- Make the $7,500 first-time homebuyer tax credit available to all buyers and eliminate repayment requirements. The credit's limited availability and repayment requirement severely limit the credit's use and effectiveness.
- Make the 2008 FHA, Fannie Mae and Freddie Mac higher loan limits permanent. New rules for 2009 will reduce them. Now is not the time to limit mortgage affordability.
- Get the Treasury relief program back on track and target more funds to mortgage relief. Create a federal mortgage interest buy-down program to make below-market rates available and stabilize home prices.
- Permanently bar banks from engaging in real estate brokerage and management. The banks have proved they have enough to do to simply manage the loan process. Banks should not manage home sales and purchases.
From my perspective, the most important item on this list would be the first one, and that is to make the $7,500 first-time homebuyers tax credit permanent (or at least extend it beyond June 30, 2009) and eliminate the repayment requirement.
Right now, first time buyers are essentially being offer a $7,500 interest-free loan by the federal governement, with a lump sum disbursement up front which is then recaptured over 15 years at the rate of $500 per year.
This tax credit has been a powerful tool for my foreclosure buyers, allowing them to budget for appliances, paint, carpet and basic repairs. Making the tax credit a permanent fixture (with no recapture clause) would be a strong incentive for many buyers to get back into the market.
I do believe help is on the way for the housing market, above and beyond the shift in government policy on Tuesday that resulted in the biggest one-day interest rate drop in seven years.
Buying a home will continue to be incentivized in 2009, in my opinion, which will bring more buyers back into the market. And with foreclosure inventory already tailing off significantly, "retail" (private party) sellers will stand a much better chance of being able to sell next year without having to compete with an exorbitant inventory of discounted, bank-owned homes.