The Mortgage Bankers Association (MBA) on Monday declared its support for a Senate bill, S 1230 or the Homebuyer Tax Credit Act of 2009, which expands the current first-time home buyer tax credit from $8,000 to $15,000. The bill also makes the tax credit available to anyone who purchases a principal residence in the year following the enactment of the bill. The MBA is already calling for monetization of the credit at the closing table on the grounds that more consumers will become home buyers if they don’t have to struggle to put away a substantial down payment. “The current $8,000 credit for first-time buyers has had a positive effect on the housing market this year,” said MBA chairman David Kittle in a media statement. “Increasing the amount and expanding the benefit to include all home buyers will have an even larger impact in spurring the housing market and stabilizing the economy.” The percent of the purchase price eligible for the tax credit stays at 10% under the bill, but the broadening of the dollar limitation expands the potential for the tax credit to reach higher-end housing. The bill eliminates the earnings caps of $75,000 for an individual and $150,000 for a joint-filing couple. Sen. Johnny Isakson, D-Ga., the bill’s sponsor, says these targeted, demand-side solutions aim to increase consumer participation in the housing market, to stimulate natural home price recovery over foreclosure and short sales and to broaden the tax credit’s reach across all tiers of home buyers. “The first-time homebuyer tax credit has made a difference,” Isakson said in a media statement. “First-time home buyers used it and the market stabilized, but we don’t have a recession in first-time home buyers. We have a recession in the move-up market.” “One of the biggest problems facing the American people today,” he added, “is an illiquid housing market, a decline in their equity, a decline in their net worth and a depression in the housing market that we are obligated to correct if we possibly can.” The bill went to a Senate finance committee last week, where it awaits further action. Critics of the bill and similar efforts to subsidize a housing market recovery argue that these incentives may only falsely exaggerate the current level of housing demand, making any stabilization seen an unreliable indicator of recovery. But the efforts are gaining traction among lawmakers, with a separate House bill also calling for a broadening of the credit. HR 2801, or the Home Ownership Moves the Economy Act, was introduced late last week and calls for the current $8,000 tax credit to apply to all who purchase a primary residence through the end of 2010. The House bill also awaits further action. Write to Diana Golobay.
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