1st Time Home Buyer Tax Credit to be extended

The New York Times is reporting Congress will extend the first time homebuyer's tax credit:

The Senate and House are poised to agree on a compromise measure to extend unemployment benefits that also would expand a popular $8,000 tax credit for homebuyers, despite a recent government report on extensive mistakes and suspected fraud in the program.

Extensive mistakes? Suspected fraud? It's bad enough this is helping balloon the housing market bust. Congress is also changing the terms to be more broad:

The homebuyers’ credit — enacted last year, expanded this year and scheduled to expire Nov. 30 — would be extended to cover homes under contract by April 30. Also, it no longer would be limited to first-time buyers; people who have owned a home for at least five years could get a $6,500 credit on a new residence. Income limits for eligibility would be raised, making many more people qualify.

Extending and expanding the credit would cost an estimated $11 billion, on top of the $10 billion spent so far. It would be a big victory for the housing and real estate lobby and for the Senate majority leader, Harry Reid, Democrat of Nevada, who faces a tough re-election race next year in the state with the most claims for the credit per capita.

Earlier were reports of fraud:

Thousands of individuals claiming the first-time home buyer's $8,000 tax credit may have been trying to scam the system, including purported 4-year-olds and illegal immigrants, according to a watchdog report released Thursday.

Treasury Inspector General for Tax Administration J. Russell George told a House panel that more than 19,000 people filed 2008 tax returns claiming the credit for homes they had not yet purchased. George said his office had identified another $500 million in claims, by some 74,000 taxpayers, where there were indications of prior home ownership.

He told a House Ways and Means oversight subcommittee that they also found 580 taxpayers under the age of 18 who claimed $4 million in first-time home buyer credit. One was 4 years old.

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Anyone see this GS buying of Freddie/Fannie tax credits?

Anyone see this Goldman Sachs plan to buy unused Fannie/Freddie tax credits?

article here.

I didn't post it in an Instapopulist because "surely this isn't possible" or will be disallowed...

but maybe not.

Maybe common good or someone can pick up this ball and see if it's true.

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It's possible

Syndication of low income housing tax credits was big business back in the day. It was helpful in building affordable (mostly rental) housing but it had problems - mostly greedy developers (remember Tony Rezko - he was big in LIHTC deals).

It would be good to have Fannie/Freddie sell these tax credits since they have no use for them but definitely not to Goldman Sachs without some sort of auction.

A project would be assigned, typically by a local housing authority, so many LIHTC. A developer with help of syndicator would go out and try and find a limited partners or equity partners to invest in projects. The equity partner would get LIHTC in exchange for their equity investment. LIHTC would be used to offset tax liability and since Fannie/Freddie are owned by gov't they really don't need these tax credits.

Just auction them off.

RebelCapitalist.com - Financial Information for the Rest of Us.

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A bold statement and message.

would be for the Obama Administration to veto this and say NO we are going to do this in a better way - we will use gov't resources to transform our economy not get back to status quo.

I know I am dreaming.

RebelCapitalist.com - Financial Information for the Rest of Us.

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