With the first-time homebuyer tax credit possibly expired (until the President signs the extension bill into law), delinquencies falling and house prices inching upward, the general mood in the mortgage finance industry seems one of hesitance to call bottom. But as the market holds its breath for turbulence in housing indicators and intensive legislation makes its way to law, originators, securitizers and servicers alike are beginning to wonder: will financial reform provide a stronghold or a prison for the future of mortgage finance? ... The tax credit shifted home sales temporally this year, according to Frank Nothaft, Freddie Mac vice president and-chief economist. Some buyers that might have bought in summer had a big incentive to buy earlier in the year, so those sales shifted from the third quarter to the second quarter. He noted a dip in the third quarter is possible. It would mirror a similar trend as the one that followed the initial Nov. 30, 2009 expiration of the tax credit, before it was extended. Home sales saw a lull in December and January after the fall push. "Some of that was seasonal, as sales are generally weak then anyway," Nothaft says. "But some of it was also the fact that those home buyers who were interested in buying a home tried to make that November 30 deadline, so they moved their decision forward, and that left less demand for December and January." Even the lower levels of home purchases in the beginning of 2010 came in higher than the same time in 2009, meaning the new bottom was above the year-ago bottom. It indicates gradual improvement in the housing market in terms of sales. Construction, on the other hand, is "extraordinarily low," Nothaft says. Despite some pick-up, new construction is still below the level necessary to keep up with net new household formations. TO READ THE FULL STORY, SUBSCRIBE NOW.