As the, so far, jobless recovery continues, the White House is reportedly hunkered down trying to figure out what to do next. Obama administration officials are taking note of programs that have worked and those that have not done as well.
Among the programs that apparently fall into the “success” column is the $8,000 tax credit for first time home buyers.
The tax credit for first timers was part of the $787 billion dollar stimulus program and is being credited with helping the real estate industry stage a modest comeback—at least among first time home buyers.
All indications are that the tax credits will be continued well into 2010 and maybe beyond. Some legislators have even suggested that the credit amount be increased to help sales in places such as coastal California, where home prices tend to be much higher than in many other parts of the nation.
While helping first time buyers is great, we are still struggling with what to do with current home owners who cannot afford their mortgages and face foreclosure…still a growing problem.
With the unemployment rate expected to only get higher in the months ahead, and with thousands upon thousands of mortgages on the verge of resetting soon at much higher rates, no real recovery in the real estate market is likely until the foreclosure problem is dealt with more effectively than it has been. And, so far, it hasn’t been dealt with effectively at all.
The president still is resisting going to bat for a change in bankruptcy law that would allow judges to adjust mortgages–something he strongly advocated as a candidate.
And, despite some self congratulating newspaper ads, most major banks have been loath to adjust homeowners’ mortgages by any method other than reducing interest while leaving principal alone. Not a good way to go about this, many economists argue.
Helping lots of first timers buy a home while allowing countless current homeowners to be booted from their properties makes little sense…politically or economically.
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Article Author: Charles FeldmanCharles has written 179 articles for us.
Visit Charles's Website: http://www.thefeldmanblog.com
Charles is currently reporting for KNX Radio in Los Angeles, is the co-author of the book No Time To Think, and can be found commenting about the news on his blog, The Feldman Blog, as well as on The Huffington Post.
Joshua Dorkin
{ 6 comments… read them below or add one }
Throwing money at the problem doesn’t seem to be the answer. I saw a stat today that says 50% of loan mods are once again facing foreclosure.
At least some of the current problem is personal responsibilty
Thanks for a good article
The first time buyer program is a great tool to get first time buyers (or at least if you have not owned a home in three years) to get out and buy a home. But does this solve our nation’s crisis-unemployment, foreclosures and failing banks? No, really we need to go back to the American trade act. We need to tax foreign companies that import items to sell in our county and we need to start making our own goods-the only way to turn this country around is to close the trade and start manufacturing HERE in the good ol’ U.S of A. Thnaks for a great article!
The housing “recovery” has been artificial. If the credit does not get extended, we will see sales fall. If it extends, we will see more money give away that future generations will have to pay for.
As for loan modifications, I don’t like that idea. Investors buying mortgagge backed securities will want a higher rate of return if they are buying assets that can create a loss. That will lead to higher interest rates.
I have heard all kinds of reports. The tax credit will be moved to $15,000 seems like the consensus right now.
Agreed, that we still have a large list of bigger problems.
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I hope that the government renews the $8,000 first time buyer tax credit. Even though it is not a permanent solution to our problems, I think it has boosted the real estate sector. However, we are still a long shot from having a thriving economy again. Thanks for the article!
I agree that the first time home buyer program works and should be extended.
I also think the way Home Affordable Modification Plan (HAMP) has not been a success and should be changed.
I think more emphasis should be on streamlining Short Sale approvals and Guarantee losses Investors will have to take on some of these toxic mortgages.
Finally back to the first time home buyer. I think FHA needs to be available for first time home buyers and talk about changing the down payment should be avoided at all cost.
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