I have no idea how accurate the information below will be relative to the final stimulus bill when it passes. However, for homeowners and those thinking about purchasing, this post articulates the components of the stimulus package that relate to real estate and housing. Thanks Gerry for the contribution...
New Update!- as of 3:30p EST Speaker Pelosi states the revisions are still being drafted and the House Vote has been postponed until tomorrow to allow for time to review the language. As of this moment there are still no new updates on the Library of Congress site. I will continue to check and likely post a new blog once the info is available. As of this time most press sources are reporting the tax credit has been reduced to $8000 max- FYI.
UPDATE! As of 9A EST, 02/12/09- We have all heard conflicting reports that the $15k tax credit provision has either been scaled back or removed completely! The Library of Congress link below still shows the bill including the tax credit but this is politics folks, things can and often do change at the last minute.
If you think it's the big deal everyone obviously thinks it is we should ALL be calling our US Representatives. You can get contact information for your Rep at the following website:
I strongly suggest you call the DC office and at least leave a message indicating your support for the tax credit. I have called my Rep and have a message into his staff to verify if the bill currently includes the tax credit or not. I'll be updating this post as the news becomes clear, and when I say clear it means I see it on government websites or I hear it from my Representative's staff.
A cursory review of the bill agreed upon by the House and the Senate today shows a number of changes to what both sides had originally wanted. On the plus side it looks like the final tab has been reduced a bit. On the downside it looks like housing didn't get the boost it certainly deserved. Here are the items that impact us the way I see them. Bear in mind the bill has not had its final vote but change at this point appears less likely. Also, the draft of the bill is undergoing constant update so some of it may not be reflected accurately.
•· We got our 10% to $15,000 tax credit, and there doesn't appear to be a repayment provision! Kudos to NAR and the National Association of Homebuilders for getting that win! It does appear the credit can be claimed as a 2008 purchase and you "may" divide it up to receive half then and half next year. This will allow our buyers to amend their current 2008 taxes to reflect the purchase and receive the credit quickly. The purchase must be a principle residence but the credit is NOT limited to first time buyers. Should the buyer sell or fail to occupy the home as a "principle residence" within 24 months of purchase, the amount of tax credit received will be due on their next tax filing. There are a few exceptions to the recapture provision such as death and divorce (same thing isn't it-J). The new credit will last for 1 year after the date this bill becomes law. Do note the old system of $7500 that must be repaid goes away the day this new bill is enacted.
•· USDA is getting over $10.4 billion for the guaranteed program alone. Although that may not be enough to fund the rest of the year it's a big jump from the approximately $7 billion that was used last year. This demonstrates the administration's commitment to the USDA Rural Development loan program.
•· The Hope 4 Homeowners refinance program is being tweaked to allow for hardship in the case of "decrease in income". The private mortgage insurance factors are also being reduced to no more than 2% up front and 1% annual. There is also a provision to entice lenders that have these loans to refinance. They can receive $1000 or more for "performing services associated with refinancing" such mortgages.
•· Mandatory mortgage loan modifications and a Foreclosure mitigation section that refer to the $50 billion the Treasury is allocating to mitigate foreclosures. Details were sketchy so look for more on this. Do note the lenders servicing these mortgages could receive payments not more than $2000/loan to modify them and seem to be granted the authority to do so if it seems reasonable that not modifying the loan will result in a bigger loss. I think this can be potentially huge if the private sector embraces it.
These are the salient points I could find for now but the bill is HUGE! If you want to try to pour through it you can access it here but you will be required to refresh your screen often as changes are coming in constantly. Many sections were stricken including provisions continuing the higher FHA loan limits and the reinstatement of seller funded down payment assistance wasn't there; but again, the cost was reduced and that is always a good thing!
Gerry Suarez, Jr.
Your FHA Loan Pro!
Ron Margolis, RA, CDPE, ABR Hawaii Life Real Estate Services 808.346.7095 email: firstname.lastname@example.org