How the Mortgage Interest Deduction Could Change!

 Does this mean they will void the interest deduction? Keep punishing the responsible people and rewarding the deadbeats... What do they think will happen? What do you think will happen? Let me know.

 

 

How the Mortgage Interest Deduction Could Change

By Mark Koba | CNBC – 7 hours ago

@cnbc on Twitter

• View PhotoPeter Dazeley | Getty Images

Congressional action on the U.S. tax code could dramatically alter one of its sacred cows: the mortgage interest deduction. And the change could come in 2013.
House Ways and Means Committee Chairman Dave Camp (R-Mich) held tax reform hearings in April to eliminate loopholes. He said he's "carefully looking into revising" the popular provision that many in the real estate business consider crucial to the industry.
Camp said he'd like a total tax reform package before the year is out.
One analyst says the time is ripe to change the deduction-in existence since 1913- which is costing the U.S. government billions in tax revenue while doing little to help home ownership.
"It costs at least $70 billion a year in lost tax revenues," said Will Fischer, a senior policy analyst at the Center on Budget and Policy Priorities, and co-author of a study released last month that called for changing the mortgage interest deduction intto a tax credit.
"It only benefits about half of homeowners that pay interest," Fischer said. "I think there's real interest in reforming the mortgage interest deduction to help more people, while bringing in more tax revenue."
Right now, taxpayers who itemize their deductions can deduct up to $1 million of the interest paid on their mortgages, plus up to $100,000 of the interest on home equity loans, a type of loan in which borrowers use the equity in their home as collateral. Homeowners can do the same on a second home.
(Read more: End the Mortgage Interest Deduction? Expect a Fight)
In his paper, Fisher states that in 2012, 77 percent of the benefits from the mortgage interest deduction went to homeowners with incomes above $100,000. Close to half of homeowners with mortgages-mostly lower and middle-income families-received no benefit from the deduction, according to Fisher.

Only about 30 percent of eligible taxpayers actually use the mortgage interest deduction each year.

"You can make the case for the deduction, but it really does promote home ownership for mostly upper income levels," said Mark Goldman, a real estate professor at San Diego State University.
"And I've never had a deal happen or not happen because of the deduction," added Goldman, who is also a real estate broker.
Fischer's study points to several bipartisan panels that have looked into changing the deduction into a tax credit.
They include the Simpson-Bowles fiscal commission, as well as a tax reform group during the first term of president George W. Bush, and a debt reduction commission headed by former Democratic White House official Alice Rivlin and former New Mexico Republican Senator Pete Domenici.
(Read more: Rising Mortgage Rates Swing Housing Sentiment)
The various proposals would have a tax credit from a low of 12 percent to a high of 15 percent, without the need for taxpayers to itemize their returns. The proposals would limit the mortgage interest covered in the credit up to $500,000, or half of what it is now. All but one of the major proposals would eliminate the tax credit for a second home.
"A tax credit is a much fairer way to help homeowners, especially those that need it, like lower income families," argued Fisher.
But some heavy hitters in housing say changing the deduction in any way is unthinkable.
The powerful real estate lobby has played a crucial role in keeping the mortgage interest deduction intact, spending more than $80 million in lobbying Congress in 2012 alone in order to advance their causes.
"We think it should stay exactly the way it is," said J.P. Delmore, a lobbyist for the National Association of Home Builders.
"The deduction helps promote home ownership and we're against any changes into a tax credit," Delmore said. "Eliminating it would really be a tax hike on homeowners."
"There are winners and losers in every scenario but there would be more losers with a tax credit,"said Robert Dietz, chief economist at the NAHB.
"Home prices would likely come down if there is no deduction, as there would be fewer buyers," he said.
The National Association of Realtors said in a statement that, "Home prices, particularly in high cost areas, could decline 15 percent if recommendations to convert the mortgage interest deduction to a tax credit are implemented."
"The deduction means more to people than a credit," said said Johnny Martinelli, an associate real estate broker at Don Cies Real Estate in Norman, Oklahoma.
"Especially for first-time home buyers who may more interest at first than someone who's been in there home a long time and are paying more principle than interest," he said.
"It's a nice benefit to have when thinking about buying a home," Martinelli added.
Proponents of killing the mortgage interest deduction point to Canada and Great Britain as examples of how it could work.
Canadian federal income tax does not allow a deduction from taxable income for interest on loans secured by the taxpayer's personal residence. Homeownership in Canada rose to a high of more than 69 percent in 2012.
(Read more: Home Builder Sales at Risk Due to Rising Mortgage Rates )
Great Britain phased out the deduction starting in the 1980's and ended it completely in 2000.
Home ownership in England will slump to just 63.8 percent over the next decade, down from 72.1 percent in 2001, according to studies . Reasons for the fall include the need for huge deposits, combined with high house prices and strict lending criteria.
"Your're seeing how the lack of a deduction is affecting first-time home ownership in Britain," said Delmore of the NAHB. "The average age for first-time homeowners is getting older. It's up from 31 to 38. It shows how important the deduction is for those first timers."
More hearings on tax reform are scheduled through the summer and autumn, but forces attempting to enact mortgage deduction reform in Congress and the White House won't find it easy going.
Representative Sander Levin, the top Democrat on the House and Ways Committee, said he is "wary of eliminating the tax break for second homes." He told reporters that many residents of his district in central and northern Michigan have "small second homes" elsewhere in the state.
Fellow committee member Rep. Linda Sanchez, (D-CA) said she wants to make sure changes won't make it more difficult for working-class families to afford a home.
"I'm a little bit skeptical of changes to the tax code that would have the effect of putting that goal out of reach," she said to reporters after the June hearings.
For his part, President Obama has proposed ending the deduction for people above the 28 percent income tax bracket. That would mean that a homeowner in the top tax bracket with $10,000 in mortgage interest would receive a tax break of $2,800, as opposed to the $3,960 they currently get.
"You can't say for sure what will happen in Congress, but I think there's a lot of momentum to finally change the mortgage interest deduction," said Fischer. "When you look at all the ideas for tax reform, this one stands out for action."

Jobless About to Take a Hit From Sequester!!!

 By Jeff Cox | CNBC – 14 hours ago

The 11.7 million Americans still unemployed are finding their wallets getting even lighter as the sequester federal spending cuts kick in.

While the mandated decreases have been slow to trickle into the real economy, the unemployed are feeling perhaps the first big jolt.
As of July 1, the average weekly benefit of $289 will fall by $43 a week, adding pressure at a time when the labor market is trying to find its bearings but has yet to generate the kind of employment that would indicate a strong recovery.
(Read More: Job Growth Posts Large Gain in June; Rate Holds )

 Sharon MacGregor, a 43-year-old graphic designer by trade, lost her job about a year ago when the medical education company she worked for went under. Since then, she's struggled to find work and now has to contend with even less unemployment compensation. 

"It's horrible, I never thought it would be like this when I got let go," she said. "I've been laid off before and found a job in a couple of months. I thought I'd be fine."

 MacGregor joins the ranks of 120,100 unemployment insurance recipients in New Jersey who will see their average compensation drop 22.2 percent, according to the National Employment Law Project. 

The current typical unemployment insurance check for the Garden State runs $382, but will be reduced by $85.

 As she traverses the rough unemployment terrain, MacGregor finds herself bartering for services at the hair and nail salon and counting on her Christian faith to get her through. 

"I believe in God. I'm keeping my patience. For me, that's how I get by," she said. "Something definitely needs to be done."
The cuts have come about as Congress debates how to handle the spending cuts mandated after it failed to reach a deficit-reduction deal last year.
(Read More: Jobs Picture Improves-but Not in Manufacturing )
While the spending pullback has helped reduce the national budget deficit and has had only incremental effect on first-half growth, economists worry that the full effect will be felt in the final six months of the year.
"They just don't care. The government is doing absolutely nothing to stimulate job growth," MacGregor said. "They've just swept this under the carpet."
Some of the sequester effects on jobs appear to have turned up in the June non-farm payrolls report, which showed the economy added 195,000 jobs while the unemployment rate held at 7.6 percent.
During the month, the number of workers holding part-time jobs for economic reasons swelled by 322,000 to the highest level since October.
How that plays out nationally likely will depend on location.
(Read More: White House Hails Jobs Report, GOP Finds Flaws )
New Jersey and Maryland led the pack of states cutting back on benefits at 22.2 percent each, followed by Montana (19.6 percent), Connecticut (19.2 percent), and Arizona and Illinois, both at 16.8 percent.
In states where the jobs picture is more robust, the cuts are lower.

 Texas, for instance, is reducing its typical benefit by 10.2 percent. The state has a 6.5 percent jobless rate-well below the national level-and has 118,500 on unemployment insurance. 

 Jordan Douglas was one of those who relied on the benefit program while studying to get her licensed vocational nursing degree. 

Douglas, 25 and a single mother living in the small panhandle city of Pampa, lost her nursing job in February 2012 and how has three positions-one full-time and two part-time jobs she has thanks to a big demand in her field.
(Slideshow: 12 Jobs Where Women Win on Gender Pay )

 "It's awesome and I couldn't have done it without unemployment," she said. "I literally got unemployment all the way up until April and I graduated in May. There just would have been no way I could have made it." 

For the jobless about to feel the sting of benefit cuts, then, Douglas' story at least provides some hope.
"I don't know if it was the economy last year or what. Now that I have a different degree it was a littler easier to find a job," she said. "I got my first check and it was double for two weeks what I made in a month. It feels pretty good."

_ By CNBC's Jeff Cox. Follow him  @JeffCoxCNBCcom on Twitter.

Wall St. gains as jobs data signals stronger economy!!!

By Angela Moon

NEW YORK (Reuters) - Stocks rose sharply on Friday after robust jobs data pointed to economic growth and investors overcame concerns that the Federal Reserve may begin scaling back its stimulus efforts as soon as September.
After choppy trading through much of the session, which was marked by light volume, stocks extended gains in late afternoon, pushing the benchmark S&P 500 index (^GSPC) to close above the its 50-day moving average for the first time since June 19.
The government's report on non-farm payrolls showed employers added 195,000 jobs in June, exceeding expectations of 165,000. Job growth in previous months also was revised higher.
For the holiday-shortened week, the Dow rose 1.5 percent, the S&P 500 was up 1.6 percent and the Nasdaq composite advanced 2.2 percent.
At first some investors saw the jobs data as increasing chances the Fed would cut its stimulus efforts sooner than expected. But the market recovered smartly as investors took the view that the data was a positive sign for the economy, with sectors tied to the pace of growth leading the way upward.
Whether the jobs report "will stop the FOMC from the onset of its tapering process remains to be seen. However, we are trying, at the suggestion of the Federal Reserve, to ignore the latest single data point" and take a longer view about the economy, said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York.
The Dow Jones industrial average (^DJI) was up 147.29 points, or 0.98 percent, at 15,135.84. The Standard & Poor's 500 Index (^GSPC) was up 16.48 points, or 1.02 percent, at 1,631.89. The Nasdaq Composite Index (^IXIC) was up 35.71 points, or 1.04 percent, at 3,479.38.
Small-cap shares and banks rallied, giving credence to the idea that investors were viewing the strong payroll figures positively.
The S&P Small Cap 600 index (.SPCY) rose 1.5 percent to hit a new all-time high of 568.15 while the S&P 500 financial sector index (CME:^SPSY) gained 1.8 percent.
"The jobs report this morning is a sign that the economy is growing and the private sector is hiring, and that bodes well for growth-oriented industries," said Janna Sampson, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.
Bank of America Corp (BAC) rose 1.8 percent to $13.06 while Citigroup Inc (NYS:C) gained 1.8 percent to $48.53. Large banks benefit when interest rates rise because higher rates increase their net interest margin.
Interest rates rose sharply on Friday in anticipation that the Fed will start cutting its monthly $85 billion in bond buying, which was a major factor in the stock market's rally this year, as early as September.
Volume was light, with many traders still away after the Independence Day holiday on Thursday. About 4.9 billion shares changed hands on U.S. exchanges, compared to a daily average of about 6.4 billion shares this year.
Annaly Capital Management (NLY), a real estate investment trust that invests in mortgage-backed securities, slid 5.1 percent to $11.51 as the yield on the benchmark 10-year U.S. Treasury note jumped above 2.7 percent. Annaly Capital was the fourth most-traded stock on the New York Stock Exchange.
Gold tumbled 3 percent, extending earlier losses as the dollar gained strength. Newmont Mining (NEM.N) was the S&P 500's worst performer, falling 4.3 percent to $27.78.

On the NYSE, advancers beat decliners 1,708 to 1,309 while on the Nasdaq, advancers outperformed decliners 1,815 to 662.

(Reporting by Angela Moon; Editing by Kenneth Barry)

Gold Tumbles as Market Speculates Anew on Fed Taper

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 Published: Friday, 5 Jul 2013 | 8:57 AM ET

By: CNBC With Reuters

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Gold was battered anew on Friday, dropping more two percent on the day after U.S. jobs data fanned speculation that the Federal Reserve's stimulus tapering might come sooner rather than later.
Unemployment steadied at 7.6 percent for the month, as nonfarm payrolls grew by 195,000, according to a closely watched Labor Department report Friday. Economists expected 165,000 more jobs and a decline in the unemployment rate to 7.5 percent.

Speculation over the direction of Fed policy has been feverish. The better-than-expected jobs figures prompted bullion traders to sell precious metals in anticipation of an eventual end to the central bank's $85 billion monthly bond purchases — the prospects of which has already triggered turbulence across major asset classes worldwide.
(Read More: Europe Closes Higher on ECB, BoE Guidance)

Gold posted its biggest quarterly loss on record, down 23 percent in the April-June period. Selling was exacerbated by comments from Fed Chairman Ben Bernanke last month that the U.S. economy was recovering strongly enough for the central bank to begin tapering in the next few months.
That would support a rise in interest rates, making gold less attractive.
"We have a forecast for a strong non-farm number (180,000) and if we prove right on that there could be some further downside in store for gold, because that would suggest that although rates are set to stay at record lows in Europe, that may not be the case in the United States," Danske Bank analyst Christin Tuxen said.
(Read More: Gartman's 'Watershed' Shift on Gold)

Spot gold dropped 2.5 percent to $1,221 an ounce this morning. U.S.gold futures for August were down $30 at $1,221.
The metal posted a 5 percent drop last week, when it fell to its lowest since August 2010 at $1,180.71. It then staged a rebound, helped by traders forced to cover short positions at the beginning of the week.

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The dollar rose nearly 1.5 percent against a basket of major currencies, bolstered by weakness in the euro after the European Central Bank and Bank of England said interest rates would stay low for an extended period.
After leaving its key interest rates unchanged on Thursday, the ECB said it may yet cut them further, responding to turbulence caused by the Fed's exit plan.
In other markets, the benchmark 10-year U.S. Treasury yield rose above 2.5 percent.
As gold pays no interest, the rise in returns from U.S. bonds and other markets is seen as negative for the metal.

Under Pressure

	Name	Price		Change	%Change	Volume
GOLD	Gold	1213.20	 	-38.70	-3.09%	154359
GOLD/USD	Gold / US Dollar Spot	1210.70	 	-38.49	-3.08%	---
SILV/USD	Silver / US Dollar Spot	18.80	 	-0.71	-3.64%	---
SILVER	Silver	18.74	 	-0.96	-4.87%	37033
PALL/USD	Palladium / US Dollar Spot	667.75	 	-6.75	-1.00%	---
PLAT/USD	Platinum / US Dollar Spot	1308.25	 	-30.25	-2.26%	---

Rapid outflows from gold exchange-traded products (ETPs) and softer-than-expected physical demand were also keeping gold prices under pressure.
(Read More: Brighter Jobs Picture to Tip Fed Taper?)

Gold ETPs holdings fell by $4.1 billion in June and $28.2 billion year-to-date, according to data from BlackRock.
Indian consumption has fallen since the government imposed new import restrictions, while Chinese buyers are waiting on the sidelines for prices to fall further, or at least stabilize.
"Chinese premiums are holding up and we expect them to be strong buyers if we get a dip back below $1,200," ANZ analyst Victor Thianpiriya said.
Silver fell 2.6 percent to $19 an ounce. Platinum was down 0.2 percent to $1,335 an ounce and palladium dropped one percent to $668 an ounce.

More possible bad economic news for Italy!!!

UniCredit weighs partnership for bad loan business -sources

By Francesca Landini and Gianluca Semeraro

MILAN, July 4 | Thu Jul 4, 2013 12:11pm EDT

(Reuters) - Italy's biggest bank UniCredit may consider a partnership for its business that manages 42 billion euros ($54.24 billion) in bad loans following interest from international investors, banking sources said on Thursday.
"Blackstone is interested in the company," said a source familiar with the activity of the U.S. investment firm in Italy.
A banking source said other investors were looking at the business, which has the largest portfolio of assets under management in Italy.
"UniCredit is weighing the possibility to find a partner ... among other options," the second source said.
UniCredit could cut the amount of capital it is required to hold to back the bad loans in the business - called Credit Management Bank - if an investor took a share in it, one analyst said.
Regulators require banks to set aside certain amounts of capital to cover their bad loans.
One of the sources said it was unlikely a deal could be reached by the beginning of August, when quarterly results are due to be published.
UniCredit declined to comment, while Blackstone did not immediately respond to a request to comment.
As of 31 December 2012, Credit Management Bank had a total portfolio of loans worth 45.2 billion euros, according to a report by rating agency Fitch.

Stock Just Pennies Away From Breaking an Important Technical Barrier

By Serge Berger | StreetAuthority Network – 7 hours ago

 

RELATED QUOTES

Symbol	Price	Change
SEE	24.96	+0.31

Sealed Air Corporation (SEE), the New Jersey-based manufacturer of food packaging materials and equipment, continues to exhibit relative strength versus the broader market, despite the recent uptick in volatility. 

The stock had a massive but orderly rally off its summer 2012 lows on unabated strength, but then spent the better part of the past four months in a notable bullish consolidation phase. SEE now looks to be coiling up, and if it gets enough momentum to break past recent resistance, it might also break past a multi-year resistance line, thus making the current juncture important in multiple time frames.

On the weekly chart, we see that the stock plummeted from a high near $33.90 in May 2007 to a low below the $10 mark in early 2009. The ensuing reaction rally measured more than 175% over the course of just 24 months.
Gravity eventually dawned on the stock in February 2011, which led to another big drop. The February 2011 top, however, is important from a multi-year perspective. It serves as the second point on a downtrend line drawn from the 2007 top.
SEE finally completed this next leg down in August 2012, which notably served as a higher low versus the 2009 lows. What followed was another sharp, roughly 90% rally over the course of seven months that came to a halt in March of this year after the stock displayed a month-long vertical leap around mid-February.
In hindsight, the March highs also coincided with the 2007 downtrend line, currently around the $24.90 mark, which increases the importance of this line from a multi-year perspective.      

Moving on to the daily chart below, note that since reaching a high of $25.08 on March 15, the stock spent the past three and a half months consolidating the big move up from August 2012 to that high. After a quick 16% correction into mid-April, SEE had retraced almost 23.6%, a Fibonacci number.
From there, as fund managers began to chase the market higher, they also snapped up shares of SEE, and by early June, this brought the stock right back near the March highs. Since early June, the stock has made three attempts (June 4, June 18, and July 1) at breaking past the mid-March highs.

There are two things that make me think an eventual breakout is just around the corner:
1. In late June, the stock had a mini pullback, which quickly found good support at the 50% retracement line of the April to early June rally. This confirmed yet another higher low on the daily chart, which increases the odds of a higher high in the near future. A higher high would be accomplished on any daily close above the March highs, or around $25.10.

2. Over the past three trading days, the stock has consolidated right at the resistance line of recent months. Such a consolidation right below the highs, after multiple tries to overcome them, qualifies as churning below resistance and is a bullish sign.

 

Nifty Futures Signal Stocks May Rally From Worst Loss in 2 Weeks

By Rajhkumar K Shaaw - Jul 3, 2013 10:58 PM ET

 

Indian stock-index futures gained, signaling benchmark indexes may rally from the biggest decline in two weeks.
SGX CNX Nifty Index futures for July delivery rose 0.2 percent to 5,783 at 10:40 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index fell 1.5 percent to 5,770.90 yesterday, the largest loss since June 20. The S&P BSE Sensex lost 1.5 percent. The Bank of New York Mellon India ADR Index of U.S.-traded shares dropped 0.9 percent.
Asian stocks outside Japan rose after better-than-estimated U.S. jobs data added to signs of recovery in the world’s largest economy, boosting the earnings outlook for exporters. The U.S. accounted for 11 percent of India’s exports in the year ended March 2012, government data show. Indian stocks dropped yesterday amid concern the central bank will have less room to cut interest rates as oil prices climb to near a 14-month high and the rupee weakens.
“The global news flow is positive and that’s the reason why futures are up,” Arun Kejriwal, director at Kejriwal Research & Investment Services, said by phone from Mumbai today. “But we don’t see it sustaining today as the rupee is likely to be under pressure because of the government’s move on food security. The concern is that our deficits will widen and it shows the government has already started preparing for next year’s election.”

Weakening Currency

India’s cabinet enacted proposals yesterday to expand the provision of cheap food to the poor, approving a rarely used executive ordinance to pursue a central plank of the government’s re-election strategy with a national ballot due before the end of May.
The government may spend about 1.25 trillion rupees ($20.7 billion) on food payments in the financial year ending March 31, 2014. Subsidies have helped widen the nation’s fiscal deficit amid the weakest economic growth in a decade.
India’s current-account imbalance, the broadest gauge of trade, is the biggest risk to an economy that grew a decade-low 5 percent in the year ended March, according to the central bank. The International Monetary Fund estimates the gap at 4.9 percent of gross domestic product this year, compared with 3.3 percent in Indonesia and a surplus of 2.6 percent in China.
The rupee weakened to within 0.9 percent of its all-time low yesterday on concern overseas investors will pull more money from local assets, leaving the currency vulnerable to a record current-account deficit.

Foreign Flows

Foreign investors withdrew the most money from Indian (SENSEX) stocks in June in about two years on concern the nation’s public finances will worsen when the U.S. Federal Reserve starts tapering monetary stimulus.
Overseas funds sold a net $1.1 million of Indian stocks on July 2, according to data from the market regulator, paring this year’s net inflow to $13.5 billion, a record for the period.
The Sensex has retreated 5.5 percent since climbing to a two-year high on May 17 as the prospect of reduced monetary easing by the U.S. prompted global investors to pull money from emerging markets. The gauge is valued at 12.8 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 9.5 times.
Shares of Larsen & Toubro Ltd. (LT), India’s biggest engineering company, may be active after Reuters reported the company got a contract for a $352 million road project in Oman.
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net
To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net