Rick Santelli's Chicago Tea Party

Rick Santelli's rant is becoming the rallying point for frustrated people across the country. Tea party groups are springing up everywhere.

Senate Unanimously Approves Isakson Amendment to Stimulate Housing Market

Note: The most important statement in this release is the very last one (in bold, my emphasis). We need to burn up the phone lines, keep the fax machines in full gear and keep those emails zipping into his inbox. Please join in the effort to kill this bill. - jmd

The U.S. Senate today unanimously approved an amendment by U.S. Senator Johnny Isakson, R-Ga., to stimulate the nation’s declining housing market by offering a $15,000 tax credit to individuals who purchase a home in the next year.

“It is time to fix America’s problem, not throw money at the symptoms. It is time to fix housing first. It is rare that we have a road map to success in times of difficulty, but this country has once before realized a housing crisis every bit as bad as the one we have today and economic troubles every bit as dangerous,” Isakson said. “We have a pervasive housing problem, and we have a historical precedent that works. I am proud this Senate has joined together, learned from history and repeated a method that worked by adopting this amendment.”

Specifically, Isakson’s amendment to the pending economic stimulus bill would provide a direct tax credit to any homebuyer who purchases any home. The amount of the tax credit would be $15,000 or 10 percent of the purchase price, whichever is less. Purchases must be made within one year of the legislation’s enactment, and the tax credit would not have to be repaid.

The amendment would allow taxpayers to claim the credit on their 2008 income tax return. It also seeks to prevent misuse by only allowing purchases of a principle residence and by recapturing the credit if the home is sold within two years of purchase. The amendment would sunset the current $7,500 housing tax credit on the date of enactment.

Isakson has pushed hard for a non-repayable tax credit for homebuyers because he knows that it will work. In the mid-1970s, America faced a similar housing crisis when a period of easy credit and loose underwriting flooded the market with new construction. Interest rates rose, the economy slowed and America was left with a three-year supply of vacant homes. Congress responded by passing a $2,000 tax credit for anyone purchasing a new home for their principal residence. Isakson believes the results were clear and swift as home values stabilized, housing inventory dropped and the market recovered.

Last year, Isakson introduced legislation to specifically target those homes that were causing the unprecedented increase in housing inventory by offering tax credits to individuals purchasing a foreclosed home or a home where foreclosure is pending. In April 2008, the Senate passed legislation to stimulate the nation’s declining housing market that included Isakson’s proposal. However, the final version of the legislation that was signed into law included only a $7,500 tax credit for first-time homebuyers that must be repaid over a 15-year period. Isakson’s amendment that passed today would sunset that $7,500 tax credit.

Isakson spent more than three decades in the real estate business, beginning his business career in 1967 when he opened the first Cobb County, Ga., office of a small, family-owned real estate business, Northside Realty. Isakson later served as president of Northside for 20 years, presiding over the company’s growth into the largest independent residential real estate brokerage company in the Southeast and one of the largest in America.

Isakson has not made a decision regarding his vote on the overall economic stimulus legislation.

Questions and Concers Re: Commission Considering Neighborhood Stabilization Program

Tomorrow night, Wednesday Jan. 14th, the Fayette County Commission is holding a special public hearing on the "Neighborhood Stabilization Program". I hope that at least a few of our concerned citizens will take the time to go to the meeting and ask questions.

Here's an overview of the program:

The Neighborhood Stabilization Program (NSP) is an emergency assistance fund
authorized under Title III of Division B, section 2301 of the Housing and Economic Recovery Act of 2008 (HERA) that is being provided for the redevelopment of abandoned and foreclosed homes and residential properties for the purpose of stabilizing neighborhoods. Unless HERA provides otherwise, the grant is considered a special Community Development Block Grant (CDBG) allocation.

Sounds OK, doesn't it? Basically, the government is going to give Fayette County funds to redevelop abandoned or foreclosed homes.

Unfortunately, long experience has told me that with the government, there's usually a nasty string or two attached, so I pulled up the six-page "Housing and Economic Recovery Act of 2008" that deals with the NSP.

There is at least one potential nasty string that's attached to the NSP: Not less than 25% of funds available to each grantee must be used for housing activities that benefit individuals whose incomes do not exceed 50% of area median income and that all funds be used to benefit individuals at or below 120% of area median income."

Click here to read the Guide to Neighborhood Stabilization Program Eligible Uses

If I'm understanding what I'm reading correctly, the government is going to require that at least 25% of the foreclosed or abandoned homes be sold or rented to people who make less than 50% of the median income of their neighbors.

Call me crazy, but isn't that how we got into this mess with foreclosed homes to begin with? People who couldn't afford to buy the houses they wanted got great deals, then couldn't make the payments?

I can understand the 120% requirement. The government doesn't want speculators and investors to buy up all these great deals just so they can flip them and make money.

In addition to my concern about potentially putting people into houses they can't afford, I don't particularly care for the idea of having our government sticking its fingers into forcing upward mobility. I don't know what my neighbors make and don't want to know. Maybe they bought down, maybe they opted to buy less house so they could spend more on vacations. Who knows and who cares.

Here's a hypothetical situation: Say there's a house in Whitewater or a similar neighborhood that I covet. If I could figure out a way to buy it, I'd be there in a heartbeat. However, for the sake of argument, let's say my income is 40% of the median income of the neighborhood. Then, continuing the scenario, "my house" goes into foreclosure and all of a sudden I can buy the house with the help of the NSP. Wow. Great deal, huh?

But then I have to buy furniture. I have a huge power bill. I have neighborhood dues I have to pay. The pipes freeze and burst. The hot water heater goes out. I have to pay for lawn service because I'm working and can't keep up the grooming. The lake behind the house overflows into the yard ruining the landscaping. You get the idea, it's more house than I might could afford, even though the monthly payment is well within my ability to pay.

Pretty soon I'm wondering how I got myself into this mess.

I don't know enough about the details of the program, even after reading the Act and looking at other counties and states who've grabbed the funds. I'm not sure that someone who couldn't afford neighborhood dues, insurance, lawn service, etc. as I hypothesized above would be allowed to buy the home.

And, I don't know what will happen when Fayette County takes the money, if they ultimately decide to do so. I "assume" that since they're holding the public hearing tomorrow night, they've pretty much decided to go for it.

In past years Fayette County has stayed away from holding their hand out to the government. We've been very, very selective about the programs we've bought into. I hope we're not looking at short-term gain to the detriment of the long-term quality of our county.

Links:
The HUD Official Documentation: Housing and Economic Recovery Act of 2008
Minnesota's explanation / write up: http://www.mnhousing.gov/idc/groups/homes/documents/webcontent/mhfa_007646.pdf

PUBLIC NOTICE FOR A SPECIAL CALLED PUBLIC HEARING
THE FAYETTE COUNTY BOARD OF COMMISSIONERS WILL HOLD A SPECIAL CALLED PUBLIC HEARING AT 7 PM ON JANUARY 14th, 2009, IN THE PUBLIC MEETING ROOM OF THE FAYETTE COUNTY ADMINISTRATIVE COMPLEX LOCATED AT 140 STONEWALL AVENUE WEST, IN FAYETTEVILLE. THE PURPOSE OF THIS HEARING IS TO RECEIVE COMMENTS REGARDING THE NEIGHBORHOOD STABILIZATION PROGRAM (TITLE III, SECTION 2301 OF THE HOUSING AND ECONOMIC RECOVERY ACT OF 2008 (HERA).