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How about a tax credit for ‘responsible’ homeowners?
November 4th, 2009, 3:50 pm · 37 Comments · posted by Mathew Padilla
The Federal Reserve today left a key short-term interest rate unchanged at near zero percent and said again it will wind down purchases of mortgage securities through March. Here’s how some market watchers reacted to the statement:
Jeff Atlman, partner with WestCal Mortgage Corp. in Tustin
“I think it was the right move on the Fed’s part. With inflation being benign and the economy at a crossroad where we are not sure if it can sustain a long-term recovery, they really have limited options. They will continue to purchase mortgage-backed securities and at some point the economy has to show a lifeline of its own. I personally have always said that Washington must realize that our economy will not turn around until jobs return and the housing market turns around. The brains in Washington D.C. are placing laws into effect that are actually hurting consumers (HVCC law, MDIA law etc.). Extending the homebuyer credit would be a positive, but they need to add an incentive to the people who are responsible homeowners and offer them a fixed tax credit as well, such as $6,000 or $6,500.”
Jack Kyser, founding economist of The Kyser Center for Economic Research, LAEDC
“This decision wasn’t unexpected. Our reading of the local economy is that it has hit bottom, but there isn’t much upward momentum yet. Small-to-medium sized businesses complain that they can’t get bank loans. They are also concerned about potential costs imposed by healthcare reform. So it is still tough out there, and keeping rates low is a good decision.”
Jeff Lazerson, a mortgage broker and founder of Mortgage Grader in Laguna Niguel
“We should consider ourselves lucky if inflation pressures force the Fed to raise rates by 4th quarter of 2010. Banksters are being scrooges when it comes to small business lending as well as commercial and residential property lending. We will be stuck in double digit unemployment for some time. The good news here is that Federal Reserve Chairman Ben Bernanke is learning the game of posturing. He didn’t say anything to upset the markets.”
More from this blog…
- Refi demand up, purchase down on drop in rates
- Price rebound parallels foreclosure drop
- Foreclosures just 4% of homes for sale
- Cash-out refis at 6-year low
- Minorities get fewer mortgages. But is that bad?
- Loan aid firms skirt ban on advance fees
- Reader owns too many homes for another loan
- These homes are about to be foreclosed
- Fed ending Treasury purchases. Will rates rise?
- Big home-loan limits likely to stay till 2011
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“Extending the homebuyer credit would be a positive, but they need to add an incentive to the people who are responsible homeowners and offer them a fixed tax credit as well, such as $6,000 or $6,500.”
WTF!
How do you define “responsible homeowners”?
It is about as creative a definition as “jobs saved.”
Obama definition: Home debtors who are only 3 months behind rather than 12 months…
Wasn’t the reward for being a responsible homeowner the ability to refinance at 4.5%. I did. It will save me a bundle.
I consider myself a responsible homeowner and can’t refinance because my house is too upside down. I put over 20% down - so I wasn’t high risk enough for my loan to be sold off. The original lender kept my loan and now has no obligation to offer me anything. We have had a significant income drop and have been trying to hold on and ride this out- no help for me on the way. But in the mean time I am paying for everyone elses home.
I like the idea. Why reward the greedy and foolish who over bought/over financed? Give the breaks to those who’ve lost their jobs, the rest should face the music. The foolish and selfish have hurt equity sellers by driving down prices with short sales and foreclosures. I know of someone who hadn’t made a payment all year, closed on a short sale of their home and has been approved on a mortgage for a brand new home. I don’t know what astounds me more: that the industry and the clowns in Congress allow this to happen or that people like this can look themselves in the mirror.
Supporting repsonsible people and people with the means to pay their mortgages goes against the Obama agenda.
You are absolutely right SC2…
Obama is not doing this for the benefit of people losing their houses, no one cares about them. It’s all for the benefit of the banks. I wish people would realize it doesn’t matter who is in office, the same thing will happen, it’s just the other party tiring to fool you. Both parties are just working for the banks, that where they get their money from, not you and I.
How about getting rid of all tax benefits for home ownership? You shouldn’t be rewarded at the expense of people who are either unable to purchase or are financially savvy enough to realize that home ownership is not a net positive investment (interest over the life of the loan, property taxes, association fees, maintenance, and an overall rate of return only slightly edging out inflation in the post-WW2 period all combine to make home owning hardly the “you’re not throwing money away unlike renting” that people like to spout). Owning a home is a luxury (and a wasteful one at that).
That would kill the housing market. Its not rewarded at the expense of the people who can’t purchse or are not savvy enough. Those people don’t pay the taxes. Owning a home is the “American Dream.” so what if some people consider it a luxury.
The market is in the tank anyway, may as well shoot it and put it out of its misery and start over. As for this American Dream, no such thing, it’s a statement concocted and marketed by the government. Probably learned a thing or two from Hallmark who bastardize and commercialize every holiday for the sake of money. Apparently the American Dream statement worked and some people actually buy into that bulk. I dream of winning the lottery, but chances are slim. But you don’t see me crying about it. Welcome to reality.
Yes… get rid of the tax benefits because people who can’t purchase a home don’t receive them… Truly the downfall of America
Mike,
Haha… Home ownership is luxury… yeah right. Unless you’re content to live on the street, you need a roof over your head. It’s not about investing, but about getting the most bang for your buck in the long run. You can lock in a house payment for the next 30 years while inflation forces ever higher rent payments. If you are a smart homeowner that pays down the mortgage and doesn’t use the house as an ATM, then you can have the freedom of NO payment ever again in due time.
Slightly edging out inflation would be what… a 3.5% gain per year? That’s as good or better than people are getting on CDs. Now leverage that with a 20% down payment and you’re getting a 17.5% return on that down payment, and the government gives you tax breaks on that profit making it even better. Besides Warren Buffet, not many folks are able to consistently get that kind of return from stocks.
Cry me a river angry renters.
We have good and smart people in the US, but they are NOT in Govt.
With unemployment benefit at more than 52 wks, why not take a year off for a long vacation instead of searching for a job.
No incentive to get off unemployment.
Uh, last I checked you have to be actively looking for a job to receive unemployment.
And the “incentive” would be that unemployment doesn’t pay as much as a job.
Next time, spend 5 minutes on Google before you embarrass yourself.
Actively looking could mean surfing the net for a few hours a month. Unemployment could supplement your rainy day savings.Sounds like a win/win.
HAHAHAHAHA.. “actively looking.” Sir, it is you that has embarrassed yourself. Actively looking constitutes checking a box that says I tried looking for a job this week.
And as for the pay..
A) Work full-time 40-60 hours a week and make 100%
B) Do absolutely nothing and receive 50% of your normal pay…
I have seen studies which show the best predictor of when someone who is unemployed finds a job is when unemployment runs out. The requirement of “looking for a job” doesn’t require a serious effort. In an economy as bad as we have, I don’t doubt that there are many looking who can’t find a job, but extending unemployment benefits undoubtedly has the effect of delaying serious efforts to find employment by many. There are plenty of people who would take a 25 percent or 50 percent pay cut as an extended vacation and/or work under the table until the benefits run out.
This is especially true for people who might have to accept new jobs for less money anyway. If you have to choose between working 40 hours a week for a 25% pay cut or a zero hours a week for a 50% paycut, which would you choose?
Hey buddy, were you ever out of work for a year? it aint any fun despite what those fools on talk radio are telling you.
I was out of work for 3 years. However I was also smart enough to save money as a general practice before hand to keep me going. I sucked it up, sold most of what I had. Moved back in with family and friends. Went back to college in the mean time. I didn’t sit around asking for another check and looking for a job. I planned for a very rainy day and also looked to improve myself. Whats your excuse?
I ain’t got no excuse. It took me 15 months to get another job in 2003. Who the hell are you to ask for an excuse? I’m surprised some blowhard like yourself can be employed.
Tom has a major chip on his shoulder.
Bums..both of you.
So, does this mean investors, brokers, etc that are buying up these homes on the cheap are going to be able to take advantage of the 6,500 credit?
How about a tax credit for the responsible homeowners that worked hard over the years, made all their payments on time, and paid off their mortgage……the line of people wanting something from the gov’t. would just get bigger and bigger. Do away with the “realtor induced” incentives, via the government, and let the market take care of itself. A tax incentive for couples making nearly $250,000 a year jointly….you’ve got to be kidding.
Talk about a lame idea, lets reward people for doing what they are supposed to do per the loan docs that they signed.
If this happens then the Govt needs to give a tax break or credit to those that could have bought a home but were smart and used the chunk of meat between their ears to realize that they will not be able to afford the ARM rate reset. Not to mention that they don’t want to gamble that they will be able to refinance in 2 years or sell the overpriced property to collect equity (for more details on this google gambling)
I mean come on, we are adults. I thought that we stopped getting gold stars for being good in grade school.
Instead of this tax break crap our Govt needs to get on the ball with the Job hemorrhaging. We need to put people back to work, then they wont get behind on their responsibilities. Let those that lived frivolous and outside their means fall on their face if they haven’t done so already.
Shadow, you know my opening sentence was mocking the entire idea of tax credits, don’t you?
Sorry Bill-1a, wast responding to your post I was responding to the title of the blog. But yeah I do know that you were mocking the idea.
Yah… lets give those that are already wealthy enough to pay their mortgage even more money. Who cares about the poor people. They should learn not to be poor. In fact… who cares about the middle class… lets just give all our money to the top 1%. That is essentially what is already happening. I’m sure that those 1% do 99% of the work in this country. The middle class and poor are a bunch of slackers.
No , they just work 99 % smarter !
99% smarter at gaming the system at least.
You are absolutely right Mike…