Lamenting the Housing Stimulus Bill

avatarthumbnail.jpgPresident Bush signed H.R. 3221, otherwise known as the Housing Stimulus Bill, into law. NAR is rather excited about the bill … but I’m not so sure.

One of the more talked-about provisions is the $7,500 tax credit for homebuyers … except it’s not really a pure tax credit. Rather, it’s essentially a 10-year tax-free loan available only on qualifying purchases (foreclosed or “recently built” homes) and available only to qualifying buyers (like anything tax related, there are some income limits built into the process.)

I guess the mere fact that the credit is less robust than first suggested leaves me less sanguin than I was yesterday at the thought of incentives only being offered on the purchase of foreclosed homes. The last thing your average home owner needs is for there to be additional incentive for buyers to ignore their homes for sale in favor of a bank-owned “deal.” (Note to Congress, et al: REOs are selling at a much faster rate than the rest of the real estate market.)

Another provision in the bill does away with down-payment assistance programs such as Ameridream and Nehemiah. Through these programs, sellers could help buyers with their down payments in addition to closing costs by making a contribution to the non-profit (with a nominal processing fee attached.) As of October 1, those go away.

I understand the concern about the percentage of FHA purchases being made through these programs, or at least I try to. For the most part, people qualifying for FHA loans legitimately are qualified to buy. You’re not seeing the shell games played with an FHA loan that you saw with sub-prime loans.

The only thing these buyers lack is sufficient money for a down payment. Having been in that situation myself, I can empathize with their plight … they have the credit, they can afford the payment and all they need is a helping hand to get them into their home.

Now that opportunity is gone (or will be shortly) in favor of tax credits that do next to nothing when all is said and done.

NAR can celebrate the “victory.” Me? I’ll take a pass.

Others opine:

[tags]Phoenix real estate, Ameridream, Housing Stimulus Bill[/tags]

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at


  • Frank Jewett 10 years ago

    Yes, making foreclosures more attractive than seller owned properties will likely push more sellers into foreclosure. As usual, the government didn’t think through their “REO infill” scheme.

    Flippers in So.Cal have solved the down payment problem by gifting 25% of the agreed purchase price to the buyer, adding that amount to the purchase price, and finding a friendly appraiser to sign off on the new price by ignoring every distressed sale in the area.

    It looks like fraud continues apace, though now the lenders are Wells Fargo and B of A instead of WaMu and Countrywide.

    As for NAR, everything they do is a “victory”, right?

  • Jonathan Dalton 10 years ago

    I think making every achievement, no matter how dubious, a victory is part of spin, Frank.

    And I’ve not met many friendly appraisers … Except for maybe Donnell on “I Survived a Japanese Game Show.” He seems nice.

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