Weekly Recap (9/6/10-9/11/10)by Tim Manni
Did you claim the homebuyer tax credit on your 2009 tax return? If so, depending on which version you got, you may have to pay it back:
According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.
Post housing bubble, home sales were so dead that Washington developed a tax incentive for Americans to buy homes. You may remember it, it was called the homebuyer tax credit (and we’ve had more than one of them). Even with the tax credits, home sales remained low. The drop off in sales we’ve witnessed after each of the tax credits have expired have been so pronounced that Washington has even considered rolling out the homebuyer tax credit for a third time.
Paul McMorrow, associate editor of CommonWealth magazine and a Boston Globe columnist, says that the low levels of home sales aren’t something that should necessarily shock or even scare us. He writes that the significant drop in home sales have to do with more than just the country’s ongoing economic struggles and the “post-tax-credit hangover.” McMorrow writes that the lack of sales is “also evidence of a fundamental shift in national housing policy.”
Realizing the scope of the underwater-but-can’t-refinance problem in this country and the lack of relief that has been directed to this group of borrowers, HSH published our own concept on how Washington could assist these borrowers. Since we published the article — titled “Underwater Solution: Value Gap Refinance” — on Monday, the comments have been rolling in from readers, reacting to our underwater refinance plan.
Let’s take a look at some of the reactions this article has generated from HSH’s readers so far.
The Obama Administration released another program this week design to help American homeowners. The FHA ’short refinance’ program is designed to help current borrowers who can’t refinance because they’re underwater.
HSH spent quite a bit of time thinking about underwater borrowers and developed our own concept to help these borrowers refinance their mortgages. We think it’s a program that is fair to homeowners, taxpayers and lenders/investors as well. It’s called the Value-Gap Refinance plan.
While no plan is perfect, there are several key aspects of ours that set it apart from the FHA’s. Instead of penalizing one party for the benefit of another, our plan is mutually beneficial and potentially more cost effective.
For a mortgage blog, the subject of jobs has come up quite a lot here recently. The reason being, as noted here quite often, jobs play an essential role in maintaining the housing market’s health, vibrancy and sustainability. Steady jobs produce consumer confidence; it’s as simple as that. Consumers who have a steady paycheck are far more likely to buy and refinance. Also, if you’re employed, you are better suited to handle costs increases in everything from your monthly payment to an unexpected home repair.
The minutes from the Federal Open Market Committee’s (FOMC) latest meeting were released last week, confirming the important connection between jobs and housing.
In the present economic climate, it’s getting harder for millions of people to want to remain responsible homeowners. Frankly, as things stand now, there’s little financial incentive for them to continue to behave responsibly, and plenty of potential benefit should they decide to behave badly.
We spent a fair bit of time thinking about what is perhaps the only group who hasn’t received any help whatsoever: homeowners who owe more on their homes then they are worth. These homeowners have found no help from anyone, but we think we’ve got a concept that is worth considering. READ ON…