- Three female fugitives wanted in New Jersey restaurant theft arrested in Illinois
- Man guilty in 2012 crash into home that injured 8-year-old
- McDonald’s: Federal complaint says company is joint employer
- T-Mobile settlement: $90M for cell phone bill cramming
- Shelter Care Ministries gets $30,000 grant
- Even more dead bees?
- Holiday travel: 98.6 million plan getaway, most on record
- Scam artists posing as utility reps, demanding payment
- Holiday mailing deadlines approach, Rockford Post Office warns
- Hispanics more than half of all renters, yet most are uninsured
On Real Estate: Tax credit deadline approaches, talks of extending credit swirl
By Jim Hagerty
As expected, millions of first-time home buyers jumped at the chance to purchase when the federal government began doling out up to $8,000 on every first-time sale. Some, however, have been left to battle stringent underwriting and lack of loan programs. With the deadline to purchase using the first-time tax credit inching closer, it’s fairly clear a buyer’s market is still ripe for the picking in most areas of the U.S.
First-time buyers must close by Nov. 30 to qualify for the tax credit, part of the American Recovery and Reinvestment Act of 2009.
As expected, the program has created a slight increase in sales since the real estate market hit the skids about two years ago. However, the results are hardly what the Barack Obama administration predicted earlier this year.
To those in the industry, having the tax credit pulled now could send the industry into rewind, especially when the overall economy is still shaky, at best, in most U.S. cities. This is why the National Association of Realtors predicts an onslaught of applicants in the next few weeks. It is also time for the feds to keep abreast of the president’s promise to fix the housing slump.
There’s no secret Obama inherited a hornet’s nest when he took office in January. The American auto and real estate industries were on the brink of implosion, as major banking players on Wall Street were pummeled with losses. The president, in turn, pushed to save the day. That push included billions in federal assistance dollars that many feel should be kept flowing, especially to first-time home buyers. According to the National Association of Realtors, a cry to Congress for an extension of the tax credit is not only being prepared, it may come with a request to increase the credit from $8,000 to $15,000.
Any increase, like anything else, looks wonderful on its face. The feds, on the other hand, will be looking closely at what an extension will cost. Estimates show any increase could come with a $15 billion, or more, price tag. With the current underwriting process taking as long as 60 days on new home loans, a score of tax credit-loaded buyers are stalled waiting for closing dates.
Some states are offering additional assistance programs aimed at sparking the housing market. Zero-interest second liens, rehab loans and 100-percent financing options are making their way back into the financing fold. First-time buyers are still at the mercy of some of the most stringent underwriting in about two decades.
Industry pros say an extension makes sense, especially in areas hit the hardest by the housing crash. With more than 15 percent of the Rockford population out of work and an overflowing housing inventory, an extension of the tax credit makes nothing but sense. However, with unemployment comes a stall in home financing, a problem many cities are facing. Mortgage rates are low, and programs through HUD are attractive, but again, the out-of-work are out of luck.
From the October 14-20, 2009 issue