COLUMN: How an ousted Dem aided the real estate industry

Voters dumped Florida Congressman Alan Grayson due in no small part to his remarks on the House floor claiming Republicans opposed to the health care bill wanted you to “die quickly.” Florida realtors, including the Emerald Coast Association of Realtors, may not want to admit it but they could owe him a debt of gratitude.

Jim McTeague (Barrons, Dec. 29, 2010) points out Grayson specifically carved an exemption in the Dodd-Frank Wall Street Reform and Consumer Protection Act to benefit the time-share industry. 

Under the new law, all banks are required to verify a prospective borrower’s income and employment. At Grayson’s insistence, however, the time-share industry garnered an exemption from these niceties.  When compared with the rest of Florida, South Walton Realtor of the Year Kitty Taylor points out time-share sales constitute a tiny part of local closings. Fractional ownership of units will be part of 30A’s latest project-Hotel Viridian, Taylor noted. Traditional financing via banks constitutes the majority of the Viridian sales with some cash purchases.

Grayson’s benevolence likely will have little impact locally, but as the economy improves developers could look to time-share ownership as a way to market property. McTeague mentions a new angle developers are trying — a property “interest” that expires on a certain date. Disney, for instance, offers the right to use the time-share until 2042. Buyers don’t have to worry about being stuck with a hard-to-market timeshare, but the downside is companies like Disney encourage buyers to finance in-house with current rates of 11.5 percent. Couple this with maintenance fees projected to rise 3 percent annually and unsophisticated buyers could be on the hook for many years.

Harkin’s inclusion effectively eliminated equity-indexed annuities from the same regulations mutual funds have. Jim McTeague is Barrons’ Washington editor and he dug for five months before stumbling across Grayson’s handiwork.

The Dodd-Frank bill has hope for redemption if the SEC will enact a fiduciary standard for insurance agents and stockbrokers similar to what registered investment advisors (like me) follow. Currently, the SEC is winding down a six-month review and comment period on the proposed fiduciary standard. As proposed, the fiduciary standard means an advisor must work in the best interest of their client and must disclose conflicts of interest. What’s to complain about there?

BEST NEW IDEA FOR 2011

Beginning in 2011, payroll taxes will be reduced temporarily 2 percent. Savvy investors will save this windfall. You were not used to having the money and the government wants you to spend it. Therein is the problem. According to a recent AP article picked up by the Northwest Florida Daily News, beginning this month 10,000 Baby Boomers will turn 65 every month. An alarming number of them are woefully unprepared financially for retirement. They simply have not saved enough. For a couple in their early 60s, there is a 30 percent chance one will live to age 92. To borrow a line from former Rep. Grayson, retirement planning for many boomers obviously includes dying quickly.

In Grayson’s defense, his over-the-top illustration was one week after Rep. Joe Wilson’s (R-SC) went nuclear with his “You Lie” outburst during President Obama’s State of the Union address.

Buz Livingston is a certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Contact him directly at 850-267-1068 or at buz@LivingstonFinancial.net.