Home » Opinion » Chinese Views
Warning Chinese buyers against taking US house-for-visa bait
By Lena Zhang |
November 28, 2011, Monday
|
Print Edition
Print Edition
THE introduction this month of the Schumer-Lee Bill would provide residential visas to foreigners who buy US homes, according to Reich, former US secretary of labor under Bill Clinton (1993-1997) and now Chancellor's professor of Public Policy at UC Berkeley.
The proposed legislation, formally called the Visa Improvements to Stimulate International Tourism to the United States of America, or VISIT-USA Act, offers a three-year renewable visa for foreigners who invest US$500,000 or more in residential real estate, at least US$250,000 of which must go toward a primary residence.
The visa holders, meanwhile, must live in their primary residence for at least 180 days a year, and pay US income taxes on their foreign earnings. They won't be eligible for Medicare, Medicaid, or Social Security benefits. Their visas wouldn't serve as a pathway to US citizenship or as an authorization to work. A property sale would render the visa invalid.
Republican Senator Mike Lee from Utah claimed that the bill would support a free-market method for increasing demand for housing at a time when so many working-class Americans are "underwater" on their homes and are desperate for prices to rise again.
While that might be true, I hear myself ask the same question as Mr Reich - what about those young Americans who are just entering the market and would prefer low home prices that aren't bid upward by rich foreigners?
And what about fairness? Many foreclosures took place because low-doc or no-doc speculators applied for loans they knew they didn't have the means to service, hoping to refinance or sell the homes after they appreciated. All they had to do to acquire a loan was to put down a false income on their applications. Is it fair to artificially inflate home prices then, at the expense of the more honest, prudent Americans whose integrity probably went above the urge to jump on the "liar loans" bandwagon?
Democratic Senator Charles Schumer from New York believed that the bill could be part of the solution to the housing crisis and won't cost the US government a nickel. What it might do to further drain the Chinese government coffers was obviously something the Americans need not be concerned about.
But unlike the Chinese government, which has been ratcheting up state intervention in its protracted war against speculative buying in the mainland property market, the US government was uncharacteristically slow to respond to the obvious signs of a potential housing meltdown in the sub-prime mortgage crisis, until things spun completely out of control.
Risks ignored
In retrospect, many experts agreed that the meltdown was a foreseeable catastrophe that could have been prevented. However, in the last decade, there was collective silence from the government, Wall Street, mortgage lenders, and the press about the dangers of "liar loans" or the housing bubble.
In his book "The Story Behind the Mortgage and Housing Meltdown," Kenneth Clark, a veteran banker and founder of a successful nationwide mortgage firm, likened the hundreds of thousands of foreclosures to an epidemic that fed on the greed of Wall Street and the ignorance of the American public.
He saw the risks of alternative mortgage instruments and purposely got out of the Alt-A Lending (originally designed for self-employed borrowers with very good credit who didn't fit all the requirements for Fannie Mae and Freddie Mac loans, and later evolved into Stated Income Lending to those who intentionally misstated their undocumented income) business in the middle part of the 2000s.
However, for average Americans, there just wasn't much information available at that time to warn them about the dangers of speculative lending and borrowing.
Now that the bubble has burst, and the Occupy Wall Street movement has hit the districts of New York, the government suddenly acted swiftly - it was swift in turning to other countries for a financial shot in the arm.
Lopsided bill
In fact, the Chinese emerging wealth has almost become a panacea for American woes in recent years.
China is now a cash ATM dispensing tens of billions of dollars, all at the insertion of a visa card to the US - when American workers needed jobs, a conditional green card was offered in exchange for half a million bucks and 10 local job opportunities; when American farmlands needed cultivating, a conditional green card was offered to those willing to buy large parcels and hire farmhands; and now, why not salvage the distressed housing market by tapping into those deep Chinese pockets yet again?
Only this time around, the card inserted wasn't even a conditional green card but merely a provision for a temporary, three-year stay on American soil with a whole bunch of strings attached.
I take my hat off to Barry Cunningham, an award-winning TV news correspondent who warned the Chinese against buying the right to live in those US "figurative holes in the ground into which one has to continually pump money," under the heavily lopsided Schumer-Lee bill that favors American banks and realtors.
The author is a freelancer now living in Shanghai.
The proposed legislation, formally called the Visa Improvements to Stimulate International Tourism to the United States of America, or VISIT-USA Act, offers a three-year renewable visa for foreigners who invest US$500,000 or more in residential real estate, at least US$250,000 of which must go toward a primary residence.
The visa holders, meanwhile, must live in their primary residence for at least 180 days a year, and pay US income taxes on their foreign earnings. They won't be eligible for Medicare, Medicaid, or Social Security benefits. Their visas wouldn't serve as a pathway to US citizenship or as an authorization to work. A property sale would render the visa invalid.
Republican Senator Mike Lee from Utah claimed that the bill would support a free-market method for increasing demand for housing at a time when so many working-class Americans are "underwater" on their homes and are desperate for prices to rise again.
While that might be true, I hear myself ask the same question as Mr Reich - what about those young Americans who are just entering the market and would prefer low home prices that aren't bid upward by rich foreigners?
And what about fairness? Many foreclosures took place because low-doc or no-doc speculators applied for loans they knew they didn't have the means to service, hoping to refinance or sell the homes after they appreciated. All they had to do to acquire a loan was to put down a false income on their applications. Is it fair to artificially inflate home prices then, at the expense of the more honest, prudent Americans whose integrity probably went above the urge to jump on the "liar loans" bandwagon?
Democratic Senator Charles Schumer from New York believed that the bill could be part of the solution to the housing crisis and won't cost the US government a nickel. What it might do to further drain the Chinese government coffers was obviously something the Americans need not be concerned about.
But unlike the Chinese government, which has been ratcheting up state intervention in its protracted war against speculative buying in the mainland property market, the US government was uncharacteristically slow to respond to the obvious signs of a potential housing meltdown in the sub-prime mortgage crisis, until things spun completely out of control.
Risks ignored
In retrospect, many experts agreed that the meltdown was a foreseeable catastrophe that could have been prevented. However, in the last decade, there was collective silence from the government, Wall Street, mortgage lenders, and the press about the dangers of "liar loans" or the housing bubble.
In his book "The Story Behind the Mortgage and Housing Meltdown," Kenneth Clark, a veteran banker and founder of a successful nationwide mortgage firm, likened the hundreds of thousands of foreclosures to an epidemic that fed on the greed of Wall Street and the ignorance of the American public.
He saw the risks of alternative mortgage instruments and purposely got out of the Alt-A Lending (originally designed for self-employed borrowers with very good credit who didn't fit all the requirements for Fannie Mae and Freddie Mac loans, and later evolved into Stated Income Lending to those who intentionally misstated their undocumented income) business in the middle part of the 2000s.
However, for average Americans, there just wasn't much information available at that time to warn them about the dangers of speculative lending and borrowing.
Now that the bubble has burst, and the Occupy Wall Street movement has hit the districts of New York, the government suddenly acted swiftly - it was swift in turning to other countries for a financial shot in the arm.
Lopsided bill
In fact, the Chinese emerging wealth has almost become a panacea for American woes in recent years.
China is now a cash ATM dispensing tens of billions of dollars, all at the insertion of a visa card to the US - when American workers needed jobs, a conditional green card was offered in exchange for half a million bucks and 10 local job opportunities; when American farmlands needed cultivating, a conditional green card was offered to those willing to buy large parcels and hire farmhands; and now, why not salvage the distressed housing market by tapping into those deep Chinese pockets yet again?
Only this time around, the card inserted wasn't even a conditional green card but merely a provision for a temporary, three-year stay on American soil with a whole bunch of strings attached.
I take my hat off to Barry Cunningham, an award-winning TV news correspondent who warned the Chinese against buying the right to live in those US "figurative holes in the ground into which one has to continually pump money," under the heavily lopsided Schumer-Lee bill that favors American banks and realtors.
The author is a freelancer now living in Shanghai.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
