Stimulus bill offer housing incentives
summit homes and properties
Question: Allison, what is the deal with the new stimulus package and how will it affect the average Summit County home buyer?
Answer: According to Inman News reports, a $15,000 homebuyer tax credit, higher loan limits for Fannie Mae, Freddie Mac and FHA, and government spending to lower mortgage rates are all in play as Congress and the Obama administration come to agreement on an economic stimulus bill and financial stability plan for banks.
The Senate approved an $838 billion economic stimulus bill that includes a $15,000 homebuyer tax credit, just hours after President Barack Obama’s new Treasury secretary unveiled a multitrillion-dollar financial stability plan that includes $50 billion for foreclosure prevention programs.
The financial stability plan may also lead to an expansion of existing efforts by the Federal Reserve to drive down mortgage interest rates by buying mortgage-backed securities and debt issued by Fannie Mae, Freddie Mac and Ginnie Mae.
The National Association of Home Builders welcomed the Senate’s move, saying a $15,000 tax break for all homebuyers could generate nearly 500,000 home sales and create more than 255,000 jobs.
NAHB Chairman Joe Robson said the enhanced tax credit would be “a powerful incentive for homebuyers to get off the sidelines” and urged Congress to make sure the full $15,000 tax credit is included in the final stimulus plan.
The housing program will also establish loan modification guidelines and standards for government and private programs, and require all institutions receiving assistance through the financial stability plan to participate in foreclosure mitigation plans. The Obama administration will also build additional flexibility into the FHA’s Hope for Homeowners refinance program to enable more distressed borrowers to participate.
While the main goal of the stimulus bill is to create jobs, the financial stability plan is designed to strengthen banks and restart the flow of credit to homeowners and small businesses, Geithner said. Currently, the financial system is working against recovery, even as the recession puts greater pressure on banks, he said.
“This is a dangerous dynamic, and we need to arrest it,” Geithner said. The battle for economic recovery must be fought on two fronts — by jump-starting job creation and private investment, and by getting credit flowing again to businesses and families.
As it has done under the TARP program, the Treasury will continue to invest in banks that need additional capital, but will now impose conditions to ensure “every dollar of assistance” is used to generate additional lending, Geithner said.
In addition, the Treasury, Federal Reserve and Federal Deposit Insurance Corp. will establish a $500 billion Public-Private Investment Fund to buy up toxic loans and assets. The fund could ultimately provide up to $1 trillion in financing, Geithner said, helping to create a market for real estate-related assets that are “at the center of this crisis.”
The Treasury and Federal Reserve will also commit up to $1 trillion in backing for a consumer and business lending initiative, building on the Federal Reserve’s Term Asset Backed Securities Loan Facility (www.inman.com/news/2008/12/16/fed-cuts-short-term-rates-bone” t “_blank” TALF) announced in November. The program will be expanded to target markets for small business lending, student loans, consumer and auto finance, and commercial mortgages.
Although I do have fears about the long-term consequences of all this money and spending, the permanency of some of the programs, increasing government even more, I welcome with open arms the assistance that is obviously needed today.
This is certainly a difficult situation, one that has no easy answers. In many respects, both sides have been right and wrong, but it is great to see that we can start putting all of this behind us.
To me, the current situation feels like being in a strange town, in the dark in a foggy night, without a map. This plan, flawed as it may be, feels a lot like having been given a general map pointing to all the cardinal points (N, S, E, W), allowing us to at least figure a way out. As the rest of the plans are announced and implemented, they will hopefully add layers to this map with highways, and eventually, individual roads for all of us to travel with great visibility into the future.
For answers to your real estate questions, call Allison at (970) 468-6800. E-mail Info@SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours. Want to know the value of your Summit County property? Visit http://www.SummitHomeValue.com
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.