Housing Stimulus Package Update:
National Association of Realtors asked for the following in November, 2008:
– Raise loan limits in high cost areas.
– Make the $7,500 tax credit NOT a loan.
– Find ways to push interest rates down.
– Provide help to foreclosure and short sale problems.
What was achieved?
– Loan limits will be raised to $727,000 in high cost areas.
– Tax credit will be raised to $8,000 with NO payback feature.
– Interest rates have come down 125-150 basis points.
– $50 billion in the stimulus bill is set aside for foreclosure mitigation. Troubled Asset Relief Program and Tax Analysis and Revenue Forecasting will be used to mitigate foreclosures through a government guarantee, drive down interest rates by purchasing another $200-$300 billion of mortgage paper from Government Sponsored Enterprises (Fannie Mae, Freddie Mac and Federal Home Loan Banks) thereby freeing them up to do the same with new mortgages.
– Fannie Mae has agreed to raise the cap on investment properties eligible for loans from 4 to 10.
What we keep:
– Mortgage interest deductibility, real estate tax deductibility, and the $250,000/$500,000 cap gains exclusion (an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects).
What we did not get:
– Tax credit $15,000
– Homebuilders credit $22,000 as well as 5 year loss carry-back deal.
Although, we cannot complain over the loss of something we never had in the first place.