Last week, National Public Radio reporter Mike Pesca sent me a link to the GOPs latest proposal for “The Responsible Homeowners Act” (PDF file). It contains several provisions, including the resurrection of the $15K home buyer tax credit that was briefly a part of the Stimulus Bill passed in February (and discussed on this blog at length).
Here’s what is in the plan with regard to a $15,000 Home Buyer Credit:
$15,000 Home buyer Credit: To spur home purchases across-the-board, House Republicans propose a $15,000 home-buyers credit for all purchases of primary residences provided that the buyer puts 5% down (covers purchases made before July 1, 2010). The down-payment requirement encourages responsible home ownership and will ensure that we do not repeat the mistake of the past where individuals ended up with more home than they could afford through the use of zero-down-payment loans.
Mike asked for my thoughts on this, and here’s what I told him:
This sounds *very* similar to the original $15K proposal that was nixed before the bill reached the President.
There was not (that I recall) a down payment requirement in that original version.
The down payment minimum of 5% concerns me for one reason — the current down payment requirement on FHA loans is 3.5%. So by requiring a minimum of 5%, many FHA buyers may be excluded. I understand (and agree completely) that some down payment should be required, but to exclude FHA buyers is not a good idea in my opinion. The best solution would be to simply write language along the lines of "a minimum down payment of 5% will be required (3.5% for those using FHA loans)". Or something to that affect. Obviously I’m neither a Congressman nor an attorney (nor do I have any desire to be either!).The original plan also allowed for the $15K credit to be split equally across two years. I think it’s important that stay in this new plan as many (MANY) people do not have $15K of tax liability in one year. I don’t see any mention of this in the link you provided (and thanks for that by the way!). I’d also like to see the credit be "refundable" like the current $8K credit and not require re-payment (like the current credit and the original $15K proposed credit was.) I understand this document is likely just a summary and doesn’t include all the details — or maybe they haven’t even worked out details yet.
I *really* like that it’s not limited to first time buyers only.
Also of interest in the proposal:
- A $5,000 refinancing credit.
- Incentives for voluntary refinancing to keep homeowners in their home.
- Mortgage modifications, not lawsuits.
- Incentives for neighborhood investors.
- Not rewarding those who created the problem.
There are not a lot of details in the plan summary but it is, if nothing else, thought provoking. The text of the full bill is available here. I haven’t had the time to read it, but it apparently goes into far more detail that the summary linked to above.
H.R. 1903 was introduced in the House on April 2 and was subsequently referred to the Committee on Ways and Means as well as the Committees on Financial Services and the Judiciary. There are 11 co-sponsors, all Republicans. Given the current make up of the House, I have a feeling this one will die in committee…
We’ll be keeping track of this and bring you whatever we can dig up!
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I thought refundable meant you could get a credit in excess of your tax liability. Your comment about folks not having a $15k liability makes me wonder if you have some reason to believe the proposed credit could not exceed your tax liability. Doubt it, just wondering.
Totally agree with your comments about FHA and also not limiting to first time buyers.
Nice catch, Jay. Thanks for sharing!
**Evan Fuchs´s last blog post..Boys and Girls Club Gets New Executive Director, Tomlinson
Evan – I think you’re right on the meaning of “refundable”. The current 8K credit works that way. Without digging, I can’t remember if the old proposed $15K was completely refundable, but I distinctly recall that you could spread it evenly across two years (which leads me to believe it could only be applied to actual tax liability).
The answer about this proposal is likely in the actual legislation. If it progresses at all, I’ll dive in and read it.
Jay,
This is good news. One other very nice provision in the original. The property didn’t have to be a primary residence. We do tend to have a few of those in AZ.
Dave
I had not heard about a refinance credit but I like the sound of it, and I’m sure that everyone would jump at that. My market is in Virginia, and I gave a little insider tip on my blog to Virginia residents. There is a tax exemption when you refinance with the same lender… bit a there are a few things to watch out for and you can see it on the link.
Like your site!
-doug
Ridiculous. This is nearly the same as something that was part of the original bill but was removed because the Reps did not like it. Now they suggest a nearly identical idea as their own and insist that it’s brilliant.
**Portland Real Estate´s last blog post..Mid-Century Modern Homes in Portland
Uhm, the original $15K credit was placed into the Senate’s version of the stimulus bill via an amendment introduced by Republican Senator Johnny Isakson, but was removed in the compromise version — which was passed overwhelmingly by the Democratic Party controlled House.
As I recall, not a single Republican in the House voted for the compromise version of the bill…
This seems on its face to be rewarding those that never caused the problem in the first place. I doubt that the vast majority of foreclosures came from people who sacrificed a 5% downpayment only to lose their homes. This also does not reward our veterans with VA entitlement. Having not read the bill, I suspect there may be some language added (or already in the bill) to accomodate those who sacrifice daily for us all. Navy Chief, Navy Pride.
**Joe´s last blog post..1st Quarter Augusta GA Home Sales Summary
that is a good post
thanks for sharing
The bill needs to be written to include FHA and VA buyers. As it stands, I don’t think it has a shot of passing.
Ok good, the GOP has gotten off the lets hope Obama fails stuff and decided that failure is not a option. 15K is a whole lot better then 8K and in a market such as New Jersey where starter homes are over 300K it makes a big difference.
I really like the idea of not limiting it to first time buyers. If we are trying to stimulate the market they should open up the criteria.
I would also like to see something to open up lending. We have had more problems recently with lending. Buyers with good credit being denied loans because they dont have 2 paystubs from their new jobs (since they just moved)
**Houston Real Estate´s last blog post..Home Sales increase from February, but down from March 2008
I have been following Johnny Isakson’s quest to have the $15,000 credit implemented and it’s quite compelling. While I think the current $8,000 credit is GREAT, it is too limiting in the fact that it’s ONLY for first time homebuyers. A lot of first-time homebuyers are still having trouble obtaining financing whereas seasoned homebuyers may not have as much trouble. Opening it up to ALL homebuyers is definitely the way to go. But…I disagree with the 5% DP minimum and also agree that FHA/VA must be included. With around 50% of all loans right now being FHA, it would again be too limiting to make the credit only applicable to ones able to do 5% DP.
The bill needs some work before it will get final approval, but I for one am following along closely. Good post!
It will be interesting to see where the money comes from for this one. Although I support this idea, I just don’t know how they can get this past Pelosi or Reid.
**Steve´s last blog post..Don’t bank with your mortgage lender if…
I’m afraid this one’s gonna be an uphill battle. Even if the Dems like the idea, the idea of allowing the conservatives a victory would stifle this nice home buying incentive.
**Colleen´s last blog post..Country Ridge Homes | Richland Washington
I agree it would be a mistake to shut out FHA buyers but do like that it would be able to be used by all buyers, not just first time home buyers! You do such a great job of keeping us all up to date on what Congress is passing around-thanks! We will see if this dies in committee or not, soon!
It will be interesting to see if the bill passes this time-it would be a great benefit to you all, so I hope that it does.
I don’t know where the money will come from or how they will get the Dems to vote on it-we will have to see, but I do hope it comes through, there are some great details that could help a lot of people with buying homes right now.
**Margaret Safford-Metro Atlanta Real Estate´s last blog post..Does the Metro Atlanta Real Estate Market Mimic the New HGTV Shows?
Maybe this will make a difference. We need something to light a spark in this housing market. There’s some great real estate prices out there we need some determined home buyers.
**Brad´s last blog post..Bakersfield Homes for Sale
I like Republicans. One thing I don’t get about Democrats is how they think that a massive, big government that pays for itself by taxing the daylights out of everyone is somehow a good thing. Our founding fathers left England because of an over-taxing king. Our founders didn’t even want the government to know how much money people made because they thought that was an invasion of personal privacy rights and they knew it would lead to power grabs by politicians. Too bad our founders are dead and Obama is in the White House!
Have you heard anything else on the 15k tax credit the house republicans were wanting to pass? I have been trying to follow when the next vote comes up, but had not heard anything and was just wondering if you had.
The RE agent drop in income story has other facets.Agents incomes are way down. The figures calculated are probably directionally correct overall. What makes things worse for the agents is that they're not doing 54% less work, or incurring 54% less out of pocket costs. Many pay for system access and certain RE related services out of pocket. With income reduced but expenses holding steady, the reduction in their net income is more pronounced. Many of these agents are also spending significant amounts of time and energy working on short sales. Few of these transactions end up closing and yielding commission $ as many banks are dragging their feet on dealing with problems. The only people who seem to have it worse are the spec builders. Many are being boiled alive as the problems they put off in 2008 by renting out unsold inventory are now snowballing into massive losses.
Looks like Real Estate is making a rebound. I see a lot of new sales in my area, here in San Diego. That should get the local economy moving a little. But, the national economy is in the hands of a clueless submarine commander.
Looks like Real Estate is making a rebound. I see a lot of new sales in my area, here in San Diego. That should get the local economy moving a little. But, the national economy is in the hands of a clueless submarine commander.
Does anyone know who or where i can write to in regards to the 2008 “Tax Credit” or interest free loan of $7500. I don't fell that it is fair that in 2009 people would get $8000 “Tax Credit” that they DON'T have to pay back. I feel that we should be allowed to keed the money without paying it back, or that those in 2009 should have to pay thiers back as well. Those of us who purchased a home last year helped the economy as much as those who purchased in 2009. If anyone has info please e-mail me at KJS7654@cox.net Thank you!!!
“Unhappy home buyer” –
About all you could do is write your representatives in Congress and the Senate. They are the ones that passed both bills.
I sure wouldn't hold my breath though… there is no way they'll change either program.