Mortgage Rate Trends, Stimulus, Letter From Sen Johnny Isakson ref to Home Purchase Tax Credit

Mortgage and Lending with John Tuggle, Senior Mortgage Loan Originator, Envoy Mortgage, Ltd. NMLS# 211187



  • One of the side effects of this government spending (for stimulus) is that we must borrow huge amounts of money to fund it.  This is putting pressure on interest rates that is unavoidable.  Mortgage rates are still historically very low although the much hoped for 4.5% is out of our vision for now and probably forever.  The 10 year note (the best gauge for long term rates) closed at its major support level (3%) Friday and hopefully will hold here.  This being said it is reasonable to expect the long term rates (mortgage rates) to float between a low of 5.5% and 6.5% depending on daily fluctuations and adjustments.<?




  • Congress is diligently debating the huge stimulus spending bill that is expected to be finalized and sent to President Obama for signature within the week.  In that bill are a lot of things but primarily there is an amendment to move the tax credit that is currently available to First Time Homebuyers for up to $7,500, to being available to all home buyers and for up to $15,000.  Also, in the amendment's current form the payback provisions that are in the current credit would be waived.  This is still up for debate and until the final bill is completed no one knows what will actually happen.  We all can agree that if this mess started with Real Estate, stimulus for Real Estate can only be a good thing.  I would encourage everyone to call your representatives and Senators and let them know you think the Isakson tax credit for homebuyers is a good idea.  Below is a reprint of Senator Isakson's letter to his constituents and the nation.



Dear Friends,


This week, the Senate continued debate on the American Recovery and Reinvestment Act of 2009, also known as the economic stimulus legislation.  As of this writing on Friday, the Senate remains in session and may work through the weekend in order to finish the bill. 

One of the keys to getting this legislation on the right track and fixing the cause of our nation's economic woes, rather than throwing money at the symptoms, was adding my amendment to stimulate the nation's declining housing market by offering a $15,000 tax credit to individuals who purchase a home in the next year.  The amendment passed the Senate unanimously on Wednesday.


It is rare that we have a road map to success in times of difficulty, but this country has once before realized a housing crisis every bit as bad as the one we have today and economic troubles every bit as dangerous.  We have a pervasive housing problem, and we have a historical precedent from 30 years ago that works. I am proud this Senate has joined together, learned from history and repeated a method that worked by adopting this amendment.


Specifically, my amendment to the pending economic stimulus bill would provide a direct tax credit to any homebuyer who purchases any home. The amount of the tax credit would be $15,000 or 10 percent of the purchase price, whichever is less. Purchases must be made within one year of the legislation's enactment, and the tax credit would not have to be repaid.


My amendment would allow taxpayers to claim the credit on their 2008 income tax return. It also seeks to prevent misuse by only allowing purchases of a principal residence and by recapturing the credit if the home is sold within two years of purchase.

Last year, I introduced legislation to specifically target those homes that were causing the unprecedented increase in housing inventory by offering tax credits to individuals purchasing a foreclosed home or a home where foreclosure is pending. In April 2008, the Senate passed legislation to stimulate the nation's declining housing market that included my proposal. However, the final version of the legislation that was signed into law included only a $7,500 tax credit for first-time homebuyers that must be repaid over a 15-year period.  My amendment that passed today would sunset that $7,500 tax credit.


In the mid-1970s, <?<?America faced a similar housing crisis when a period of easy credit and loose underwriting flooded the market with new construction.  Interest rates rose, the economy slowed and <?<?America was left with a three-year supply of vacant homes. Congress responded by passing a $2,000 tax credit for anyone purchasing a new home for their principal residence. The results were clear and swift as home values stabilized, housing inventory dropped and the market recovered.  Once stability comes back to the housing market, we will see investors and small business begin to reinvest in job creating activities, which will put hard working Americans back to work.


The House version of the stimulus is a non-starter for me. I believe it is another example of Congress throwing money at the symptoms but not getting to the root of the problem.  I have not made a decision regarding my vote on the overall economic stimulus legislation. However, I believe there need to be major changes to the Senate bill. At this point, there is still too much funding for programs that should not be categorized as stimulus and will not do anything to help our economy.


Financial Markets Commission

On January 22, Sen. Kent Conrad, D-N.D., and I introduced legislation to create a Financial Markets Commission that will be charged with fully investigating the near collapse of the banking system and the loss of tens of trillions of dollars.

The seven-member, bipartisan Financial Markets Commission will be modeled after the 9-11 Commission, which thoroughly and independently investigated the failures leading up to the September 11, 2001, terrorist attacks and made sound recommendations on where we needed to improve to prevent another attack in the future.

Likewise, the Financial Markets Commission will have one year to investigate all the circumstances that led to this financial crisis. The panel will have the authority to refer to the U.S. Attorney General and state attorneys general any evidence that institutions or individuals may have violated existing laws. At the end of its investigation, the Commission will report to the President and to the Congress its recommendations for statutory or regulatory changes necessary to protect our country from a repeat of this financial collapse.

We must not rush to legislate and regulate without all the facts. This legislation will help Congress understand exactly what happened to our financial system and why.


What's on Tap?

The Senate's main order of business remains the economic stimulus legislation and as of this writing, the Senate may remain in session through the weekend in order to finish it.  Senator Reid's goal is to finish the bill and get it to a conference committee to iron out the differences between the House and Senate versions. President Obama has stated he would like to sign the legislation into law before the President's Day recess.



Johnny Isakson


Thank you all for allowing me to assist you and your clients in achieving the American Dream of Homeownership.  Please feel free to call on me anytime if you need something or have questions.  As always and because I was a Realtor before I was a lender I work when Realtors work; nights and weekends!


John Tuggle

Senior Loan Officer

Freedom Mortgage Corporation

1625 Highway 42 North

<?McDonough, Georgia  30253

Direct (Best) 706 315-2365

Office 770 957-8211

Fax 866 270-4840


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