According to housing wire the House of Representatives passed an extension of the first time buyer 416 to zip for extending the first time home tax credit to those that severed over seas. So if you severed overseas for 90 days or more in 2009 you will be given an additional 180 days to take advantage of the tax credit. So this is a clear sign that the first time home tax credit will be coming to an end for most people. Sounds like a cool way to say the tax credit is going to be extended. The problem here is that it will only be extended to a select few. This will hurt the fragile real estate market recovery.
The first time tax credit is estimated to cost roughly 30 billion dollars in 2009 or with the amount of bailout money flying around what is another 30 billion? That is an absurd statement but when compared to the 9 trillion plus that the current administration has spent what is another 30 billion.
Currently there is a bill in Congress, H.R. 2483, which will affect the FHA loan guidelines. H.R. 2483 has two things that make sense and is almost unbelievable in today’s environment. The first is to make the new expanded loan limits for FHA loans permanent. The second is to eliminate owner occupied ratios on Condo’s. The second issue is big due to high foreclosures in condo projects. The current FHA ratios make FHA loans impossible in most Condo complexes due to the ratios. Eliminating the issue requirements makes sense because FHA only works for owner occupied properties. So you would only be putting owner occupied people in the complexes which will make the ratio issue a non issue.
There is also another bill in Congress, H.R. 3146, which will help to open up warehouse lines to non banking institutions. This is huge as it will put pressure on the big four, BofA, Wells Fargo, Citibank & Chase, to offer better rates to the consumer that is you and I people. The big four are posting big profits in a down economy and that would not be possible if there was more competition.
Below is a graph of the Mortgage Bond Market. This is the market that deals with mortgage bonds and directly affects rates and is rarely spoke about in Main Stream Media. In late January of 2008 you could get a 30 year fixed rate at 5.00%. You can see that the market has risen over 200 bases points and rate are roughly still 5.00% for the same loan. So where is the additional money going? That’s right, in the pockets of the big four.
Congressman Barney Frank wants to put all non banking institutions’ “out of their misery.” If this is done is will be yet another blunder all of Mr. Frank’s doing and I am sure that someone else will take the blame.
The HBMO supports H.R. 2483 & H.R. 3146 and urge’s you to let your Congressman know that you are in support on these bills as well.