Happy Christmas Eve, 2014.

The world is an interesting place, where people express their thoughts and beliefs for the world to see.  Sometimes with facts and logic, and sometimes with emotion and rhetoric. 

My Christmas wish is that we all take the next 8 days to calm down and come together as people and Americans, whether we are black, white, brown, yellow or any color in between.  Let's really take an introspective look at ourselves over the next few days, and resolve to make things better.

My thoughts for the next year:

1.         I resolve to stop listening to the provocateurs in this world, whether it be the Al Sharpton's or the Rush Limbaugh's.

2.         I resolve to take everything that ANY politician says with a grain of sand, knowing that most of them do not care about the American people or what is best for the country and the world, and instead really care only about getting re-elected to the office they are in or getting up to a higher office.

3.         I resolve to ignore much of the media, whether left, right or supposedly in the center, because they only want to increase their ratings or circulation.  Let's demand that they report facts in the main pages of the paper, and limit their opinions to the Opinion Page.

4.         Having successfully managed to keep resolutions 1 through 3, I resolve to use my own mind to determine what is good for all Americans, including myself.  Not at the expense of anyone, but at the service of everyone.

5.         I resolve to work to lift people up, rather than tear them down.  To lift myself up by making myself a better person, rather than tear other people down to make me appear to be a better person.

6.         Finally, I will search for people that want to serve the people while they are in office, and who will promote changes in the laws of the United States that will reduce or eliminate the power of money in politics and elections.

Merry Christmas

Buying a Short Sale 101: An Interview with Ken Koenen, LLM-Taxation, Attorney at Law

Buying a Short Sale 101: An Interview with Ken Koenen, LLM-Taxation, Attorney at Law

Who Cares More About America

It would appear that you are the one in need of education.

Republican politicians care more about the poor than do Democrats.  Republicans donate more money to charities that help people than Democrats, because they believe that local groups can do a better job of helping the poor than the government does. 

If you want to get a close look at what results when the government says, "We'll take care of you," take a drive to an Indian reservation.  Take a look at Oakland and Chicago, where the residents kill each other.  The Democrats answer for Indians was to allow them to have casinos, which are actually run by Las Vegas and Atlantic City conglomerates, and are a tax on the poor.  Rich people do not go to casinos to get wealthy.

As far as the "uneducated" in this country, whose fault is that?  Education is free, but not mandatory.  How about a law that states that you cannot have a driver's license until you are 18 and have a high school diploma.  When 40% of the kids going to a California State University need to take a bonehead English and/or Math course because they were not taught properly in school, it say something.  Elementary and high schools are like the Ford assembly line ... they come in at the beginning and leave, whether they are operating properly or not. 

Why are teachers not paid for their results rather than for showing up and going through the motions.  Don't get me wrong.  There are many good teachers in the schools who are prevented by the administrators from doing their jobs, which often involves not giving the kids the grades they EARNED and deserve.  Tenure keeps the bad teachers in place and sucks the enthusiasm from the younger teachers who are eager to teach, rather than just go through the motions until retirement.

Let's also look at the history of Democrats.  The 13th Amendment, which abolished slavery, was introduced by Republicans and overwhelmingly approved by Republicans, while the majority of Democrats voted against it.  The Civil Rights Act of 1964 80% of House Republicans voted in favor, compared to only 63% of Democrats.  It was not much different in the Senate, where 82% of Republicans voted for the bill, compared to only 69% of Democrats.  Prior to the passage of the bill, Democrats filibustered for 54 days against it.

After the passage of the Civil Rights Act, it was the Democrats in the south who blocked kids from going into white schools and passed various voting restrictions, such as a poll tax and a literacy test.  The court system overrode those restrictive laws, and the Democrats knew that they were going to face obliteration as a party unless they did something.  In order to start winning the black vote, they began the Welfare State, promising to take care of them.  Slavery is alive and well in America, thanks to the Democrats.  Instead of whips, chains and task masters, they are controlled by welfare, food stamps and promises of corrupt Democrats who can never deliver on their promises.  As far as Democrats are concerned, people need only learn the first four letters of the alphabet, so they can recognize who to vote for because there is a (D) at the end of their names.  There are you sheep.

Yes, there are people who are poor for many reasons that justify the help that they receive from the government.  However, when someone who is perfectly capable of working sits around the house or cruises the streets and collects $50,000 a year in benefits, there is a definite problem with the system. 

And please, don't bring up the "wealth gap."  The wealth gap in countries like China, India and Russia are much greater than here.  At least in America, there is an opportunity to try something to improve one's self.  Even if they dropped out of school, they can still learn and improve themselves.  Last I heard, library cards are free.

Finally, regarding Al "Not-So" Sharpton, he does not tell the truth.  He is an agitator, not a reverend.  He was wrong with the Tawana Brawley matter.  He was wrong with the Duke University Lacrosse team matter.  He may or may not be wrong about the Ferguson case.  The point out is that he follows the ready, fire, aim approach.  He and Jesse Jackson do more the create racial unrest than anyone I can think of, and Obama and Holder help him do it.  Why did Sharpton after he went to Ferguson hop on a plane in St. Louis and go to Salt Lake City to raise hell about Dillon Taylor, another unarmed man who was shot to death by a cop?  Couldn't be because the cop was black and Taylor was white, could it?

I think that his time would be better spent in Obama's state of Illinois, working with the black community on improving themselves rather than killing each other.

There will always be the wealthy and there will always be the poor.  The ration has not really changed over the history of mankind.  Some get their wealth in evil ways, such as Saddam Husain, and some get it through hard work and bringing value, like Bill Gates.  Others are in between.  However, America is the only country that I know of where someone can start with nothing and make a better life for him or herself.  I know that, because I did it.

Minimum Wage Increase Is Really a Tax Increase

The Obama proposal to increase the minimum wage to $10.10 is actually a thinly veiled $9 billion tax increase at the expense of employers and those workers who would qualify for the increase in minimum wages.

If you take a family of four, with both parents having $7.50 per hour (close to minimum wage jobs), their gross income would be $31,200 per year.  However, due to child credits and earned income credits totaling more than $5,600, their actual net family income, after deducting their FICA contributions, would be $34,082.20. 

Now, if they both had pay raises to $10.10 per hour, their net family income would be $40,716.78.  This is due to a reduction in Earned Income Credits and an increase in the amount of their FICA contributions.  Out of a $2.60 increase in pay, the employees would only see $1.59 of that increase.  The remaining $1.01 increase goes to the Federal Government.  The employers would need to match the increased FICA contributions, meaning that the total cost per employee would be $5,821.71.

The Bureau of Labor Statistics (BLS), another wasted Government bureaucracy, indicates that there are 3.6 million minimum wage earners in the United States.  Employers would need to absorb $20.9 billion in costs, of which the employees would received $11.9 billion (56.8%) and the Federal Government would receive the remaining $9.0 billion (43.2%).

Now, let's take a look at the strikes and complaints by the highly skilled fast food workers, who are told that the instructions for doing their job is written on the other side of that hamburger cooking on the grill.  They want an increase to $15.00 per hour.  Using the same $7.50 starting point, they want to double their income without doing anything to increase their skills or increase their contribution to the marketplace.  What would they actually get?

First of all, they would completely lose their Earned Income Credit.  Not only that, but they would actually owe $2,301.00 in Federal Income Tax.  Their FICA contribution would double.  The result is that their net family after tax income would be $55,325.40 per year, a net increase of $10,621.60 per employee.  That will equate to keeping $5.11 out of every $7.50 of increase they received.

The employers, with the additional hourly rate and FICA contributions that they need to make, would be paying out an additional $60.46 billion.  The employees would receive $38.24 billion (63.25%) and the Federal government would receive $22.22 billion (36.75%) of the money paid out by employers.

What an easy way for the democrats to buy votes using the money of the employer.  Their motto must be "From each according to his ability; To each according to his needs."  America is unique in that people do not have a limit on what they can earn.  The reality is that people get paid for bringing value to the market place, not because they simply want to get paid more than they are currently receiving.  If they want more money, they need to become more valuable to the marketplace. 

As Jim Rohn put it years ago, America is a ladder to climb.  You start on the bottom rung and climb up the ladder.  It is not a bed, where you lie there hoping someone will give you more money.  Climbing the ladder is really pretty simple.  Improve your skills a little, have a good attitude, and people will notice.  Soon, someone will be calling you saying, "I see how well you work.  We would like for you to come to our company to work, and we will make it worth your while."

Ask yourself, "How tall will a tree grow?"  The answer is, as tall as it can!  It will send its roots down as deep as they can go; send its branches out as far as they can go, and grow as many leaves as it is capable of growing.  They never stop growing until they die.  Wouldn't that be great if human beings would do that?  Most have the ability to grow; few make the effort.

We have deteriorated to an "entitlement" society rather than an "earn it" society.  It is no wonder we are losing jobs to foreign countries.  Things will not get better until Americans learn that you cannot "arrive" without first taking the trip.

Minimum Wage and Fast Food Workers Wage Increase are Hidden Taxes

Minimum Wage and Fast Food Workers Wage Increase are Hidden Taxes

When Does a $870,000 home cost less than a $800,000 home?

Would you believe that it can cost less to purchase and maintain a home that costs $70,000 more than a less expensive property? It is true. When could this possible occur? When the more expensive home is equipped with full electric solar, owned by the property owner.

I know that it is hard to believe, but the monthly out of pocket expenses for that $870,000 property is less than an identical $800,000 home that does not have solar. Take a look at the following comparison:

Without Solar 1
Cost of Home                 800,000.00
20% Down Payment       160,000.00
Loan Amount                  640,000.00
Monthly Pmts (4.25%)         3148.42
Monthly Property Taxes         800.00
Average Electric Bill               450.00
Final Monthly Payment        4,398.42

Cost of Home                  840,000.00
20% Down Payment        168,000.00
Loan Amount                   672,000.00
Monthly Pmts (4.25%)         3,305.84
Monthly Property Taxes          840.00
Average Electric Bill                450.00
Final Monthly Payment         4,595.84

Cost of Home                  870,000.00
20% Down Payment        174,000.00
Loan Amount                   696,000.00
Monthly Pmts (4.25%)         3,423.90
Monthly Property Taxes          870.00
Average Electric Bill                  55.00
Final Monthly Payment         4,348.90

The charts above shows the monthly payments that will be made by a home purchaser when a house has solar, as compared to two properties that do not have solar. The assumptions are that they are substantially the same house in the same neighbor hood, the buyer is making a 20% down payment and the interest rate is 4.25%.

The monthly payment on the loan for the $800,000 house is about $275 less than the more expensive home, and the property taxes are about $70.00 less, for a total difference of $345 less than the more expensive property. However, the home with solar has electric bills, on average, of at least $395 less per month. The owner of the $870,000 home actually pays a total of $50 less per month.

Since the increase bank loan interest and the property taxes of the more expensive home is about $3,255 higher per year, that owner has a higher tax deduction. Depending on the income of the home owner, that could be $1,000 to $1,500 less is tax payments per year, actually increasing the monthly savings.

Unfortunately, this type of analysis is not given to potential buyers by their real estate agents, often times because they simply do not understand the actual savings. They will sometimes direct their client to a home priced a little lower, not realizing that they are costing their clients thousands of dollars per year.

An example would be two homes in South Livermore, one with solar and one without, but the same floor plans just a couple of blocks apart. The one with solar is on the market for $869,500 while the one without solar is on the market at $829,000. The less expensive home will cost almost $200.00 more monthly than the more expensive home. That number could increase, as electric rates continue to climb. The buyer of the less expensive home will actually lose $2,400 per year plus the additional tax deductions.

If you are in the market for a home and you come across one that has full solar installed, don't just compare the prices between two properties. Take the time to do an analysis of the overall savings that you might have with a solar equipped property. Ask the seller for a year if electric bills in order to see what they are actually paying. Don't confuse price with cost.  You might be putting thousands of dollars into your own pocket simply by paying a little more.

Ken Koenen is a real estate and taxation attorney in Pleasanton. He is also a licensed real estate broker. He can be contacted at 925-924-0100 or by email at ken@lawken.com

Who Are the Real Racial Profilers?

I am amazed how people put forth facts regarding the Zimmerman-Martin tragedy that are pure make believe, or could not possibly be known by anyone today. Much of the rhetoric comes from the likes of Al Sharpton and Jessie Jackson (I will not call them "Reverends" because reverends do not provoke anger like they do), the real "Racial Profilers" in America.

I can just imagine the dialogue that goes on with their research staff as they scour the news articles in the newspapers and the internet. It would go something like this:

Black kills black .... No
Black kills black .... Nope
Black kills Hispanic .... Nah
Black kills black .... No
Black kills white .... Yawn
Black kills Hispanic .... No
Black kills black .... Can someone bring me some coffee?
17 year old black kills 13 month old white child in stroller .... He probably threatened him with is rattle.
Black kills black .... Nope
White man kills black man .... "Oh my God, the outrage! This racial animus against blacks has to stop! Al! Jesse! Come look at this!"

Let's not forget President Obama ("He would look like my son!") and Maxine Waters ("He was hunted down like a dog.") That last remark creates visions of George Zimmerman walking around with his gun drawn, peeking behind every wall and bush, trying to track down a wanton criminal.

I also like the multiple statements about a "child" carrying Skittles and Iced Tea, innocently walking through the community. Perhaps I missed it, but I heard no evidence that Zimmerman had X-Ray vision that would allow him to determine what Mr. Martin was carrying. Furthermore, that "child" was a 17 year old young man who was taller, and possibly stronger than Mr. Zimmerman. That is the same age as the young man who shot a 13 month old in the head while the baby's mother watched. I wonder if the baby threatened him with his rattle, justifying self-defense. That is not my definition of a child.

We would be remiss if we did not compliment Beyonce, JayZ, Madonna, and all of the other celebrities who have condemned the verdict, even though they have no clue about the actual evidence, and have threatened to never perform in the State of Florida until the state does away with the "Stand Your Ground" law. Obviously, they have been playing their music too loud without ear plugs, because their brains must have been severely damaged. Stand Your Ground was never part of the case, and had no bearing on the decision by the jury. I would suggest that we all boycott any venue at which any of these people have performed. They do nothing by harm America, both with the words of their songs and their opinions.

The rhetoric spouted by the media, the black activists and others is completely contrary to the facts that were brought at the trial. Let's take some examples:

1. "Zimmerman was told to stay in his car, but got out anyway to follow Martin." A review of the transcript of the 911 call does not support that. For some reason, people choose to believe this without reading the entire transcript. The dispatcher never told Zimmerman to stay in the car. They asked if he was following Martin and, when he replied that he was, they said, "We don't need you to do that." He replied "OK", and then they talked about where he would meet the police when they arrived.

2. "This young man was just walking through the neighborhood minding his own business." How do those making that statement know what was in Martin's mind? He was, according to the transcript, walking slowly in the rain. I know that when I am caught in the rain, especially without an umbrella, I walk as quickly as I can to get to where I was going so I could get out of the rain.

3. "Martin was armed only with a bag of Skittles and some iced tea." That is true, but how was Zimmerman to know that? Since no one has demonstrated that Zimmerman had X-ray vision, he had no idea as to whether or not Martin was armed in any way.

The reality is that Zimmerman lost sight of Martin, and was headed back to his truck. Martin had more than four minutes to leave the area and go to the house at which his father was staying. I am guessing that I could cover a quarter mile (4.4 football fields) walking in four minutes. Since he was concerned about this "cracker," why didn't he get out of there. There is substantial evidence to support Zimmerman's story.

I was watching two black women debating the Oprah Winfrey issue in Switzerland. One said that Oprah was too sensitive. The other said, "You weren't there and I wasn't there, so we have no right to make that judgment." A month earlier, that same woman was critical of the Zimmerman verdict, even though she was not there, had not heard all of the evidence in the court room, and had no right to make a judgment in that matter, either. Apparently, she only has the right to judge negatively against white people.

If Mr. Sharpton and Mr. Jackson want to make a difference for the black community, they will go to the Chicago's and Oakland's in the country to work on building self respect for the lives of other blacks, the discipline to stay in school, and the desire to succeed through becoming smarter and of more value to society and the market place. They need to convince the black community to stop looking in the rear view mirror of the past, and start looking in a regular mirror to identify the problem. Then, to look to the future to create their own decent life in this land of opportunity, not of handouts.

Of course, if that happens, Sharpton and Jackson might be out of a job, so it is in their personal best interest to keep the unrest and divisiveness alive.

Meeting Registration: When the Seller Is Dead - Probate and Trust Administration | AnyMeeting - The Completely Free Web Conferencing and Meeting Service

Free Webinar on Tuesday, August 20th at 2 p.m. PDT

Death and Real Estate!  Register today!

Meeting Registration: When the Seller Is Dead - Probate and Trust Administration | AnyMeeting - The Completely Free Web Conferencing and Meeting Service

Teaching Kids About Redistribution

Teaching Kids About Redistribution

Why I Changed My 2008 Vote From Obama to Romney

A Northern California newspaper that owns the Oakland Tribune and the San Jose Mercury News, made a recommendation that Obama should be re-elected. The reasoning that they provided in support of its endorsement for the re-election of President Obama was flawed and follows the typical belief of the left leaning media. As someone who voted for Obama in 2008, I have seen the error of my ways.

1. The Economy - They said that Obama had inherited the worst recession since the Great Depression. The economy has experienced recessions as bad as the one inherited by Obama. In the Carter years there was double digit inflation and double digit interest rates, neither of which was faced by Obama.

They pointed to the Dow doubling since Obama took office, but they did not look to see why that happened. Although the TARP program was initiated by Bush, Obama administered much of it and provided billions of dollars to the financial sector with no strings attached. That was followed in February 2009 with the American Reinvestment Act which provided $800 billion to "stimulate the economy." Instead of working with the core of the problem which they had helped create, namely the collapse of the housing market, the banks invested in the stock market, which drove the prices higher. They then cashed in slowly, paid back the loans, and started paying outrageous bonuses to themselves again. I have talked to hundreds of individuals who have been destroyed by these policies, and know of four who committed suicide. They are not better off than four years ago.

They also claimed that Obama "saved" the auto industry, pointing to General Motors. In reality, I think it is important to note that General Motors did exactly what Romney had suggested, which was to go through bankruptcy. By doing so, they were able to void their contract with Toyota regarding Nummi, which cost the Bay Area tens of thousands of jobs. The money that the taxpayers provided to GM, which we will never get back, went to shore up the Auto Workers Union. California is a lock for Obama, so he needed to structure the GM bailout to take care of the Ohio and Michigan voters.

2. Foreign Affairs - Contrary to their opinion letter, Bin Laden was not an accomplishment for Obama. Rather, it was an accomplishment for the CIA and the interrogation techniques that Obama disapproved. When he called on the Navy Seals, they got Bin Laden. When the Seals called on Obama in Libya on September 11th this year, they got denied.

The doctor in Pakistan who provided us with the precise location of Bin Laden was arrested by the Pakistani government and is sitting in jail, without hardly a complaint from Obama. His entire Middle East policy is a failure because that region has no respect for the United States.

3. Domestic Issues - While I agree that our health care issues need to be addressed, Obamacare is not the answer. Of course those with pre-existing conditions will agree that Obamacare is great. Think about it, though. If I wrap my car around a tree and am uninsured, should I be able to call an insurance company, purchase a policy and ask them to fix my car? Health care issues must be addressed, but it must take into account tort reform, availability of health providers, business interests and how to handle the poor without penalizing someone who can afford an enhanced health insurance policy.

We cannot continue to spend more than we take in, nor can we depend on the federal government to provide the incentive to create jobs through bureaucratic control.

Finally, I agree that people who were brought into the country illegally should not be held responsible for what their parents did bringing them here. However, I cannot support Obama's rejection of the U.S. Constitution, which requires laws to be created in Congress and enforced by the President. He has unilaterally made his own law and decided what laws would be enforced.

Eventually, when the federal government gets big enough, the first amendment might be ignored, much like the 10th amendment is, and "Freedom of the Press" will give way to government ownership of business, not unlike GM and AIG.

Based upon the many failures of Obama over the past four years, and the lack of any substantive plan, I will be changing my vote to Mitt Romney.

The Biggest Banking Scandal The World Has Ever Seen

Once again, the Banksters are making money illegally by manipulating the financial markets.  They are engaging in insider trading, constiracy, collusion and they are using OUR money to do it!  Furthermore, they are making that money at ouor expense! 

Click on this link to learn more.

The Biggest Banking Scandal The World Has Ever Seen

MEMORIAL DAY

The Rear View Mirror

The case of Trayvon Martin and George Zimmerman was, and continues to be, a tragedy for all concerned, including the entire country. Those who have a pedestal that the media will follow, Jesse Jackson and Al Sharpton, for example, used the incident to incite a racial divide. Why do they do this without having full knowledge of what actually transpired.

The simple truth is that it is for their own benefit, not for Martin’s family or to help improve the plight of blacks in America.

Today, Leonard Pitts, Jr., a “News” columnist for the Miami Herald, discussed the stereotype of blacks. He made a comment that black students, who guess that 75% of whites who are murdered are at the hands of black offenders, are surprised that the actual number is only 13%. Of course, it is easy to manipulate numbers to make your article look good, so let’s take a look at the real numbers.

• Blacks were disproportionately represented as both homicide victims and offenders. The victimization rate for blacks (27.8 per 100,000) was 6 times higher than the rate for whites (4.5 per 100,000). The offending rate for blacks (34.4 per 100,000) was almost 8 times higher than the rate for whites (4.5 per 100,000).
• What is the percentage of blacks killed at the hands of white offenders? The answer is only about 5%.
• 93% of black victims were killed by blacks.

I do not know what happened in the Martin-Zimmerman matter, any more than Jackson, Sharpton or Pitts knows. In a previous opinion, Pitts made the statement “No justice – no peace!” relating issues to the Los Angeles riots after the Rodney King verdict. While I certainly did not agree with that verdict (I lived there at the time), I could not condone the violence that took place, which hurt many black business owners.

The issue is not that man in the mirror that Pitts mentions, and instead should be a matter of the rear view mirror. They make rear view mirrors in a car smaller than the windshield because it is more important to look ahead than behind. It would appear that black leaders do not agree with that, because they continue to point to the past and what has been done, instead of working within the black communities to point to the future.

Human beings will rise to the level of expectations that are set for them, especially children. Instead of raising the bar and expecting more from black communities, these “leaders” make every effort to keep those communities impoverished and dependent on government, as if it is owed to them for the “400 years of injustice,” which I had no part of and most blacks did not experience. The biggest obstacles in the black communities today are other members of the black community.

I do not care if someone is white, black, brown, yellow, red or plaid! If they make an effort, they are worthy of everyone’s support. If they are not willing to make an effort, then they are destined to remain bogged down in the swamp of sadness.

Work on making progress, rather than excuses.

This is a partial excerpt from my book, "The American Dream Becomes the Global Nightmare." http://tinyurl.com/4s3exmd

When the housing market began falling, I shared my plan with many people. Part of that plan was, instead of bailing out the Banksters and their accessories on Wall Street, we could have distributed that $800 billion to the investors, who actually owned the loans. In exchange, they would agree to reduce the interest rates to a manageable 5% per annum. In real estate terms, this is known as "buying down the loan."

This would have reduced the number of foreclosures because fewer people would have been hit by the increase in payments when the interest rates adjusted under the terms of the loan. The "bailout" required on each loan, which would have been minimal, would be added to the balance of the loan.

I have heard all arguments from people at the time I made that suggestion. That wouldn’t be fair to those who were more careful in their purchase or put more money down, or that they did not want to help pay for the idiots who accepted these loan ters, and who were not deserving of owning a house anyway. "Why should they be helped, since they did it the wrong way?" I was asked.

The reality is that those people, who did not want to help those who had been taken advantage of or got caught in the lenders’ predatory lending scheme, have suffered just as much, if not more, with their lost equity and, in many cases, lost jobs. Let’s take a look at an analysis of who really lost when the prices started dropping and no one wanted to “bail-out” the buyers who made bad decisions. The scenario is that two people bought identical homes in the same neighborhood at a price of $500,000.00. Buyer A, whose credit was marginal and could only get a sub-prime loan, put nothing down and had 2 mortgages; one for 80% of the price and one for the remaining 20% of the price. Buyer B, whose credit was excellent and was able to make a 20% down payment, had only one mortgage at 80% loan to value.

The chart below demonstrates that those who didn’t want to “bail out” the irresponsible homebuyers were the ones who were hurt the most. By resisting the help to those who were irresponsible, they took their own equity and threw it away without even realizing it.

                                             Buyer A                Buyer B
Purchase Price - 2006       $500,000.00          $500,000.00
Down Payment                            $0.00          $100,000.00
1st Loan                            $400,000.00          $400,000.00
Interest Rate         2.9% pmt, 6.5% actual       5.5% fixed
Monthly Payment                 $1,664.92              $2,271.16
2nd Loan                           $100,000.00                    $0.00
Interest Rate               6.5%, Interest only
Payment                                   $541.67                     None

Present Value                     $375000.00           $375000.00
Out of Pocket Loss                   Nothing          $100,000.00

The big loser is the guy who was responsible, and put down 20% and had a fixed loan. He, in most cases, was the one who was most vocal against those who had been irresponsible, and took on more than they could handle or didn’t pay attention to the terms of what he was signing. The lenders took Buyer B’s $100,000.00 down payment; while the irresponsible Buyer B only lost the place that he was living in on the lender’s investment.

No one, including the banks and the government, took the time to look at the BIG picture.

Take a Tax Deductible Weekend!

A great way to make your business travel more enjoyable is to combine it with a tax deductible weekend getaway! You can end your business meetings on noon Friday, and then enjoy that afternoon, Saturday and Sunday at the location where your business was.

Assuming, of course, that it is a location where you would enjoy spending the weekend.

All you will need to do is have another business related meeting on Monday morning and then go home. It can be a meeting with a business associate, a prospective new customer or even an educational event that ties into your business. The key is that whatever it is that you are doing on Monday must have a direct relationship to your business.

For example, if you are a real estate agent and are going to a convention that ends on Friday, you can arrange to meet with a real estate agent in that area for the purpose of being able to exchange referrals in the future. If you are a salesperson and are meeting with a client on Friday, make arrangements to meet another potential client on Monday (or even make a cold call).

You can also bring a spouse or significant other with you. You won't be able to deduct his or her meals or travel expenses (unless you are driving), but you meals and 100% of the hotel costs will be deductible. Of course, if your spouse or significant other works with you in business, all of the expenses can be deductible. Having your spouse work for you is whole other topic, but there are significant tax savings to be had by having your spouse work for you part or full time.

If you are self employed, you are paying all of your own Social Security and Medicare taxes, rather than having one half of them paid by your employer. That means that for every dollar you can deduct, you are saving up to 49 cents in taxes, depending on your State tax structure. You might as well have some fun while you are taking your deductions.

The main thing is to keep good records of the purpose of your business both before and after the weekend, and keep all receipts. There is nothing that will prevent an audit, but by maintaining good records, it will end up with a handshake and a good-bye with the auditor, and all of your money in your pocket.

So, enjoy your tax deductible business trip with a little vacation mixed in.

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A New Christmas Tradition

I cannot claim originality on this, but it meant enough to me to share.

As the holidays approach, the giant Asian factories are kicking into high gear to provide Americans with monstrous piles of cheaply produced goods -- merchandise that has been produced at the expense of American labor.

This year will be different. This year Americans will give the gift of genuine concern for other Americans. There is no longer an excuse that, at gift giving time, nothing can be found that is produced by American hands. Yes there is!

It's time to think outside the box, people. Who says a gift needs to fit in a shirt box, wrapped in Chinese produced wrapping paper? Here are some ideas:

Everyone -- yes EVERYONE gets their hair cut. How about gift certificates from your local American hair salon or barber?

Gym membership. It's appropriate for all ages who are thinking about some health improvement.

Who wouldn't appreciate getting their car detailed? Small, American owned detail shops and car washes would love to sell you a gift certificate or a book of gift certificates.

Are you one of those extravagant givers who think nothing of plunking down the dollars on a Chinese made flat-screen? Perhaps that grateful gift receiver would like his driveway sealed, or lawn mowed for the summer, or driveway plowed all winter, or games at the local golf course.

There are millions of owner-run restaurants -- all offering gift certificates. And, if your intended isn't the fancy eatery sort, what about a half dozen breakfasts at the local breakfast joint. Remember, folks this isn't about big National chains -- this is about supporting your home town Americans with their financial lives on the line to keep their doors open.

How many people couldn't use an oil change for their car, truck or motorcycle, done at a shop run by the American working guy?

Thinking about a heartfelt gift for mom? Mom would LOVE the services of a local cleaning lady for a day.

My computer could use a tune-up, and I KNOW I can find some young guy who is struggling to get his repair business up and running.

OK, you were looking for something more personal. Local crafts people spin their own wool and knit them into scarves. They make jewelry, and pottery and beautiful wooden boxes.

Plan your holiday outings at local, owner operated restaurants and leave your server a nice tip. How about going out to see a play or ballet at your hometown theatre.

Musicians need love too, so find a venue showcasing local bands.

Honestly, people, do you REALLY need to buy another ten thousand Chinese lights for the house? When you buy a five dollar string of light, about fifty cents stays in the community. If you have those kinds of bucks to burn, leave the mailman, trash guy or babysitter a nice BIG tip.

You see, Christmas is no longer about draining American pockets so that China can build another glittering city. Christmas is now about caring about US, encouraging American small businesses to keep plugging away to follow their dreams. And, when we care about other Americans, we care about our communities, and the benefits come back to us in ways we couldn't imagine.

How about just taking the time to make your own, personal Christmas card with your words from your heart to show how you appreciate your friends and loved ones.

THIS needs to be the new American Christmas tradition.

Feel free to share this with anyone you want.

Lessons on Life | Lessons on Life

Lessons on Life | Lessons on Life

New California Anti-Deficiency Law

Last week, on July 11, 2011, California governor Jerry Brown signed into law a new law to combat deficiency judgments by holders of non-purchase money junior mortgages (second or third mortgages) when the lender has accepted funds during a short sale transaction. This law protects homeowners who refinanced a loan after the original purchase loans. This was Senate Bill 458, and amends the language to the California Code of Civil Procedure §580e.

Previously, a junior mortgage holder of a refinanced loan had the right to collect on any balance unpaid after the sale of the transaction. In many cases, they specifically stated in their short sale approval documents that they retained the right to seek collection of any deficiency.

In January of 2011, a similar law went into effect that eliminated the right of a first lender of a refinanced loan to seek a deficiency judgment after a short sale. However, it did not affect secondary loans after the short sale transaction. As with all laws aimed at stemming the tide of foreclosures and distressed property sales, there is bound to be some confusion in the interpretation of these laws.
The new law only affects real estate of one to four units, and will have no impact on short sale transactions with bare land or commercial property, such as apartments, office buildings or retail locations.

In essence, the law states that if a junior lender accepts any money to release its lien against the property, it will be deemed to have executed a non-judicial foreclosure of the property. Since a California has what is known as a “One Action” rule, a non-judicial foreclosure bars any further attempts to collect on a deficiency. Therefore, if the lender accepts any money during the short sale transaction, it is the only “action” that they can take.

The law also prevents the lender from slipping in a piece of paper in the documents being executed by the sellers in which the sellers “waive their rights” under this law. Any such document will be void as against public policy.

What is going to be the result from this new law? I believe that there are three possible directions that lenders will take.

1. The first possibility will be that the junior lenders will take a stronger stand during the short sale transaction, and demand more money at the time of the sale. I have already seen situations where Chase, when in first position, will offer a second no more than $3,000-$5,000. However, when they are in second position, they are demanding $15,000.00! This could get even worse in the future.

2. The next possibility will be that they refuse to release their lien, and let the first go ahead with foreclosure. The first lender will be stuck with the property and no recourse for any deficiency, but the junior lender will only lose its security (which was probably already worthless) and still have the right to obtain a deficiency judgment.

3. The other possibility is that the junior lender will simply release its lien, without receiving anything of value to do so. As in the situation where they allow the first to foreclose, the junior lender will be free to pursue its deficiency remedies.

This is going to put real estate agents in a very dangerous position, and I will explain why. Whenever anyone approaches a lender requesting a short sale, what is the first thing that the lenders say? They say, “We need the last 2 years of tax returns and three months of bank statements.” I often wonder why they need these items, because in most cases they were not requested when the original loan was made. Te question is, do they really NEED this information, or do the just WANT this information?

When this information is provided to the lender or servicer, they are given all of the information that they need to decide if the seller has enough assets to warrant them pursuing the owner with a lawsuit. If a lender refuses the short sale, and instead sues the homeowner for a money judgment, would the real estate agent who gave the lender the information, or recommended to the seller that they do so be liable for a breach of fiduciary duty? It is a possibility that such could be the outcome.

In my opinion, and I have done this many times with lenders, the lender and servicer needs to know only a few things. They are, a) the Fair Market Value of the Property, b) the offer that has been obtained to purchase the property, and c) that the owner does not intend to make any more payments. The real estate industry has been caving in to the lenders demands for too long, and it is time to take control back.

Help your California clients know their rights and obligations under the law before you start on the short sale route. Check out the video at http://www.lawken.com/ss.htm . These are serious times, and everyone needs to know where they stand.

The Rest of the Short Sale Story

I read a story about short sales in today's local newspaper. Although it was accurate, it told only half of the story. As a real estate and tax attorney, I have consulted with about 300 homeowners regarding the legal and tax ramifications of short sales and foreclosures.

What is missing from the story is 1) why we went from zero distressed properties to 45% of the properties being in that situation, 2) why the banks (in reality servicing companies) drag out the short sale procedure, sometimes without a sale being made, and 3) how they are still defrauding the government and taxpayers with the after sale or foreclosure documents they file with IRS after the transaction. I cover the first two in my book, “Greed-American Dream Becomes the Global Nightmare.” The last one is a new twist to the puzzle.

1. The reason that the number of distressed properties has increased is solely attributable to the actions of the Federal government and the lending institutions. The problem could have been nipped in the bud had different actions taken place in 2007. The banks, which created the problem with their weapons of mass destruction (easy credit, subprime loans, and mortgage-backed securities), handled the problem like they had for 100 years: foreclose and sell the property quickly at below market value, just to get it out of their portfolio. That worked fine in the past, when there were down payments and verification of income required on home loans. However, there were millions of loans that had been made in which there was no equity.

If someone then needed to sell their home in the same neighborhood, they were facing a fair market value of less than what they owed. At that time, getting a short sale through was next to impossible because the banks were not staffed with anyone to handle them, and they failed to look at the problem logically based upon the lack of equity in property, and that the manner in which they addressed the problem would simply make it worse.

2. In the vast majority of short sale transactions, the banks are not the lenders. The scheme that they put together was to make loans, package them into trusts, turn them into securities which they would get rated as AAA by Standard & Poor’s or Moody’s, then sell them to unsuspecting investors throughout the world. They made money creating the loans, selling the loans, and after the sale had maintained the right to service the loans, which provided them with ongoing income.
When a mortgage goes into default, the fee charged to the investor by the servicer is higher than when not in default. The longer the property is in default, the more money the servicing bank makes. If there is a modification of the loan, the banks do not get paid in a lump sum, but must wait for their payment, just like the investor. When there is a short sale or a foreclosure, the servicing bank gets paid immediately from the funds at the sale of the property, with the balance going to the investor. They have built in their own profit structure.

3. The latest fraud is that they are issuing fraudulent 1099’s to the previous owner, in such a manner that benefits the lender or the servicing bank at the expense of the taxpayers or the homeowners. I am in the process of preparing a lawsuit against Chase Mortgage based upon a fraudulent 1099-A. Chase foreclosed on a property and reported to San Luis Obispo County that the fair market value was $143,000.00. This reduces the property taxes that would be required to be paid to the County. When they issued the 1099-A, it showed a fair market value as $345,000.00! They then sold the property for $120,000.00. By doing this, they created a fraudulent $225,000.00 capital loss to offset other capital gains that they might have had, all at the expense of the taxpayers and the property owner, who was actually entitled to that capital loss, because it was investment property.

Although demand has been made to correct the 1099-A, and it has been reported by me to both IRS and the County Assessor’s office, nothing has been done.

I think it is important that people start demanding an investigation these issues by our elected representatives, Democrats and Republicans, why they are allowing our country and its people continue to suffer for the benefit of the stock market, which in no way truly reflects the health of the nation.

The Latest Bankster Tricks

I thought the banks had gone as far as possible to take money from the taxpayers and the government through their TARP funds and the manner in which they paid it back, enabling them to pay bonuses to their executives without government interference. They did not make the money by doing what banks are supposed to do, which is lend money. Instead, they invested it in the stock market, driving it up, and then selling and reaping the profits.

Of course, that results in capital gains that is taxable income with no offsetting deductions other than capital losses. God forbid the banksters should pay tax to the government (and the taxpayers) who bailed them out. They had to come up with a way to create more capital losses.

Of course, for these brilliant people, this was an easy task. Here is what they did, and I have the proof, which I am forwarding to the Internal Revenue Service this week. This was a JP Morgan Chase Bank transaction.

1. When they foreclose on a property, they report the "transfer value" to the county recorder. I am not sure how this affects the property taxes in other states, but in California the property taxes are assessed based upon the transfer value, as are the transfer taxes. The property for which I have the proof was reported to the county as having a transfer value of $143,000.

2. Chase then issued to the previous owner a 1099-A, as required by Federal law, to report the amount of the obligation and the fair market value of the property. In this case the outstanding principle was $283,000.00. In spite of the fact that they had shown a transfer value of $143,000 to the county, Chase reported that the Fair Market Value of the property was $345,000, more than $200,000 higher!

3. Chase then put the property on the market for $147,000, even though they had already turned down a short sale offer of $150,000 cash. They ultimately sold the property for $130,000.

What this means is that they now showed a capital loss of the difference between what they reported as the Fair Market Value ($345,000) and the final selling price ($130,000). Using those numbers, their capital loss was $215,000 which they could now offset against the capital gains from their stock dealings, saving them $32,250 in Federal taxes, and who knows how much in state taxes.

Doesn't seem like all that much for a big corporation such as Chase, but multiply that by 100,000 foreclosures and you come up with something like $3 billion dollars in fraudulent tax evasion.

In the mean time, our government leaders ignore these facts and have allowed the big banks and the rest of the financial markets to run our country because they have all of the wealth. They continue to drive down the prices of homes through the foreclosure process, while the government sits on the side lines making meaningless gestures regarding helping homeowners, while allowing the banksters free reign in destroying the fabric of America.

For more, read my book ... The American Dream Becomes the Global Nightmare