselves interest. The system is broke. Rich people get richer by doing nothing. Working people have to work to prevent an all too easy downward spiral.

  2. John (if that IS your real name) 🙂 — I AM the middle class! My wife runs a small massage and skin care business and I run a marketing agency that I started when I got laid off from a middle management corporate job back in 2009.

    We’re getting HAMMERED with taxes.

    The bottom 45% of income earners pay ZERO federal income taxes. The top 10 percent pay about 70% of federal income taxes.

    Fair?

    I’d say you have your definitions a bit cockeyed…

  3. No one forced the banks to lend and no one forced the banks to pervert the opportunity to lend to low income buyers. Bad mortgages were pushed by banks to cover obscene leverage used in risky bets. The more mortgages for more money they had on the books, the more it balanced their bad judgement. That’s why they call it predatory lending. Let alone the fact that lawsuits exist and are being settled constantly because of the way banks conducted their business during the housing bubble. It wasn’t the government falsifying lending documents or cutting and pasting signatures on fraudulent paperwork. Thats why they call it lending fraud.

    Furthermore if your income is too small on paper for lending opportunities precisely because of write-offs and expenses then I can hardly believe you are being HAMMERED with taxes. If you don’t make enough money on paper to convince the bank you’re a worthy loan applicant then chances are the government is taxing you proportionately based on the same information. Just the same, would you rather the IRS call and tell the bank to loan you the money?

    Let alone that a good amount of those “expenses” and write-offs are quite possibly not strictly within the lines of your business and bear a benefit to your domestic viability. If you wan’t your income to look better then stop claiming all that gas and toilet paper and millage and clothing and all those business meals against your income to get tax breaks and you’ll be able to refinance your house no problem.

    You can’t have it both ways because that shit wouldn’t be fair.

    45% of income earners pay ZERO because they don’t make enough money to pay taxes. Somewhere in the neighborhood of less than $27k I think. The top 10% pay 70% of the income taxes because they have 90%+ of the wealth in the country.

    If poor people didn’t want to lose their houses then they shouldn’t have bought one sounds almost as silly as saying if rich people don’t want to pay all the taxes they shouldn’t make all the money.

  4. Spoke like a good lefty, Frank. Well done.

    It’s lefty week here at ToBeRIGHT – every commie nut has come out of the woodwork and outs from under the Kos rock to visit my blog. I guess I should be flattered.

    Dude, there isn’t “70% of the wealth.” Wealth is not a static pie that is sliced up, forever to remain in certain ownership. The economy is constantly growing and shrinking. How this is lost on lefties is beyond me…

  5. Nice of you to ignore everything to focus on nitpicking one tiny issue and not even referencing it properly. When I said “90% of the wealth”. It was an easier way of saying 90% of the income reported based on the statistic that the top %10 wealthiest people pay 70% of the taxes. I’m sorry you couldn’t figure that out.

    Given the context and the inverse ratios I’m talking about it should have been obvious what I meant.

    You are certainly right about wealth not being static but the point I was making is that the people who are paying 70% of the income taxes are the people who are paying those taxes based on the fact that their income is in the top 10 percentile per capita. They are deemed the top 10% precisely because their income accounts for 90% that’s how percentages and ratios work.

    They are paying 70% of the taxes but they are earning 90% of the reported income. Which is fine by me by the way. It’s a lot of money and it’s not being used well no matter who is in office. Not everything is supposed to be fair. I just can’t lend a tender ear for people to cry foul when those earning less than $30k a year don’t pay taxes but people earning $300k a year are probably earning no less than $200k a year after taxes.

    How this is deemed unfair by so many conservatives is lost on me. Would you say it’s more fair if someone earning $70,000 a year pays $15,000 in income taxes and a person who makes $700,0000 to also pay $15,000 in taxes?

    Conservatives always want to cry socialism when there is a discussion of an elevated standard for a larger pool of people and yet nobody thinks it’s the same functioning principal to keep standards low for a widening base of people. Wanting a large group of people to have the same thing is still socialism even if that same thing is poverty.

  6. Again, at once you say you understand but clearly don’t.

    There is not 90% of the income.

    What income?

    Income varies all over the place. There is not a fixed amount of income to be earned. When someone earns income, it does not happen at the expense of another.

    This is the salient point because all of your arguments hinge on this.

    Moreover, you miss the point of the post. The point is that there are many people who make about the same amount of money I do, who have taken refi programs that only apply if you 1) default or 2) have a Fannie/Freddie backed mortgage. Meanwhile, those of us who played by the rules and make our payments, but don’t have a Fannie backed mortgage, have to go through full doc refi’s. THAT’s the point.

    Lastly, you conclude with yet another contradiction: Socialism ALWAYS ends in lowering the standard for everyone, not raising it. See Europe for various examples.

  7. If incomes are so etherial and the economy is in a constant sate of flux, from where are you able to come up with a top 10% who are paying 70% of all taxes?

    As I said twice, we are talking about reported income. We are working with percentages of total income reported to the IRS on income tax fillings. Both income earned annually and taxes paid on said income.

    Also I addressed the point of the post in my first comment which you chose to ignore. I told you to stop fudging your taxes and take fewer deductions if you want the bank to know how much cash you have.

    As for socialism I’m just saying the ignorance with which that term is used in conservative circles is astounding. You want fairness for you but have no compassion for people who lost their homes regardless of their circumstances. You want to be able to have a bigger house and keep your tax deductions but you can’t so that’s not fair.

  8. You accusation that I am fudging taxes is absurd. You fudge your taxes – you tax cheat.

    See how stupid that is?

    In a given year the people who have income in the bottom 45 or so percent pay NOTHING.

    IN a given year, the people who make income greater than the 90th percentile pay the vast majority.

    There, happy?

    Same thing I already said a half dozen times.

    Your arguments are boring. And to claim that conservatives (me) misrepresent socialism is also boring.

    YOu and your ilk throw around these accusations like, “you have no compassion…” ” you want people to starve” “you want old people to die without medicine” and on and on.

    Then your leaders create ads with a conservative pushing a woman in a wheelchair over a cliff.

    Meanwhile, your chosen One racks up $5 Trillion in debt, adds massive regulation, and takes over a sixth of the economy.

    I don’t want the fairness you want. I don’t want a Fannie Mae loan. I think government handouts for deadbeats who don’t pay their obligations sucks, because my taxes pay for it.

    What’s astounding is people like you finding every excuse in the book to justify your own subjugation and think calling the excuses “fair” makes them okay.

    Willful subjugation and an embrace of proven ineffectual liberal tripe. Just take a look at Greece. Then stop by half the other countries in the EU….yeah – looks like a great model.

  9. Not exactly happy, no. You’re the one who decided to try to pick on me and be unbelievably condescending in regards to my understanding of the rote statistic you trot out as some mountain of evidence for tax inequality. It’s a piece of crap tidbit that means the exact opposite of the point people try to make when they use it.

    Furthermore, it’s the 45% that do pay taxes that are covering 30% of the income taxes paid with less than 10% of the reported income. You want to talk about fair. Would you rather pay 70% of income taxes with 90% of the reported income or 30% of the taxes with 10% of the reported income? Neither looks great on paper but that’s the way it is. Not really worthy of supporting an argument.

    Look I came across this post and it struck me as utterly ridiculous to find someone calling people who lost their homes assholes and blaming them and the government as reasons that you are unable to to have a bigger house. You’re dolling out blame while you are righteously ignoring the roles of deregulation and your own choices in your inability to get what you want.

    Just the same as you can choose to blame the government and all the deadbeats who lost their homes (talk about generalizing). You can also choose to not be self employed or you can also choose to not take so many tax deductions. Everybody has their circumstances.

    I agree that it’s ridiculous that you make your large mortgage payments on time and that should be enough for you to be a qualified applicant for refinancing especially in light of all the unqualified loan recipients and how those turned out. However you can’t ignore the fact that the reasons that you are unable to “look good on paper” are reasons that benefit you in other areas.

    I’m not some socialist and I’m probably not going to vote for Obama. I understand the frustration in not being able to do what you think is best for you and your family especially when the choices of others play a large part.

    However, calling the homeless and unemployed assholes while turning a blind eye to such a huge part of the problem (predatory lending and mammoth over-leverage) plus the consequences of your own choices is perhaps one of the most repugnant things I’ve read all month.

  10. Finally! It took a good bit of kicking and screaming but you finally come around.

    “I agree that it’s ridiculous that you make your large mortgage payments on time and that should be enough for you to be a qualified applicant for refinancing especially in light of all the unqualified loan recipients and how those turned out.”

    And …

    “I understand the frustration in not being able to do what you think is best for you and your family especially when the choices of others play a large part.”

    And THAT is the point of the post. The entire point of the post.

    Okay….so you called me out on some (admittedly) bad generalizations. No foul there – you’re right. But it pisses me off that people game the system. Story after story of people purposefully defaulting in order to get out of bad mortgages. And then then Fannie doing no-doc loans for these people. It’s infuriating.

    I think we have some genuine differences in how we view income and the ability to achieve. But I also think we’re very much aligned in abhorring the madness that is occurring now – namely my particular situation. And we come full circle…. the situation is ridiculous, and in my opinion, largely caused by government.

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