Did Cash For Clunkers stabilize auto sales? No. It was a disaster. It borrowed from the future. I think this is Deja-vu all over again.

I would expect the market to “smoothly recover” – sales go up and prices go steady if the credit is extended. And I don’t think that’s a horrible thing.

Your posts seem to get increasingly angry from someone whose bubble-busting expectation are misaligned with how the market behaves.

Yes, that 8K is all that stands between me and my million-dollar mcmansion! 8k for all!!!

Funny article.

OK San Francisco, maybe, Rochester, no, Oakland,no, Birmingham, no, and all the numbers are way out of whack.

It’s this kind of article that makes the Real Estate market so crazy.

The State programs are already in place. They do qualify people to get a loan, be home owners, and talk about the finances of home ownership.

I think you are under the impression that this program is set up for those agents, and mortgage brokers, who go through the time to be certified. You are correct it’s not a y’all come, bring your buyers, and do a deal kind of thing.

I look at this $8K tax credit as the next wave of foreclosures.

First we had the up tick in pricing which wiped out the credit. Second we had the weasel Real Estate agents hyping people to buy now, or the credit will be gone forever. Third is that this lower priced inventory has now sold for premium prices.

We need to bring the Real Estate industry under control and protect consumers.

We gave the banks a ton of money and now they have profits. The stock market is manipulated by these huge institutional investors. In my opinion it’s about time every body went back to work and stopped shopping for hand outs.

We can’t pay for health care, but we can pay for Warren Buffet to make a profit.

Sheesh!

http://www.lewrockwell.com/celente/Future-Trends-2012-Celente.pdf

Good luck with that. Foreclosures had their highest week EVER this week in King County!!…and BKs are up dramatically.

http://money.cnn.com/galleries/2009/real_estate/0910/gallery.housing_price_forecast/2.html

A few days ago we told the story of Denise Tejada, the 21 year old California woman who bought a house with an FHA backed loan with almost no money down.

Readers were outraged.

And rightfully so. It’s our money on the line and it is simply outrageous that our government is still encouraging these kind of loans to be made. Even if Tejada pays off her loan in full, it was an insane gamble on our behalf to have the government back her loan.

But as it turns out, the gamble was even more insane that we originally reported.

http://www.businessinsider.com/the-story-of-21-year-old-with-the-underwater-fha-loan-is-even-worse-than-you-think-2009-10

I agree that the 8K credit program is probably “fraud-laced” when compared to other tax programs.The federal tax system is an honor system. With the exception of withholding and information reporting like w-2’s, 1099’s, K-1’s etc. done by employers and other sources, the taxpayer is trusted to report and pay their tax accurately. When you throw in a refundable credit the size of 8K, it opens the door for those who aren’t so honorable, especially in an internet world where one can put together the information necessary to file a bogus return without leaving the house. Because this refundable credit is so large, I think that as compared to other tax programs, this program is probably “fraud-laced” on at least a relative basis.

As to the 107K cases however, the vast majority of those probably only involve allegations of taxpayer negligence and not fraud. Civil tax fraud is almost always (if not always) also actionable criminally if the justice department and the IRS want to pursue it. The Reuters article also says that the IRS has identified only 167 criminal schemes. It’s probably also true that most of those schemes involve multiple credit claims. But whether the amount of fraud is greater or less than the 107K credit claims, the 107K metric of IRS cases probably includes mostly claims of taxpayer negligence and just isn’t a good gauge by which to estimate the true amount of fraud related to the credit.

Softy- the government just released the new unemployment numbers. Under the now revised plan, the metric formerly known as U-3, commonly quoted by all MSM sources, will only included those who have been unemployed for at least two years. Federal spokesperson Ilie Freely said the revised measure is an attempt to more accurately capture the true number of unemployed after filtering out “job hoppers,” semi-transient workers, the merely bored, etc.

As of 10-21-2009 the comprehensive revised unemployment rate for the U.S. is 4.3%. Analysts immediately expressed concern that the now tight labor market would lead to wage inflation and subsequent sharp increases in housing prices. Realtor Buffy Myass was quoted on CNN as suggesting those on the fence about rising home values should “buy now, or be priced out forever!”

Barrack Obama, humbly accepting credit for the now ongoing economic recovery, announced he will indeed be running for re-election in 2012, as well as 2016, 2020, and 2024, then moving on to other challenges and fulfilling his desire to spend more time with his family….

8/2009 Article in part:

“…The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation’s plate and struggling to find money to pay the tab

Read more at: http://www.huffingtonpost.com/2009/08/03/tax-revenues-post-biggest_n_250108.html

If this phony stimulus spending was helping things, why to we currently have a chronically worsening unemployment/underemployment rate at 17%?

Oh, and the “R” in front of Sen. Johnny Isakson’s name stands for “re-elect me!”

Me? I’m holding out- my house will be free, at least to me! ;-)

I think if you swapped it over to him for $150k, the sales tax is only about $2k. If the extension goes through, you should do it and let the .gov pay for your refinance-by-proxy.

I still have mixed feelings about extending the home credit. I don’t think it would be “good” long term, but congress seems to be all about the handouts, and I’d rather see a handout go to home buyers than national banks.

And that is exactly what they want people to think. Look a bit deeper than the glossy surface and you realize that this is just another funnel of tax money to the big banks. It’s awesome for them, not only do they get more time to suck on the FED teet in form of cheap money that they can re-invest in Treasuries with guaranteeed profits to offset their losses they also get more buyers ( who over pays with $8k + any bonus from increased competition ) for their reos. For the home buyer, not so good, increased risk to over pay, getting under water etc, etc. It’s a bank bailout dressed up to be a helping hand to home owners. It’s not even good for realtors since it delays the road to sustainable volumes. I still have god hopes that this scam will be killed, the whispers of out of control spending is getting louder, soon even a senator will hear it.

Mind you, I’m arguing to kill the credit, not raise the income limit. For places like Seattle, NY, etc, where there are high income earners and high real estate prices, I suspect there are other people in my situation that have looked at this credit, and seen that it creates a further disincentive to buy.

When I saw the title to the post, I assumed that when you used the term “fraud” you were referring to the lack of substance to the political rhetoric put forth by those who support the credit. Although that may amount to hyperbole, I think that would be a reasonably appropriate use of the term “fraud” as a purely editorial comment.

However, your reference to a 5% fraud rate on the credit claims is an inaccurate conclusion from the facts presented in the Reuters’ article. Reuters never said that the 107,000 civil cases constitute fraud, as opposed to just allegations which might in a much smaller percentage of cases constitute fraud. The majority of the 107,000 cases probably constitute only negligence on behalf of the taxpayer and some will likely be found to be altogether unfounded claims by the IRS. By referring to allegations that may be unfounded and actions that may only constitute negligence as fraud, you are unintentionally distorting the facts to further sensationalize the story. You don’t need to go there.

Your editorial point regarding the problems with the credit is well made without the potentially ill founded rhetoric regarding issues of taxpayer fraud.

If they don’t extend the credit, at least the industry can point to something when houses prices start falling faster after the expiration.

Is this like running numbers on Madoff? Obviously it’s much more interesting to run the numbers before the fraud is known, but I am not sure how one does that. How do you know you are the victim of fraud until it’s too late, and then how do you know how many non-fraudsters there are in the population to get the percent of fraud? Finally, if there are a bunch of small frauds that does not have the same impact as one mega fraud–the sum of all the small frauds may be smaller than the amount of one mega fraud.

Tim, have you done any numbers of fraud percentages on other tax credits housing or not to see if the 5% figure is truly fraud laced or an average number of investigations for any given tax credits? I haven’t, but would be curious to know how that compares to other IRS “free” money. I guess it is also important to note that investigation does not always equal fraud.

I had a few clients take advantage of the credit this year, but I would not say it directly affected their decision to buy or not.

Thanks for bringing all these posts together:)

“They use stolen identities and file a return claiming the credit. They have the credit direct deposited to a prepaid card they purchased. The IRS processes the credit and transfers the money to the prepaid card account and the fraudsters are gone. The IRS is so screwed up, they have no way to verify the return before sending the credit out. Once they review the return, they send the taxpayer whose identity has been stolen a deficiency notice. The fraudsters may file a hundred or more returns.”

hmmm white house against it, a republican pushing it OH where is Scotsman with his outrage against Obama?

I like Obama and have democratic values but to be fair:

” Isakson and Senate banking and housing committee Chairman Sen. Chris Dodd, a Democrat, are co-sponsoring legislation that would extend the tax credit until June 30, 2010.”

As I said I like Obama but I have no love for Chris Dodd.

In my opinion the point to the tax credit was to stablize the housing market free fall, which it did. You would have to be brain dead not to figure out a 3% uptick in home prices doesn’t wipe out any savings from a $8K tax credit.

So, the $8K did what it was meant to do, the TARP money is giving banks profits, and now it’s time to move on.

On the fraud issue, I’m assuming most actually bought a new house, but didn’t qualify for the credit. If so, then the IRS pursuit of them could result in a foreclosure down the road. But for them to have over 100,000 cases to investigate, I have to assume that most/all of those probably had claimed home interest deductions within the past 3 years. If so, a rather stupid attempt at fraud.