Making people homebuyers without burdening taxpayers

The first-time-homebuyer tax credit has no doubt been effective in bringing in people off the sideline and into the market, but it also has cost the taxpayer nearly $15 billion. Several bills in Congress contemplate extending the tax credit past its Nov. 30 deadline and carry price tags as high as $100 billion. Wouldn’t it be great if we could accomplish the same outcome, with no taxpayer money, have only the highest of credit-qualified buyers, use strict appraisal standards, and use only safe, 30-year fixed rate loans?

Having people buy homes is extremely important to the long-term stability of our economy, not only through the direct expense of the actual home sale, but also the ripple effect of the sale of goods and use of related services, as well as taxes and fees that are generated to local governments because of house sales. According to the National Association of Realtors (NAR), more than 350,000 individuals and families have taken advantage of the $8,000 gift from Congress to purchase their home. Now that home prices have adjusted down from their highs of the autumn of 2007, homes are, in theory, more affordable than ever. Interest rates are still at historical lows and banks, miraculously, are lending again.

To help revive devastated housing markets, and to help otherwise qualified and credit-worthy families achieve the American dream of home ownership, the federal government has two principal policy tools available to help turn this market around: the taxpayer-funded $8,000 first-time-homebuyer tax credit and any ensuing extension; or another bill now in Congress, H.R. 600, which is estimated to have the same positive impact on the housing market, but will not cost $100 billion of taxpayer money.

H.R. 600 is a bill that authorizes the use of private-sector dollars to be used for helping high-credit quality buyers with the down payment to purchase their first home. Let me be clear — this is not an exotic mortgage product. It is a fixed-rate, 30-year loan that has the same payment in the first month as it does in year 30. The bill allows for a down payment gift to be given so that on Day One a buyer has instant equity in his or her home and that equity is affirmed and certified through strict appraisal assessments.

The housing market is nowhere near being back on its feet and our economy will not completely recover without a healthy housing market. So, given the option to renew the tax credit, which some believe will run as high as $100 billion, versus a program that essentially does the same thing that costs zero taxpayer dollars, I believe the American people would choose the latter, and so should Congress.

AmeriDream, based in Gaithersburg, Md., has a financial interest in the passage of H.R. 600.

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