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Healthcare Legislation at the Crossroads
More Signs
of a Housing Recovery
Administration Pressures Lenders to Make Mortgage
Modifications
Remodeling in 2009
Technology Policy Will Impact Homeowners
New Rules to
Protect Borrowers
The Changing
Face of Yard Sales
Healthcare Legislation at the Crossroads
 It’s likely we’re near the tipping point.
The actions of Congress over the next week and the public
reaction to it over the August Congressional recess could
seal the fate of healthcare legislation in this Congress.
President Obama entered office with strong personal support
and strong support for his comprehensive healthcare
legislation. Many were optimistic that the potential savings
from the proposal would offset any new costs it created.
Unfortunately, in the last month or so support for
healthcare reform has slipped and so has the President’s
popularity.
While 51% of voters approve the President’s overall job
in July (vs. 26% disapproval), according to a PEW survey,
the recent loss of public support for his healthcare
proposal has been dramatic. It has gone from 51% for, 26%
against in April to 42% for, 43% against in July.
Several factors are at work. Recent federal revenue
estimates for the cost of comprehensive healthcare
legislation came in far higher than most expected. They also
came in the face of a much greater federal budget deficit
than existed at the beginning of the year. The main cause of
the deficit growth has been new federal spending to try to
keep the present deep recession from spiraling into a
recession. While these expenditures were prudent given the
magnitude of the threat to our economy, they are big
nevertheless. It’s possible that even more spending may be
needed to prop up the economy, and many voters are getting
increasingly worried about the size of the deficit,
including many who would also very much like to see
comprehensive healthcare reform.
Also emerging are second thoughts by those who currently
have healthcare insurance. Many of them also recognize the
benefits of comprehensive healthcare reform, but some are
now beginning to wonder whether the package will undermine
their benefits and choices. Both of these concerns are
increasingly reflected in public opinion polls. The result
is that more voters are sympathetic to the efforts of
moderate Democrats and Republicans in the House and Senate
to make changes in the legislation that will reduce the cost
of the package.
Rising tensions have lead to infighting between House
Democratic leaders and Blue Dog (moderate) Democrats. There
aren’t enough other Democratic votes in the House to pass
the measure without the Blue Dog’s support. The outcome of
negotiations was that the Blue Dogs dropped their opposition
to the markup of the part of the bill under consideration by
the Energy and Commerce Committee, and the Democratic
leadership agreed that there would be no vote on the final
bi9ll until after the August Congressional recess. The bill
passed the committee on a 31-28 vote. It will be combined
with the two other parts of the bill previously approved by
other House Committees, and the combined package will be
voted on the House floor after the recess. The agreement did
not bind the Blue dogs to support the final bill.
As we go to press, bipartisan negotiations between Senate
Finance Committee Democrats and moderate committee
Republicans on a possible compromise healthcare bill
continue. Complicating matters in the Senate, a different
healthcare bill has already passed the Senate Health
Committee. The Grassroots Alliance believes that any
compromise bill that receives support from moderates
(Democrats and/or Republicans) will likely pass Congress.
Major reform is necessary to truly address the healthcare
crisis, and AHGA salutes President Obama for his worthy
efforts. However the comprehensive package originally
envisioned by President Obama is increasingly likely to fail
in Congress without compromises with congressional
moderates, given the recent direction of public opinion. The
challenge will only increase the closer we get to the next
election.
The choice may be between the same outcome as President
Clinton’s unsuccessful comprehensive effort to reform
healthcare and more modest healthcare legislation. Under the
circumstances we believe that is better to support
compromise and come away with some modest improvements this
year. No legislation was going to address all of the
challenges we face anyway, and we can revisit the issue and
make further improvements in the next Congress.
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More
Signs of a Housing Recovery
The
overall news is good, but many local markets are
still hurting.
Among the good signs is
a continuing decline in the number of homes listed
for sale in many local Multiple Listing Services.
Declining inventory is generally a precursor for
price increases. June, 2009 marked the twelfth
straight month of declines. Some of the local
markets showing signs of life included Las Vegas,
Los Angeles and Phoenix where there were significant
declines in inventory.
Sales of existing homes
increased for a third straight month in June, and
there are signs that prices are stabilizing in many
areas, including some that have experienced
substantial declines in home values, according to
the National Association of Realtors. In addition,
home prices in major U.S. cities registered the
first monthly gain in nearly three years in May,
according to Standard & Poor's Case-Shiller index,
which follows home selling prices in 20 large
cities. Home prices over the prior three months
increased 0.5% in May, compared with the prior three
months ending in April. It was the first increase in
the index after 34 continuous months of declining
prices. Selling prices in May hit new lows in Los
Angeles, Miami, Seattle and Tampa, Standard & Poor's
said.
Median asking prices
have leveled off or increased in Las Vegas, Los
Angeles, Phoenix, and San Francisco. South Florida
asking prices have not yet increased, but it too has
fewer listed homes for sale than last June.
New-home sales increased
in June, the third month in a row. New single-family
home sales increased 11.0% according to the U.S.
Department of Commerce Department. While that is
encouraging, sales of new homes were still down
21.3% compared to June 2008. Even with the several
negative numbers, this is the first time in several
years that there have been as many simultaneous
positive signs in the housing market.
Affordability, first
time buyer tax incentives, and growing consumer
confidence levels have probably all played a role in
this encouraging news. With home prices down in many
areas and mortgage interest rates still near record
lows, more and more potential buyers can now afford
to own a home, even without “gimmicks” such as even
lower temporary/teaser mortgage interest rates.
Consumer confidence has also increased substantially
since the beginning of the year. While many
consumers are still very cautious or unable to buy
homes because of job losses, etc., those that can
are beginning to step forward. Although many of the
Administration’s programs to address the foreclosure
crisis have not worked as intended, there is a sense
that President Obama will keep trying until the
problem is resolved.
It is as yet unclear how
effective the new $8,000 first time buyer’s tax
credit has been in stimulating new buyers. It lowers
the effective cost of homes even more. Now that
buyers can apply it to the down payment, it
certainly makes it easier for those who need the
extra cash to qualify. But it is difficult to
estimate how many first time buyers would have
bought even without the credit.
In any event the credit,
unless extended beyond its November 2009 expiration,
will soon run its course as a stimulant. That’s
because of the time lines involved in searching for
a home and getting approved for a mortgage. First
time buyers interested in taking advantage of the
credit should start looking now. If they can
identify a home they want to buy and make an offer
in August, they’ll have September and October to get
the loan approved and go to settlement/closing.
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Administration Pressures Lenders to Make Mortgage
Modifications
Many lenders appear
hobbled by bureaucracy or blind to their own best
interest.
The Administration continues to try to help mortgage
lenders recognize that it is in everybody’s best
interest to modify mortgage terms in cases where it
makes economic sense to do so and the homeowner can
still afford to keep up with the payments. On July
28th, Administration representatives met with a
group of mortgage loan servicers and urged more of
them to participate in the Making Home Affordable
plan. The program began in April, 2009 and offers
billions of dollars of taxpayer incentives to
encourage them to participate.
Many homeowners have
seen their wages and/or hours cut and can no longer
afford the original monthly mortgage payments. Many,
such as U.S. autoworkers, have lost good paying jobs
and are earning far less in whatever work they’ve
been able to find. The likelihood that they will
ever again find a job that pays recent auto union
wages is very low. Many of them own Detroit homes
whose market value is as little as half their
mortgage balance. Foreclosing on them would yield
even less by the time the lender paid for legal fees
and real estate commissions for reselling the house.
If the lender could modify the mortgage in a way
that retained a mortgage balance greater than that
amount, and yielded at least market rate payments on
that amount, lenders and their stockholders as well
as their mortgagees would better off with that
alternative than foreclosing
Lenders have not
supported the program to any significant degree, and
it is critical that they do so. If we can simply
reduce the number of foreclosures to a point that
the rate of total home purchases exceeds the rate at
which homes come on the market (both foreclosures
and non-foreclosures), the current large supply of
unsold homes will begin to decline and prices will
begin to stabilize. That is already beginning to
happen on a national level, but troubled local
markets are still seeing growth in inventory and
further declines in home values, fed to a large
degree by the continuing growth in foreclosures.
Many mortgages can be
modified in a way that makes economic sense for a
lender under terms that will also be affordable for
the borrower. Relatively few actual modifications
have been made. Many of them did not result in
significant reductions in monthly mortgage payments
for homeowners who still had little or no chance of
keeping up with those minor reductions at their
current income levels. As a result, re-defaults have
been very common, even though it would have made
better economic sense given the current market value
of many of those homes for the lender to reduce
payments to an amount that would have been
affordable for the borrower. The lenders’ failure to
be both responsive and realistic is not only driving
up foreclosure rates and hurting home values, it is
eroding the value of the lenders’ assets, which is
also a disservice to their stockholders.
In fairness, some
segments of the financial services community have
been more responsive to the challenge. The mortgage
insurance industry is stepping up its ongoing
efforts to keep families in their homes. The
industry has been at the forefront in developing
systems and procedures to support the U.S.
Treasury’s Home Affordable Refinance Program (HARP)
and Home Affordable Modification Program (HAMP).
While these programs are in their early stages,
initial results have been encouraging. In addition,
mortgage insurers have developed back-up
underwriting capabilities and standardized reporting
systems to provide distressed homeowners a “second
look” if they have been turned down for a loan
modification on a non-GSE loan. “In 2008 alone,
mortgage insurers, working with servicers, were able
to save almost 100,000 people from losing their
homes,” noted Kevin D. Schneider, president of
Mortgage Insurance Companies of America (MICA).
House Financial Services
Committee Chairman Barney Frank (D-MA) welcomed the
announcement by Secretaries Geithner and Donovan
that the meeting held by their top assistants with
representatives of the mortgage servicing industry
on July 28th
was productive, and that they
expect there to be a significant increase in the
number of mortgage modifications. Frank noted
that there is great disappointment in both Congress
in particular and the country as a whole in the
failure of these institutions to do a much better
job at modification so far, and he cautioned that if
the progress the administration foresees is not soon
evident, more drastic legislative measures will be
back on the agenda.
Chairman Frank noted
that “Congress has provided every legislative tool
recommended by people in the mortgage industry, and
in the administration, that we were told would be
helpful in facilitating the modifications we need to
diminish the flood of foreclosures which has been so
much a part of our national economic problem.
The one measure that did not survive the process was
the right of individuals to declare bankruptcy for
their personal residences, and while many of us
strongly supported this and it passed the House, in
the Senate the argument that it would be destructive
and was unnecessary to achieve modifications
succeeded. But the evidence to date does not
bear out that latter point: people in the
servicing industry and in the broader financial
industry must understand that if this last effort to
produce significant modifications fails, the
argument for reviving the bankruptcy option will be
extremely strong, and I think there is a substantial
chance that the outcome will be different. I
can assure all concerned that no legislation which
we are asked to pass to facilitate the full return
of the lending industry to the role it should be
playing in the economy will pass out of the
Financial Services Committee unless we see a
significant increase in mortgage modifications and
foreclosure-avoidance, or the legislation includes a
bankruptcy provision for primary residences.”
The American Homeowners
Grassroots Alliance applauds the Administration for
summoning industry executives to this meeting to
discuss how to step up the pace of loan relief. AHGA
also applauds Chairman Frank for making it clear
that Congressional action will follow if the
mortgage lenders don’t step up their efforts. We are
providing lenders billions of taxpayer dollars to
get them to take actions that make sense even
without the incentives, are in the interests of
their stockholders, and will remedy a problem they
caused. If the mortgage lenders and servicers will
only modify those mortgages that make economic sense
for them, and under terms that are realistically
affordable for the borrower, we will be able to
reduce the rate of foreclosures to a number that the
current market can absorb without driving home
values down further. This would mark a major step
forward in our economic recovery. For the sake of
all homeowners, the economy, and the stockholders of
those mortgage lenders, let’s hope this critical
mission is successful.
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Remodeling in 2009
Returns on investment follow their
historic patterns, but aren’t as great as before.
Remodeling has always made a great amount of sense for
many homeowners. Even apart from the personal comfort and
enjoyment, it is often the smartest decision from an
economic standpoint compared to selling your current home
and buying something nicer. Remodeling will add to your
home’s value, and you’ll often recoup most of your
remodeling investment when you do sell it. In contrast,
selling and buying expenses (real estate commissions,
mortgage loan points, moving expenses, and a myriad of other
charges) typically exceed 10% of a home’s value. Apply that
amount towards remodeling projects on your current home and
also add the increase in your present homes value as a
result of the remodeling project and that alternative will
often be the wisest financial choice. If you like your home
and neighborhood and have no other reason to sell you should
definitely consider remodeling your current home rather than
moving.
Certain remodeling projects have
always provided better returns on your investment than
others. Updating old kitchens and baths have always
provided good paybacks, as long as you don’t go
overboard. Swimming pools and other improvements that
may be attractive to a smaller number of potential
buyers provide lower returns.
In years past kitchen and bath remodeling projects have
yielded returns of as much as 90% of their cost or more,
according to Remodeling Magazine’s annual remodeling cost
vs. value report. Their 2008-09 annual remodeling cost vs.
value report shows that they are still provide among the
best returns, but those returns have fallen off somewhat.
The 2009 study found the average major kitchen remodel cost
$53,235, its resale value was $42,104, and the cost recouped
was 79.1%. For a minor kitchen remodel, the resale value was
$16, 234 on a $20,320 job, recouping 79.9% of the cost. A
$14,510 bathroom remodel had a resale value of $10,953, and
the cost recouped was 75.5%. Even so, the difference will
often be less than what you would have spent on
transaction-related fees if you moved rather than remodeled.
Other minor projects also provide good returns.
Homeowners can do many of them without a contractor, and
they will add more than their cost to your home’s value,
according to Remodeling Magazine. They include such
thinks as painting, installing trim such as crown
moldings, wider baseboards and tile back splash;
changing the hardware on doors; changing toilets, sinks
and bathroom hardware; installing new appliances;
upgrading countertops; or reworking cabinets by painting
them or replacing the doors and hardware. Landscaping
can also add substantial value to a home.
As always, the Foundation recommends that homeowners who
use remodeling contractors utilize a comprehensive written
contract to protect their interests. Complaints about
remodeling contractors continue at the top of the
Foundation’s and Better Business Bureaus complaint list. You
can order one of the Foundations’s remodeling contract forms
here.
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Technology Policy Will Impact Homeowners
A
new research study
commissioned by the Communications Workers of America
union reveals that many American households now consider
broadband Internet access a necessity.
Broadband at home, the study concludes, provides over
$30 billion annually in benefits to consumers in the
areas of education, health care, work, news,
entertainment and civic affairs. The study also found
that home broadband adoption increased more than
six-fold between 2001 and 2008 – from 10.4 million
households in 2001 to 66.6 million households in 2008.
The study, titled
"The Substantial Consumer benefits
of Broadband connectivity for US households,"
was produced by the three economic experts: Jonathan Orszag,
former economic policy advisor on President Bill Clinton's
national economic council; Dr. Robert Willig former chief
economist in the Department of Justice's Antitrust Division
and professor of economics and public affairs at Princeton
University; and Mark Dutz, a special consultant with Compass
Lexecon, an economic consulting firm.
The
American Recovery and Reinvestment
Plan earmarked $7.2 billion for broadband
development and tasked the Federal Communications Commission
(FCC) with devising a national broadband plan. The
Dutz-Orszag-Willig study demonstrates that the benefits
enjoyed today are only the beginning. The stimulus funds
open our nation to a better broadband future: Smart power
grids to proactively maintain and save energy consumption,
the ability for more homeowners to work from home thereby
reducing automotive pollution, enhanced communication about
health status and potential treatments, and effective web
2.0 tools to better manage civic elections.
The American Homeowners Grassroots
Alliance believes that making affordable high-speed Internet
available to all Americans is not only the most important
current mission for the FCC, but also one of the most
important missions for the federal government as well. The
Dutz-Orszag-Willig study demonstrates that the importance of
broadband to the life of the average American is growing
rapidly and as a result those who do not have it become more
and more disadvantaged as each year passes.
While the growth of both U.S.
broadband adoption and private broadband infrastructure
investment has been impressive, there are clearly serious
barriers to universal broadband availability ahead. Most
relate to geographic challenges, in particular the low
population density in many rural areas where most of the
unserved live. From an economic/return on investment
standpoint it will take many years before private broadband
providers can justify to their stockholders the investment
of the amount of money needed to provide broadband access to
the most isolated consumers.
That’s why the multibillion dollar
federal stimulus funding for providing broadband access to
the unserved is so important. It is all the more vital
because the money must be spent in the next several years.
Questions about how to most cost effectively spend it are
very complex. Cost efficiency must be maximized because
nobody believes that the funding is sufficient to provide
broadband to every home in the country.
There are differences of opinion
between members of the nonprofit community on how to best
allocate the federal broadband investment to maximize the
benefits, and there are also differences of opinion between
other stakeholders over the same question. One thing we can
all agree on is that there is a short window of opportunity
to apply substantial resources to bring affordable
high-speed broadband to millions of homeowners and other
consumers who don’t presently have it.
The FCC and other agencies involved in
the process should keep their eyes focused on this most
important priority over the next several years and should
not let tangential issues undermine their focus over this
critical time frame. This is not to suggest that other
issues may not be important, but work on them should not
come at the expense of giving the needed attention to
expanding broadband access to the unserved. Unanimity on how
to proceed will not happen, but all the stakeholders should
try to work together to the greatest extent possible to
contribute to the solution. They should avoid becoming
barriers to a goal that we all share.
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 New
Rules to Protect Borrowers
Several sets of new federal rules are
intended to help home buyers.
The Federal Reserve has proposed new
protections for mortgage and home-equity loan consumers.
They aim to improve disclosures and ban undisclosed
kickbacks. Consumers would receive more precise and clear
price disclosures when they apply for a mortgage loan. They
would also receive a one-page warning regarding inherently
risky features of some loans. These include negative
amortization and balloon payment mortgages as well as ARMs
(adjustable-rate mortgages). The Fed also wants lenders to
provide better information on how much borrower payments can
increase with ARM loans and revise how the annual percentage
rate, or APR, is calculated. The proposal would bar steering
consumers to higher-cost or riskier loans in order to
increase the broker's or loan officer's compensation. It
would also prohibit payments to mortgage brokers or loan
officers that are tied to the loan's interest rate or other
terms.
The proposal would also replace
several generic publications currently provided to
home-equity loan applicants with a more focused single page
document summarizing the risks of home-equity loans. Home
equity lenders would have to furnish consumers with specific
cost information within three days of receiving an
application and before the credit line commitment is
effective. The information would confirm the terms and
approved credit limit, and would also enable the consumers
to shop for better terms before committing to opening the
home-equity line of credit.
The American Homeowners Grassroots
Alliance strongly supports these proposed rules, but
believes that consumers should be allowed to continue to use
fully disclosed "yield spread premiums" to offset the same
amount in mortgage broker origination fees. AHGA expects
that the proposal will be opposed by mortgage lenders. The
public has 120 days to comment on both the mortgage and
home-equity loan proposals before the new rules are
finalized.
Another set of rules that just took
effect on July 30 will provide related protections to
mortgage applicants. Lenders will be required to give you a
preliminary disclosure of your mortgage costs within three
business days of your loan application. If they fail to do
so you have no obligation to sign the loan agreement.
Lenders are prohibited from collecting any advance fees
except reasonable amounts for a credit check until after
you’ve received both the truth-in-lending disclosure form
including an annual percentage rate (APR) calculation of
your loan costs.
A required seven day cooling off
period after the preliminary disclosure is mailed or given
to you should provide you at least a few days to review the
numbers and decide if you still want to go forward. If the
final APR is off by more than an eighth of a percent from
the preliminary disclosure for any reason, lenders have to
give you another disclosure followed by another week to
review the new information.
They also have to give you a copy of
the real estate appraisal at least three business days
before you sign the loan, although you have the right to
waive that requirement. These new rules address a number of
problems frequently experienced by real estate consumers in
the past, and should bring more fairness into the process.
Another set of new rules intended to
lessen the ability of real estate agents or mortgage brokers
to pressure real estate appraisers into inflating a home’s
value has come under attack by from both real estate brokers
and appraisers. Appraisers rely heavily on referrals from
real estate agents and mortgage brokers for their business.
Many appraisers have complained that they have received
heavy pressure from real estate agents to change the numbers
when it turns out that the buyers are paying more than fair
market value for the home.
To address the problem Fannie Mae and
Freddie Mac developed a Home Valuation Code of Conduct (HVCC).
Under the code, which went into effect May 1, Fannie and
Freddie will purchase only mortgages supported by an
"independent" appraisal that did not allow real estate agent
or mortgage broker input into the appraiser selection
process. As a result most lenders are now getting appraisals
from an appraiser selected by the buyer or appraisal
management companies (AMCs), which farm out the appraisals
to the appraiser of their choice.
Complaints leveled at this new
arrangement include that some AMC’s are using unqualified
appraisers and that they frequently miss settlement
deadlines. The Federal Housing Finance Agency recently
countered that the HVCC has not led to lower appraisals or encouraged the use
of appraisal management companies. Nevertheless on June 26
the national Association of Mortgage Brokers got two
legislators (Representatives Childress of Mississippi and
Miller of California) to introduce legislation calling for
an 18 month moratorium on the HVCC.
While there may be some glitches with
the implementation of the HVCC, AHGA believes it embodies
important consumer protections. Although it is becoming
apparent that there are problems with the implementation of
HVCC, its authors obviously did not intend for it to lead to
the use of appraisers unfamiliar with the local market, or
the use of comps that were inappropriate because of their
geographic location or for other reasons. It does not
necessarily follow that it needs to be repealed. Its
original purpose is still valid, and now that some of the
implementation problems have been identified they can and
should be quickly addressed through the regulatory process,
or through legislative action that will assure independence
and transparency and thoughtful and effective methodology.
Reasonable people should support that approach and offer
suggestions to achieve that objective. It is not necessary
to return to the system where fraud and coercion were all
too common.
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The
Changing Face of Yard Sales
Make sure you comply with consumer-product safety
laws, and get ready to collect sales taxes.
Because of the recession, more homeowners are disposing
of unneeded possessions. Listings on Craigslist for garage
sales have increased 60% in the past year. The 2008 Consumer
Product Safety Improvement Act makes it illegal for anyone
to resell recalled products, including individual
homeowners. The American Homeowners Foundation urges all
homeowners to comply with this law, which applies to resales
through yard sales and/or through Craigslist, EBay, Amazon,
or other avenues. There are too many recalls to keep up with
on an ongoing basis (563 product recalls in 2008, and 472 in
2007), but they are indexed at
www.cpsc.gov , where you can easily search by
product type, company name, or hazard, among other
categories. Another recall search site is
www.recalls.gov , which
lists recalls by the Consumer Product Safety Commission and
five other federal agencies.
If you suspect that you might have an item that has been
recalled, check first before putting it on craigslist, EBay,
Amazon, or regifting it. Among frequently recalled items are
toys, cribs, electric blowers, cosmetic accessory bags and
window blinds. If it is on the list either return it to the
manufacturer or dispose it – don’t pass the risk on to
someone else. The Consumer Product Safety Commission doesn’t
have the resources to monitor compliance with the 2008 law,
but we should all comply because it is the right thing to
do.
While consumer protection is something we should all
support, not every government initiative related to Internet
commerce is widely supported by consumers. For example sales
taxes on consumer Internet purchases are opposed by over 87%
of the public, according to a Parade Magazine survey. More
and more of those sellers are also consumers who have been
hurt by the recession and are selling unneeded items on
Craigslist, eBay, Amazon, or similar sites. Many of the
buyers are also turning to these sites to save some money in
these tough economic times.
Some state governments are considering resurrecting a
previous effort to force those sellers to collect sales
taxes from buyers on those purchases, and remit the taxes
back to the buyer’s state or local government. With over
7,000 state and local taxing authorities, each taxing
different products at different rates, this would be quite a
chore for the average online yard-saler. Another question is
whether simply posting an advance announcement of the yard
sale in your front yard online would trigger sales tax
collection responsibilities for the items sold face-to-face
at the yard sale. With the large increase in Craigslist yard
sale postings and many newspapers posting yard sale
announcements online, millions of homeowners could be forced
to become tax collectors.
There are many policy arguments against taxing
e-commerce. People who buy online don’t pollute the
atmosphere by driving to the mall to get the product, and
that saves wear and tear on transportation infrastructure as
well. The postal carrier, FedEx, or UPS delivery trucks are
going down the buyer’s street everyday anyway so there’s
really no offsetting downsides. Brick and mortar retailers
that do collect sales taxes are at no real disadvantage,
since shipping costs are roughly the same as sales taxes.
Besides, business websites today are inexpensive, and most
small brick and mortar retailers have them.
Another current state Internet sales tax collection
effort would impact the growing number of homeowners who
have small home-based Internet businesses, hobby sites or
blogs. Many of them earn a modest side income by hosting
links on their websites to other Internet vendors, and
collecting referral fees if others buy through those links.
Even a modest side income can be critical to many
hard-pressed homeowners in this economy. An example cited in
a July Wall Street Journal article on the subject was a
woman who hosts a cooking blog. Her site included links to
cookbooks sold on Amazon and other sites, and she earned as
much as $1,000 in sales commission annually from those
links. Amazon ended its business relationship with her as a
result of state threats to force Amazon to collect sales
taxes on the sales she generated.
State legislatures in New York, Rhode Island, North
Carolina and Hawaii passed legislation requiring such
e-commerce companies to collect sales tax if they have these
in-state online-marketing affiliates. Hawaii governor Linda
Lingle vetoed that bill. California Governor Arnold
Schwarzenegger of California has also promised that he will
veto similar proposals under consideration in California.
The American Homeowners Grassroots Alliance and a growing
share of its members understand firsthand the financial
challenge faced by many state governments. To the extent
that belt tightening isn’t enough to close their budget
shortfalls, they should consider other revenue generation
alternatives with far fewer policy downsides and far less
taxpayer opposition than taxing Internet sales. They might
include options such as surtaxes on the rich as Congress is
considering to help pay for healthcare costs. Many states
have existing sales tax holidays for back-to-school
purchases. For many sound policy reasons a permanent state
Internet sales tax holiday would seem to be a much better
idea than the other Internet sales tax ideas that have been
proposed.
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message.
To look up the phone number, email, and/or
postal address of your U.S. Representative or your
two U.S. Senators, (or your state representative or
state senator)
click here. You can also look up which
legislators represent your zip
code if you don’t recall their names.
A personal meeting is a particularly effective way
to get their attention and reinforce your message.
Many legislators are also happy to meet personally
with their constituents when they are back home on
weekends or when Congress is not in session. The
House is in recess for the August, and the Senate is
expected to begin its August Recess on August 7.
Please consider also requesting a follow up
face-to-face meeting in their home state or home
district offices near you when you contact their
Washington DC offices on policy issues.
Is there a policy issue that is particularly
important to you which significantly impacts
homeowners or home ownership? Any member may propose
a position on a policy issue, so please check the
American Homeowners Grassroots Alliance's 2009
Issue Guide to see whether it’s already on our
list. If it isn't on the list, we invite you to send
us an email and tell us why you think the American
Homeowners Grassroots Alliance should take a
position and work on it.
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