By The Tim on February 11th, 2009 at 11:23 AM · 108 Comments
It looks like the $15,000 homebuyer tax credit may not make it into the final “stimulus” plan after all…
From the AP:
Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, these officials said.
Another source, Housing Wire, confirms:
Under the finalized plan, Sen. Max Baucus (D-Mont.) has said that the $35.5 billion to provide a $15,000 homebuyer tax credit, approved in the Senate last week, would likely be cut back.
Good riddance.
Update: The Associated Press is reporting that in the final version of the “stimulus” bill, instead of a $15,000 tax credit, the repayment requirement on last year’s first-time homebuyer $7,500 tax loan is being waived from January 1 through August 31 of this year, and the amount is being upped to $8,000.
Categories: News
Tags: bailout, government_meddling
By The Tim on February 8th, 2009 at 12:05 AM · 78 Comments
Please vote in this poll using the sidebar.
Potential Buyers Only: Would a $15k tax credit affect your decision to purchase a home?
- Yes (34%, 93 Votes)
- No (66%, 180 Votes)
Total Voters: 273
This poll will be active and displayed on the sidebar through 02.14.2009.
Categories: Polls
Tags: bailout, government_meddling, Polls
By The Tim on February 7th, 2009 at 1:24 PM · 72 Comments
I’m sure many real estate agents out there are throwing parties and dancing in the streets with the Senate passage of the so-called stimulus that includes a $15,000 tax credit for home buyers. The idea is that somehow this will magically rescue the housing market and (presumably) reverse the fall of home prices.
Personally, I’m not convinced it will do any such thing. Here is a good analysis of the program from Calculated Risk, who seems to agree with me.
This tax credit is being compared to the 1975 tax credit for homebuyers. However in 1975 the tax credit was for new homes only, and was intended to reduce the inventory of new homes, and help put residential construction workers back to work.
…
In this case the tax credit is for both existing and new homes. This is more of an incentive to get people to move as opposed to putting people back to work. Whereas there were few excess units in 1975 (except excess new home inventory), there are far too many excess units today.
The sponsors and supporters of this tax credit believe this will support house prices – a mistake because this will mostly just shuffle homeowners between homes, and not reduce the excess supply.
…
The key problem for housing is prices are too high. How does this tax credit help reduce prices? Why are we trying to artificially increase the turnover rate? And why are we targeting a tax credit at higher income individuals?
This tax credit seems ill-conceived, and probably should be removed from the stimulus package. No one has adequately explained how this helps “fix housing first”.
Your thoughts are welcomed.
Categories: News
Tags: bailout, government_meddling
By The Tim on December 17th, 2008 at 11:07 AM · 17 Comments
I thought this was somewhat interesting. You may recall the “Foreclosure Prevention Act of 2008,” about which we held a poll back in July. One of the primary aspects of the Foreclosure Prevention Act is the HOPE (Home Ownership Preservation Entity) for Homeowners program, which was intended to:
…insure up to $300 billion for 30 year refinanced loans for distressed borrowers between October 1, 2008-September 30, 2011.
- Project Vote Smart
Two and a half months into to the program, it would appear that the 51% of you that said the act would “have little effect on the housing market” are correct.
From the Washington Post: HUD Chief Calls Aid on Mortgages A Failure
The three-year program was supposed to help 400,000 borrowers avoid foreclosure. But it has attracted only 312 applications since its October launch because it is too expensive and onerous for lenders and borrowers alike, [Secretary of Housing and Urban Development Steve] Preston said in an interview.
…
One of several federal and state foreclosure prevention initiatives facing difficulties, HUD’s Hope for Homeowners program has been especially hamstrung.
…
“Getting the lenders to agree . . . has been our biggest challenge,” said Peyton Herbert, director of foreclosure services at HomeFree USA, a housing counseling firm in Hyattsville. “They want dollar for dollar what’s owed on that loan or something close to it. That’s the fly in the ointment.”
Go figure.
Categories: News
Tags: bailout, foreclosures, HOPE, HUD
By The Tim on November 11th, 2008 at 4:25 PM · 45 Comments
Here are the basics of the latest mortgage bailout initiative from Fannie Mae and Freddie Mac that was announced today by the Federal Housing Finance Agency.
To qualify, borrowers must:
- Have a loan owned or guaranteed by Fannie or Freddie.
- Owe 90% or more than the home is worth.
- Be 90 days or more behind on payments.
- Demonstrate financial hardship.
- Not have filed bankruptcy.
- Presently occupy the home.
Possible remedies under the plan include:
- Interest rate reduction.
- Loan term extended from 30 to 40 years.
- Deferred principal.
Note that principal reduction is not among the possible remedies (nor should it be, in my opinion). What this means is that this plan is really only useful for individuals that really want to keep living where they are now for an extended period of time (10+ years). If you owe $400,000 on a house that’s only worth $300,000 and you want to sell a year or two down the road, reworking your loan in this manner will be of little help.
The plan goes into effect December 15th.
I’d also like to briefly address a quote from FHFA Director James B. Lockhart that appears in the press release:
Foreclosures hurt families, their neighbors, whole communities and the overall housing market. We need to stop this downward spiral.
Note that when a family goes through foreclosure, it’s not as if they end up on the street. They simply have to go back to renting, which is often financially where they probably should have stayed in the first place. And somehow I don’t seem to recall ever hearing high-ranking housing officials saying the converse of the above statement during the inflation of this ridiculous bubble:
Skyrocketing home prices hurt families, neighborhoods, whole communities, and the overall housing market. We need to stop this upward spiral.
But now we have to do anything and everything to (attempt to) keep home prices at ridiculously high levels that prevent financially responsible families from becoming homeowners? Nonsense.
Categories: News
Tags: bailout, Fannie, FHFA, Freddie, government_meddling, loan modification, loans
