Obama plan for new homeowners

[gamecock43]

I just heard a rumor that Obama has a plan to give new homeowners 10% of the purchase price of a house effective April 08 to Dec 09 (up to $20,000) in cash- no loan. I heard it's "in writing" not official yet. Must pass, but thats what Obama is aiming for. BTW- must be an existing house, not new construction. I am looking for the link now to post.

[kork13]

.........are you freaking kidding me?? If this is true, I think I'll be writing a number of letters fairly soon to a few members of the congress. Sorry people, but that's a joke. No way should the government be giving people $20k straight up, even if directed toward a house. Low-cost loan? Okay, I could live with that. But free money? let's be serious here....

[fruitbowlk]

That would be great. Hopefully I would be able to get on with that. I just would need an extra 10,000.

[maat55]

I don't know why this country does not just skip socialism and just jump right to communism. It's a long boring ride for the capitalist that know we are headed there anyway.

[ScrimpAndSave]

20% or 20k?

Oh...nevermind...I read the post too fast.

Wow this is interesting...

[jIM_Ohio]

like extreme home makeover, what assurances would the taxpayers have that the new homeowner would not take a 2nd mortgage out to spend that 20k?

[maat55]

If there is any thread of capitalism left in Congress, this would go down in defeat just on principle, but it is a vision of the possible waves of socialism to come.

I would like to believe that Obama will do the right thing. I question whether he even knows what it is.

[gamecock43]

wait...I'm reading it now on the internet, I'm interpreting it as a 10% Mortgage tax cut. Actually, I'm not sure how to interpret this....

pasted from: Stimulus? Okay, but what about housing? - Jan. 9, 2009

"Offer bigger tax break to home buyers: NAHB has been pushing for all home buyers to get a temporary tax credit for buying a primary residence worth up to 10% of the purchase price. A tax credit is a dollar-for-dollar reduction of one's tax liability.

Currently, only first-time buyers may get a temporary tax credit worth up to $7,500 for a limited period of time. But that credit functions more as an interest-free loan from Uncle Sam because the home buyer has to repay it over time.

Neither Dodd nor Senate Finance member Charles Schumer, D-N.Y., speaking to the press on Thursday, endorsed the idea of an actual tax credit. Dodd said a tax credit would not help prevent foreclosures but could spur economic growth.

And Schumer said there was "broad support" among members of the Senate Finance Committee to make tax policy changes to support housing, particularly existing homes as opposed to newly constructed ones."

[ScrimpAndSave]

Wow...so it is a 10% of the purchase price...but up to $20,000? I know you mentioned $20,000 earlier but I didn't see it in the article.

[kork13]

I sometimes wish I had a button that I could push which would simultaneously smack the Congress upside the back of the head.


...correction: Scratch "sometimes"--make that "frequently"

[ScrimpAndSave]

Here is some more info:

Senator Barack Obama's Partial Homeowners Plan, Homeowners Plan

[gamecock43]

My husbands really excitable father called us telling us Obama is giving us 20 grand off the purchase of our new house and I trusted the relayed information blindly...now that I'm really trying to find what he was reading.

[gamecock43]

I went straight to the source and called the dad, he does not know where he read it, but he read that the Homebuilders association is lobbying for a 10% credit up to 20k off the purchase of an existing home between April 08 and Dec 09. This will eat up existing inventory and stabilize prices. So what the Homebuilders association WANTS and what will get PASSED is somewhere in the middle. But I STILL cant find what he read!

[ScrimpAndSave]

Interesting...I wonder if you can get both the $7500 tax credit interest free loan and alsothe $20,000.

Wow, what a great time to buy.

[jIM_Ohio]

the best laid plans...

Most of the people which are not in a house now would be the same people which had sub prime mortgages before... these would be the same people which would probably spend any equity they had, borrow against any equity the government gives them, or otherwise just delays any recovery the housing market could do with free market principles.

I do agree this would stablize prices short term
I think the people getting the houses would borrow against the new found equity and make a problem come to head a few years later.

Call me a skeptic...

[maat55]

Create a Universal Mortgage Credit: Obama and Biden will create a 10 percent universal mortgage credit to provide homeowners who do not itemize tax relief. This credit will provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.

This looks more like an across the board credit for those who do not itemize. It favors homeowners over renters, but it is obtainable to anyone who will buy or own a home, with the exception of those who itemize.

This is much better than rewarding only those who purchase in the next year, but is still cheating those who itemize.IMO.

[banditfist]

This is the government's attempt to pump the bubble back up on the housing market. Another stupid attempt.
Mean reversion is a pain. Nothing that the government can do to stop it. Forestall it yes, but you cannot avoid the unavoidable.
Will be interesting when the bond market tells the government 'no mas'. When that happens, the gig is up....immediately.

[gamecock43]

Jim, the plan is for first time homebuyers. you cannot have owned a house in at least 3 years...so this might be excluding the sub prime people and heloc foreclosures...given that they started in 07.

[ScrimpAndSave]

So does that mean...if I buy a house in December of this year...

I could put 10% down, have an 80% first mortgage and a 10% second mortgage...

...and then when I get the money with my tax return in 2010, I can put that full $20,000 on my 2nd mortgage to pay it off? That is what I would do if I could...

[gamecock43]

Not the most credible source...but I found this on a TN newspaper article: Chattanooga Times Free Press | Tennessee: Home builders push stimulus for housing

" Home builders are pushing Congress to approve a stimulus to jump-start the housing industry.

“We are calling on Congress to enact some bold measures to fix the housing crisis which is at root of the economic troubles,” said Phil Chamberlain, a member of the Home Builders Association of Tennessee and a home builder in Cordova, Tenn.

The association held a conference call Thursday to discuss a plan called Fix Housing First.

The builders’ effort is part of a national campaign to convince Congress to make changes to a tax credit of up to $7,500 for first-time home buyers, an incentive that Congress approved last year to stimulate the housing market.

Builders contend that program is ineffective because the tax credit must be repaid over 15 years, is provided during the buyer’s next tax return instead of at closing, and is available only to first-time buyers. The credit is available for homes purchased between April 9, 2008, to June 30, this year.

The housing stimulus money would go directly to buyers and sellers, not to builders or real estate agents, Mr. Chamberlain said.

The builders’ plan calls for eliminating the repayment of the current tax credit; providing a tax credit of up to 10 percent of a home’s purchase price, or up to $10,000 in the Chattanooga area; making the credit available at the time of closing; expanding the program to all buyers, not just first-time buyers; and setting a below-market, 30-year fixed-rate mortgage.

Fix Housing First also supports a proposal by Federal Deposit Insurance Corp. Chairwoman Sheila Bair to prevent foreclosures, said Bernie Markstein, a senior economist for the National Association of Home Builders.

Ms. Bair has called for modifying millions of delinquent mortgages to prevent foreclosure, using the Troubled Assets Relief Program, or TARP, which Congress approved for providing assistance to financial institutions."

So there is a discrepancy of up to $10,000 or $20,000...but if money is provided immediately- SWEET! for me! And even if this can apply to all homebuyers...subprime foreclosure people still cant get in on the action because of their credit- they wont get approved for a mortgage.