Idea for 2010 Home Owner Tax Credit - Bail yourself out!

I appreciate the differences of opinion here. It makes for a much better debate than "Nice post ... did I get 25 points?"

Housing has a huge impact on our economy, so we have to treat it carefully.  One of the many problems is that people expected to make 10-20% profit during the bubble and bought more than they could afford thinking this would help increase their leverage without understanding leverage is a double sided sword.

Almost every car owner that is making payments on a new car is upside down in that valuation as well, but I know for a fact that if the loan is paid as agreed over time whether it is on a car or a home a three year payback or a 30; the item being financed will ultimately be paid for and theirs!

I am not in favor of hand out programs, but I do like creative "hand ups".  When I see videos of communities bull dozing new homes under construction instead of donating them to organizations like Habitat For Humanity to finish, I know we need to help do more to be proactive in a solution!

Larry, Great question - Why $8k?  I have never seen any documentation on how they came up with that number.   I will check with NAR to see what I can learn since I have talked to one of their economists that was key in getting it passed to start with.

Chuck, I agree that at a minimum an extension for those that may not get the credit if the fault is not theirs if the home was under contract by 45 days prior to the deadline.  I don't think it should work for someone going under contract November 15th, however since a 15 day escrow wouldn't have been realistic.

Lenn, I agree there is a huge difference between cars and homes and their depreciation vs appreciation.  The main point I was trying to make however was if there original loans were paid off as originally agreed to when they bought (not refinanced afterwards), their original purchase would still be paid off at the term of their loan.

Some people argue the problem is buyers didn't have enough down payment into a home; however VA foreclosures are typically in the lowest bracket of delinquent loans/foreclosures yet they are typically 100% financing!  That is because VA looks at the whole picture including the condition of the home, the buyers family size, residual income (additional debt service); then makes their decision.  Our military is typically more disciplined and comply better with obligations than the typical consumer.  Most military people I know are men and women of honor and stick to their words and see even difficult times through to the end.

I am suggesting that we just consider ways to make recipients of the bailout money be as accountable.

• Maybe we can do the zero interest seconds to be paid back later up on sale or transfer;
• Maybe we should consider shared equity participation loans so what ever the percentage from the government, they share in the same ratio of profit at the end;
• Instead of just giving banks money, why not buy preferred stock with some rules attached so if they don't comply, get seized by the feds?;
• Instead of just giving money for cash for clunkers to then destroy the trade ins, why not have a program to "donate" the trade ins to charitable non profit agencies if they agree to do donate additional time cleaning up or perfecting their communities based on having to donate hours at $10 per hour till they accumulate enough time to get the car?

People that think Realtors are just self serving sales people should read this blog!  Quite a few people are not for tax credits which does support our sales and therefore us.  The problem with trying to forcast the market is that in economics there are two key principles:

1. A stable market;
2. Barring any outside government intervention (programs).