(Sen.) Nelson Says Senate to Extend, Reduce Homebuyer Credit

[sabra]

Source: Bloomberg

Oct. 26 (Bloomberg) -- Senate leaders are negotiating to extend and gradually reduce an $8,000 tax credit for first-time homebuyers through 2010, Senator Bill Nelson of Florida said.

“We should be able to extend that later this week,” Nelson, a Democrat, told reporters traveling today with President Barack Obama on Air Force One to a speech in Jacksonville, Florida.

Senate Majority Leader Harry Reid of Nevada and Senate Finance Committee Chairman Max Baucus of Montana, both Democrats, may seek to add the homebuyers extension to legislation extending unemployment benefits that may be debated as early as this week, according to Regan Lachapelle, an aide to Reid.

Lawmakers are under pressure from real estate agents, mortgage brokers and homebuilders to extend the $8,000 credit before it expires Nov. 30.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=a1N3zxvMA1jY

[WriteDown]

1. I would extend it for at least another year. nt

[cutlassmama]

5. It seems to have been a good idea. Hope they extend it.

[Robb]

2. Well, if real estate agents, mortgage brokers and homebuilders want it, it must be a good idea. nt

[SpartanDem]

6. God knows there aren't middle class Americans working in those industries

that could use some help right now.:sarcasm:

[Frank Booth]

3. This is another gift to the banks at the expense of taxpayers.

Here's a great explanation of why this is just a very well disguised give-away to the banks:

At 3.5% down, an $8000 tax credit potentially (and yes, I know this is a simplified version of reality) increases the amount a buyer can spend on a home by over $200,000. A sharp mind named Nemo at Self Evident says that this is bound to increase both the supply of homes on the market (since it allows buyers to spend -much- more, getting rid of -perceived- bottom prices) and the price per home. "Nemo" estimates the rise in prices could be as much as $100,000 per home. While we might discuss or even dispute that number, the principle is obvious and not disputable. . . .

Who loses in this set-up? First, homebuyers, since they pay much more for their homes than if the government would stay out of the market. Then again, what obligations do the buyers really have? They get a home for free, more or less, and often with a non-recourse loan to boot. In the end, the by far biggest losers are the American taxpayers, who have to watch helplessly as their own chosen government shifts a fast increasing share of the losses of the housing market onto their tab, all solely for the benefit of the one and only party that stands to profit.

That is, the banks. Which can unload repossessed properties at much higher prices, given the tax credits. Which can keep properties and loans at greatly elevated prices on their books, which allows them to fool their shareholders and depositors into thinking they are far more healthy then they would be without government involvement. Who can use the artificially raised "values" on their books for highly leveraged financial wagers that if they pay off allow for multi-billion dollar bonuses, and if they don't can be channeled back to the taxpayers' account.

Much more here: http://theautomaticearth.blogspot.com/

The whole piece is well worth reading.

[Name removed]

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