Yeah it sounds like Better.com could probably take the spread and hedge with puts on Amazon shares. What is interesting is that these mortgages almost surely cannot be conforming loans or resold to Fanny Mae so that should affect rates negatively and then there’s the extra juice on top of that. At some point the rate isn’t going to be worth it.
I would bet these loans are all too big to be sold to Fannie anyways…
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I would guess guess they are taking the spread and paying themselves big bonuses. Innovation!
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This is true and way under discussed.
https://twitter.com/for_yield/status/1630983381264797696?s=46&t=XN_Tfgh7zrOAbtuquQWx0A
Wat? MN has a 10B surplus right now and some of the highest state taxes in the country.
On the state level, blue states at least tend to have some ability to smooth tax receipts if people/consumption moves from cities to nearby suburbs.
My hometown, otoh…
Guess I’ll put this here
https://twitter.com/elongreen/status/1631018051645710337?s=46&t=RKQIqRrKzVps835SSEmebA
politically speaking the optics of taking money directly out of peoples 401ks/iras are much worse than raising the age of ss even if they accomplish the same thing. the first one people will view it as taking money directly out of their pockets, the second one is a little bit less tangible.
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If you could go back in time two years and show economists this headline and tell them it’s two years in the future, what do you think the average guess would be for what the March 1 2023 yield is?
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Most people wouldn’t even notice. For example my 401k increased some nebulous and ill defined fee from eight dollars a quarter to 12 dollars a quarter a while ago. I was outraged, a 50% increase in the fee! Talking to my coworkers, not only did no one else know the fee was increased, none of them even knew that the fee was being taken out of our accounts. Are people going to be up in arms about a .03% annual tax on their 401k? I doubt it.
Eh I could def see media going apeshit about it, they robbing the people smart enough to have 401ks to pay for the people who were too dumb and rely on social security!
Yeah it would be a tough sell for a lot of people if/when it’s framed as “punishing savers”.
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It would make so much more sense from a policy perspective to actually tax estates properly instead of going after the retirement savings of workers.
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its not about how much is being taken out, its about who its being administered by. a .03% fee from your 401k provider is seen as the cost of doing business, they have to stay in business somehow, pay their rent etc. a .03% tax on your 401k from the government is seen as hide your kids, hide your wife, Biden is coming for your retirement. No politician who wants to be re-elected (so all of them) is ever going to open that door.
Or we could just have people pay payroll taxes and ordinary income taxes on capital gains!
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Ban trusts other than special needs trusts.
Just say it’s a surcharge the 401k administrator has to pay to the government. People won’t fall for that you say? They fell for the government saying that the employer pays half the payroll tax, so I don’t see why not.
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Or opening the door to a wealth tax. Or only allowing up to $10M of capital gains to be categorized as unrealized. Etc, etc, etc. Going after the retirement savings of Joe Six Pack when there are so many structural tax subsidies to the wealthy is bad politics and bad policy. So get ready for lots of eDem support with op-eds flying in the NYT and WSJ.
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