I don’t have the vote count yet, but the Mortgage Bankers Association says the House of Representatives passed the extension of the homebuyer tax credit . Now all the bill awaits is a presidential signature.
Update: The bill passed the House 403-12. The Senate passed the same bill yesterday 98-0.
The U.S. Senate passed the bill containing the homebuyer tax credit expansion and extension unanimously on Wednesday, 98-0.
Looks like a possible extension of the homebuyer tax credit could potentially take another couple of days to come to a vote:
The following comes from Congress Daily, which has been quoted by Progress Illinois:
Monday’s vote cut off debate on the substitute amendment from Majority Leader Reid and Finance Chairman Max Baucus adding the tax breaks to the underlying unemployment insurance bill. Another cloture vote, this time on the amended bill, could occur as late as 11:40 tonight unless Republicans yield back time or agree to vitiate cloture. Even if cloture is invoked, Republicans would have up to another 30 hours to debate, pushing final passage off until Thursday.
So, there could be a vote tomorrow, or not until Thursday.
Looks like Congress will be extending that homebuyer tax credit afterall. First time homebuyers, known to the IRS as people who haven’t owned a home in the last three years, have been frantically trying to get into contract on a house in time to get an $8,000 federal tax credit due to expire on Nov. 30. But some of them have had such a hard time outbidding cash buyers that they despaired of making the deadline.
Well, they’re in luck. The Senate just passed a cloture motion to end debate on a bill, 85-2. that will extend the tax credit to April 30, 2010. The bill should find it’s way through floor votes in both Senate and the House by the end of tomorrow, if Senate Majority Leader Harry Reid has his way.
But the bill will not just be extended, it will also be expanded. From Bloomberg:
Homebuyers who have lived in their prior residences for at least five years could receive a credit of $6,500 under the plan. Couples earning as much as much as $225,000 and individuals earning up to $125,000 would also qualify. That’s up from the current $75,000 limit for individuals and $150,000 for couples.
Also, anyone taking the credit from a home purchased in 2010 would be able to take the credit in 2009.
So, to recap: Homebuyer tax credit takes a major step toward extension and expansion. No doubt there’s a great rhyming headline there somewhere.
I just got a voice mail from Jessica Duarte, one of three frustrated home buyers I mentioned in my story in today’s paper. She was pleased to tell me that the article must have been good luck: Her bid was accepted on the condo she’s pictured looking at in the paper. I think I’m going to petition upper management to change our motto: The North County Times, your four-leaf clover in times of trouble.
For all the discussion of extending the new home buyer federal tax credit, it seems like no one remembered to check in with the administration. The credit is very popular among congress members, several of whom have proposed various kinds of extensions.
But Shaun Donovan, the Secretary of Housing and Urban Development, told a Senate Committee today that the administration needs to review the data and do some cost-benefit analysis before it decides whether or not to back an extension.
This is from the Wall Street Journal’s Developments blog:
Donovan told a Senate hearing on Tuesday that there was “clear evidence” that the tax credit had benefited the housing market. But he said that the “real issue” in considering an extension was whether an extension was worth the cost to the government in lost tax revenue.
The actual cost of the credit won’t be known “until Americans have filed their tax returns,” he said. “And so, we feel it’s very important within the administration that we gather as much data as we possible can in advance of that before we make a final decision.”
the IRS is looking into 100,000 suspicious claims for the tax credit for qualified home buyers, the Wall Street Journal reports. As I wrote over the weekend, home buyers are leaping in to the market to take advantage of a potential $8,000 federal tax credit for anyone who has not owned their own home for three years. Many are hurrying to get deals into escrow this month, to give their lenders time to process paperwork.
From the story:
“More than a million claims for the credit have been received so far, and housing-industry experts estimated that the credit has helped generate about 350,000 home sales that wouldn’t otherwise have occurred. But some lawmakers and tax experts now say there is evidence that a significant number of the claims might prove to be unjustified, or even fraudulent.”
Several bills have been introduced in Congress to extend the deadline for the tax credit, make the credit larger, or even expand the program to all home buyers. If the IRS starts to come up with a laundry list of fraudulent credits, the agency could put a chill on all the extend-the-credit enthusiasm.
[Via Calculated Risk]
Last week I wrote a story based on a report from ForeclosureRadar arguing that there was no such thing as a shadow inventory, meaning that there was no glut of houses banks were secreting away for future sale in a better market.
Before my story ran, I put in a call to real estate economist Chris Thornberg of Beacon Economics. He couldn’t get back to me until today, but he had some good thoughts about ForeclosureRadar’s analysis worth repeating here:
“He’s right, the number of REO units is falling, but the reason it’s falling is because the inventory is stalled in the pre-REO space. There’s all these crazy programs out there, all these help for home owners programs that banks are forced to indulge in.
“Something like nine percent of mortgages are extremely behind on payments, another six percent of mortgages are somewhere in the foreclosures process.
“So you have about 15% about to be foreclosed on. That the number of REO units is dropping is irrelevant, because there’s an enormous backlog behind them. You haven’t cleaned the pipe.”
If I may rephrase, if the flow of foreclosures is like a river, then the government programs are a dam, slowing the flow of the river. The drop in bank inventory corresponds to a drop in foreclosures, which are the lessened flow beneath the dam. But the water behind the dam is still building up, and at some point it will need to be released. And when that happens, the flow of foreclosures may be another flood.
Hi all.
The last real estate post on this blog was from my predecessor Zach Fox, lo these many moons ago. Well, I’m putting an end to that lengthy hiatus as of today.
My name is Eric Wolff, I come to the North County Times from San Diego CityBeat, a free weekly down in San Diego. I’ve been here at the NCT for a couple of weeks now, and some of you may have seen my first few bylines.
I’m going to write something more substantive in the next post in a minute, but one quick question of for blog readers: Can someone help me come up with a better name for this thing? I’m just not a fan of “On the Realside”. I’m sure we can come up with something better.
Anyway, I look forward to the conversation.
Reporter Zach Fox is no longer with the North County Times, having relocated to the East Coast. “On the Realside” may resume as other reporters cover real estate issues in North San Diego and Southwest Riverside counties. In the meantime, you may send your real estate and business news tips to business@nctimes.com.