...Or What H.R. 3221 means to me.
Do you ever feel the more things change the more they stay the same? H.R. 3221, a.k.a., "The Housing and Economic Recovery Act of 2008" is just one such example. Granted, I have not delved into all 260+/- pages, but from what I have skimmed over, and tried to read, this act is not in actuality the panacea we are hoping for. In my opinion it's not even a high quality band aid.
(Or am I a duck out of water here?)
Let's start with the $4,000,000,000 in aid to those states and government localities for the "emergency assistance and redevelopment of abandoned and foreclosed homes" to be allocated to these areas based upon a funding formula from HUD. Currently, there is no allocation formula or a viable plan on the table for this allocation. However, HUD has 60 days to come up with a plan and another 30 to implement it; so we are at a minimum 90 days out from an actual start to this plan. I don't know about your locality, but 90 days will see more than a few more homes go to foreclosure, sit at county auction and return to the bank that holds the note. Where is the "recovery for these individuals or are they just a necessary loss on the way to recovery?
And "Riddle me this Batman..." what happens when the localities buy back these properties with government funds (also known as our tax dollars) to "refurbish" these houses? The banks get paid, but then the property is at the mercy of it's locality to liquidate after rehabilitation. Has anyone stopped to think what type of financial burden creating a program to manage these properties will create on the individual localities and how that portion of this grand plan is to be paid for? Now as local and state tax payers we possibly have the added joy and burden of helping further offset this investment until qualified buyers are located and these distressed homes are liquidated.
Here in Central Oregon, we have great prices and great inventory we just don't have many qualified or cash ready buyers given the tightened lending restrictions and lack of private market competition against Fannie Mae and Freddie Mac. By eliminating the Down Payment Assistance Programs H.R. 3221 has ensured that we have even fewer qualified buyer's than before. And I personally would like to see the statistics that supported the thought process that first time home buyer's using these programs are the bulk of our defaulted properties as in my locality during the "boom" years we had little concept of Nehemiah, or other down payment assistance programs and generally used the conventional financing vehicles offered at that time.
Then of course there is the ubiquitous "First Time Home Buyers Tax Credit." In actuality, what we have here is a first time home buyer's tax advance/loan. The actual amount of this "credit" is tied into gross adjusted income therefore the entire $7500 is not available to all buyers and decreases in proportion to the buyer's income. However, what needs to be made crystal clear is the fact that this is a loan to be paid back over 15 years and not a gift. Beginning with the 2nd year of home ownership and ending with recapture of the balance owed at time of sale or final payment in the 16th year of ownership.
In closing, while solutions to our housing market crisis are needed H.R.3221 is not the answer we think it is. At best it is political "smoke and mirrors" act to allow our government officials to look involved and concerned in a process they obviously know little to nothing about while seeking reelection in their districts this year.
(The Views and opinions expressed within this post are those of the author's soley; they do not necessarily reflect the views and opinions of COAR, OAR, NAR or the other agents of Desert Sky Real Estate, LLC.)