Friday, September 14, 2007

Lois Capps Visits Santa Barbara Assoc of Realtors

Lois Capps came by The Santa Barbara Association of Realtors and spoke with a group of about 25 real estate agents today. The conversation focused mainly on legislation that is in process. One piece of proposed legislation is FHA reform and the main piece of this legislation is raising the FHA loan limit to $417,000. This wasn't met with much enthusiasm as the Real Estate agents attending thought this was not going to affect Santa Barbara since purchase loans are generally much higher than that. They believed the limit should be considerably higher. One other piece of legislation the group was in favor of was Mortgage Cancellation Forgiveness. This would allow a homeowner that has to sell their property for less than the mortgage is to avoid having to pay income tax on the debt that would be forgiven in these short sales. Currently this shortage is being taxed as income even though the seller never received the money. Two other items that were spoken about and the real estate agents were not in favor of were Carried Interest and Banks in Real Estate. Carried interest is a way to tax partners of a partnership that do not put in any money in a transaction. They have essentially been earning sweat equity and when the property is sold their profits have been taxed at the capital gain rate. The new legislation would tax this profit as ordinary income thus increasing the tax burden to the partner. The last issue being banks in real estate has been around for a while now and certainly wouldn't be anything real estate agents would be in favor of. The most spirited conversations turned towards the media over exaggerating the credit crisis and what should be done if anything to more regulate the lending industry so things like this don't happen again. Lois seemed genuinely pleased that the topic of Iraq didn't come up and she thanked everyone for expressing their thoughts.

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