Rental Properties to Lead Recovery, Experts Say

Housing experts predict that multi-family rental properties and apartments will recover fastest from the current downturn, followed by housing in cities that didn’t overbuild.

The market is likely to hit bottom in the next few months, says Bernard Markstein, senior economist and director of forecasting for the National Association of Home Builders.

"Next year will see slow but steady improvement, as home builders are controlling their inventory," Markstein says.

Apartments and other multi-family residences will snap back quickly once businesses start hiring again, predicts Victor Calanog, director of research at Reis.

Baby boomers looking for retirement homes and first-time home buyers also will lead the way out of the decline, predicts Bill Singer, a securities attorney and trader who is a member of Forbes.com’s panel of financial gurus.

Source: Forbes.com, Madalina Iacob (03/18/2009)

Homeowner Affordability and Stability Plan

The following is taken directly from the U.S. Treasury in regard to the Homeowner Affordability and Stability Plan. It provides answers to many common questions about the new program announced by President Obama to help current homeowners. Full guidelines for the new program are set to be released on Wednesday March 4, 2009.

Also remember, the first time buyer is eligible for a direct tax credit of the greater of 10% of purchase price or $8,000 on either the '08 or '09 tax return.

Borrowers Who Are Current on Their Mortgage Are Asking:

1. What help is available for borrowers who stay current on their mortgage payments but have seen their homes decrease in value?

Under the Homeowner Affordability and Stability Plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower their interest rates because their homes have decreased in value, may now have the opportunity to refinance into a 30 or 15 year, fixed rate loan. Through the program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they hold in their portfolios or that they placed in mortgage backed securities.

2. I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify. The current value of your property will be determined after you apply to refinance.

3. How do I know if I am eligible?

Complete eligibility details will be announced on March 4th when the program starts. The criteria for eligibility will include having sufficient income to make the new payment and an acceptable mortgage payment history. The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

4. I have both a first and a second mortgage. Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan. Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage.

5. Will refinancing lower my payments?

The objective of the Homeowner Affordability and Stability Plan is to provide creditworthy borrowers who have shown a commitment to paying their mortgage with affordable

payments that are sustainable for the life of the loan. Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments. Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down if they refinance to a fixed rate. These borrowers, however, could save a great deal over the life of the loan. When you submit a loan application, your lender will give you a "Good Faith Estimate" that includes your new interest rate, mortgage payment and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing may not be right for you.

6. What are the interest rate and other terms of this refinance offer?

The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment. All loans refinanced under the plan will have a 30 or 15 year term with a fixed interest rate. The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender. Interest rates may vary across lenders and over time as market rates adjust. The refinanced loans will have no prepayment penalties or balloon notes.

7. Will refinancing reduce the amount that I owe on my loan?

No. The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans. Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe. However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

8. How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?

To determine if your loan is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible to be refinanced, you should contact your mortgage lender after March 4, 2009.

9. When can I apply?

Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.

10. What should I do in the meantime?

You should gather the information that you will need to provide to your lender after March 4, when the refinance program becomes available. This includes:

information about the gross monthly income of all borrowers, including your most recent pay stubs if you receive them or documentation of income you receive from other sources

-your most recent income tax return

-information about any second mortgage on the house

-payments on each of your credit cards if you are carrying balances from month to month, ----and payments on other loans such as student loans and car loans.

Borrowers Who Are at Risk of Foreclosure Are Asking:

1. What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?

The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

2. Do I need to be behind on my mortgage payments to be eligible for a modification?

No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.

3. How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?

In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009.

4. I do not live in the house that secures the mortgage I'd like to modify. Is this mortgage eligible for the Homeowner Affordability and Stability Plan?

No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible. If you used to live in the home but you moved out, the mortgage is not eligible. Only the mortgage on your primary residence is eligible. The mortgage lender will check to see if the dwelling is your primary residence.

5. I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.

6. I have two mortgages. Will the Homeowner Affordability and Stability Plan reduce the payments on both?

Only the first mortgage is eligible for a modification.

7. I owe more than my house is worth. Will the Homeowner Affordability and Stability Plan reduce what I owe?

The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Lenders are likely to lower payments mainly by reducing loan interest rates. However, the program offers incentives for principal reductions and at your lender's discretion modifications may include upfront reductions of loan principal.

8. I heard the government was providing a financial incentive to borrowers. Is that true?

Yes. To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan. The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt. Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of that period.

9. How much will a modification cost me?

There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan. If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee. Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance.

10. Is my lender required to modify my loan?

No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.

11. I'm already working with my lender / housing counselor on a loan workout. Can I still be considered for the Homeowner Affordability and Stability Plan?

Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.

12. How do I apply for a modification under the Homeowner Affordability and Stability Plan?

You may not need to do anything at this time. Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria. After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks. If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or a HUD-approved housing counselor. Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.

13. What should I do in the meantime?

You should gather the information that you will need to provide to your lender on or after March 4, when the modification program becomes available. This includes information about the monthly gross income of your household including recent pay stubs if you receive them or documentation of income you receive from other sources

-your most recent income tax return

-information about any second mortgage on the house

-payments on each of your credit cards if you are carrying balances from month to month, and payments on other loans such as student loans and car loans.

14. My loan is scheduled for foreclosure soon. What should I do?

Contact your mortgage servicer or credit counselor. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower's eligibility. We support this effort.

FHA Loan Limits Raised Again

Additional Homes Will Qualify For FHA Financing

With signing of the American Recovery and Reinvestment Act of 2009 into law by President Obama, FHA loan limits have been reinstated to the loan limits of 2008. What this means is that Maricopa and Pinal will have their loan limits raised from the current level of $271,050 back to $346,250. This will help more homeowners be able to qualify for an FHA loan in 2009 for both the purchase and refinance of a home loan.

FHA financing still has some of the lowest down payment requirements of all loans at 3.5% for a purchase. While also allowing higher loan to values for borrowers looking to refinance their home. So this along with the recently amended $8,000 home buyer tax credit is good news for the housing market.

In addition, the next week should bring more details about additional programs from the current administration aimed at helping the housing market that are set to launch very soon. Including the proposed refinance program to help home buyers who owe more than their homes are worth. Stay tuned for details.

HOME BUYER TAX CREDIT REVISED:

$8,000 TAX CREDIT TO TAKE EFFECT WITH NEW BILL

After debate over the final dollar amount, the new economic stimulus bill awaiting President Obama's signature on Tuesday will contain an $8,000 tax credit. First-time buyers can claim the credit worth $8,000 or 10% of the home's value, whichever is less either on their 2008 or 2009 taxes.

This credit will be refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of withholding they paid during the year plus anything extra they had to pay when they filed their returns - was less than that amount.

To qualify for the credit, potential home owners must have purchased January 1, 2009 or later and will have up until November 30, 2009 to close on their new home. Buyers may not have owned a home for the past three years to qualify as "first time" buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.

Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. Although higher-income buyers may receive a partial credit.

In addition, applying for the credit will be easy as home buyer will be able to just claim it on their return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.

This new plan improves on the current $7,500 tax credit, which was passed in July and was more of an interest free loan than an actual credit. But it did not go as far as a proposed a $15,000 non-refundable credit for all homebuyers.

According to the National Association Realtors, the $8,000 credit will bring an additional 300,000 new homebuyers into the market between now and its expiration on November 30, 2008 which should somewhat improve the housing market.

In addition, a carryover effect may occur because each first-time homebuyer sale will lead to two more trade-up transactions down the line. As it will allow more existing sellers to sell their homes to potential first time buyers. The true impact is yet to be determined, but the credit is a step in the right direction to help further stimulate the housing market.

American Recovery and Reinvestment Act of 2009

H.R. 1, the “American Recovery and Reinvestment Act of 2009,” passed the House on February 13, 2009, by a vote of 246 - 184. The Senate also passed the bill later that day. The President is expected to sign the bill soon. The bill is a $780 billion package, with roughly 35% of the package devoted to tax cuts (mostly for 2009) and the rest to spending intended to occur in 2009 and 2010.
View how the U.S. House of Representatives voted>

The mix of provisions of interest to REALTORS® changed frequently throughout the legislative process, with changes continuing to be made just hours before the measure was released prior to the vote. In the end, the elements of NAR’s housing agenda were included. Congress and the President have announced that a finance and housing package (including tax provisions) will be the next “big” initiative, so Congress has by no means finished its work as it affects the housing industry and REALTORS®.

The bill includes the following provisions:

Homebuyer Tax Credit
FHA, Fannie Mae and Freddie Mac Loan Limits
Neighborhood Stabilization
Commercial Real Estate
Rural Housing Service
Low Income-Housing Grants
Tax Exempt Housing Bonds
Energy Efficient Housing Tax Credits & Grants
Transportation Investments
Broadband Deployment

Homebuyer Tax Credit – The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
Chart Highlighting the Major Modifications to the First-Time Homebuyer Tax Credit> (PDF: 309K)
Back to top

FHA, Fannie Mae and Freddie Mac Loan Limits -The bill reinstates last year's 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans. These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750. For the few areas where the 2009 limits were higher, the higher limits will apply. In addition, the bill includes language providing the HUD Secretary with the discretion, if warranted, to increase the loan limit for any “sub-area”, i.e.an area smaller than a county. The Secretary's discretion is again limited by the $729,750 cap. These 2009 limits will expire December 31, 2009.

The inclusion of these loan limit provisions in the final bill is a victory for homeowners, buyers and Realtors. While these new limits were included in version of the original stimulus bill approved by the House, the bill first approved by the Senate did not. NAR's Call for Action to both the House and the Senate prior to the final vote advocated strongly for the provisions which were then included in the final bill approved by both Chambers.

Estimated 2009 FHA, Fannie Mae and Freddie Mac Loan Limits> (PDF: 1.3M)
Back to top

Neighborhood Stabilization – Division A, Title XII of the bill provides $2,000,000,000 in additional funding for the Neighborhood Stabilization Program (NSP). The NSP was created by the Housing and Economic Recovery Act of 2089 (Public Law 110–289) to provide grants through the Community Development Block Grant program (CDBG) to states and localities to address the problems that can be created when whole neighborhoods are decimated by foreclosures. The funds can be used to purchase, manage, repair and resell foreclosed and abandoned properties. In addition, the funds can also be used by states and localities to establish financing methods for the purchase and redevelopment of foreclosed properties. After purchase the homes must be used to assist individuals and families with incomes at or below 120% of area median income. Twenty-five percent of funds must be used for households with incomes at or below 50% of area median income. By leveraging their expertise in partnership with others from both the public and private sector, Realtors® in many communities have been making important contributions to their local communities’ neighborhood stabilization programs.
Back to top

Commercial Real Estate - Commercial real estate is impacted primarily through those provisions of the bill focused on green building and energy efficiency as well as business tax incentives. H.R. 1 provides significant funds for state energy programs, which could be used to support commerical property owners' investment in energy efficiency upgrades while commercial property owners seeking to invest in alternative energy systems for onsite power generation would benefit from the Department of Energy Renewable Energy Loan Guarantees Program. Of particular benefit to small businesses would be certain provisions of the bill that provide tax relief in the area of bonus depreciation and capital expenditures, as well as the 5-Year carryback of net operating losses for small businesses.
Back to top

Rural Housing Service

Rural Housing Service – The bill provides an additional $500 million to existing USDA Rural Housing programs. The RHS provides both a guaranteed loan program and a direct housing loan program for those meeting the program’s eligibility criteria. The direct loan program will receive $270 million while $230 million will be allocated for unsubsidized guaranteed loans. It has been reported that this level of funding would provide for an additional 192,000 homeowners.
Back to top

Low Income Housing Grants - Allow states to trade in a portion of their 2009 low-income housing tax credits for Treasury grants to finance the construction or acquisition and rehabilitation of low-income housing, including those with or without tax credit allocations.
Back to top

Tax-Exempt Housing Bonds - Tax-exempt interest earned on specified state and local bonds issued during 2009 and 2010 will not be subject to the Alternative Minimum Tax (AMT). In addition, financial institutions will have greater capacity to purchase tax-exempt state and local bonds.
Back to top

Energy Efficient Housing Tax Credits & Grants - To promote green jobs and energy independence, ARRA invests significantly in efforts to make homes and buildings more energy efficient. The bill provides state and local governments with $6 billion in energy efficiency and conservation grants for energy audits, retrofits and financial incentives. Through 2010, homeowners will be able to claim a 30% tax credit (up from 10%) for purchases of new furnaces, windows and insulation. Another $5 billion will be available to modernize the nation’s electricity grid and install smart meters on homes that help to save consumers money. There is also $5 billion for weatherization assistance for low income households and $2 billion for federally assisted housing (section 8) efficiency efforts.
Back to top

Transportation Investments - The bill provides $46.7 billion to states and localities for capital investment for surface transportation projects including highways, bridges, transit, and rail projects. NAR policy supports increased spending on the types of transportation infrastructure addressed in the bill with the exception of Amtrak and high-speed inter-city rail where NAR has no policy. These investments will tend to moderate traffic congestion and support a variety of transportation alternatives which will improve the quality of life of American communities and bolster the value of real estate.
Back to top

Broadband Deployment - The bill creates $7.2 billion in grants to promote broadband deployment in unserved and underserved areas and for mapping the availability of broadband service in the U.S. Any entity is eligible to apply for a grant including municipalities, public/private partnerships and private companies as long as they comply with the grant conditions. The grants are subject to “network neutrality” requirements to ensure that broadband networks be free of restrictions on content, sites, or platforms, on the kinds of equipment that may be attached, and on the modes of communication allowed.

The bill also charges the FCC is with developing a national broadband plan that shall seek to ensure that all Americans have access to broadband capability and shall establish benchmarks for meeting that goal.

These provisions are important victories for REALTORS because increased broadband access promotes economic growth and expands opportunities for home sales. A 2006 Commerce Department report determined that property values are 6% higher in communities where broadband is available.

provided by Realtor.org

Geithner unveils new bank rescue plan

At long last, the Treasury Secretary has announced how the Obama administration will try to stabilize the financial sector.

Colin Barr, senior writer

Last Updated: February 10, 2009: 11:46 AM ET

NEW YORK (Fortune) -- Treasury Secretary Tim Geithner sketched out the broad strokes of the latest government attempt to stabilize the financial sector Tuesday morning.

Speaking in the Cash Room at the Treasury Department in Washington, D.C., Geithner introduced a four-point plan that aims to restart the flow of credit to businesses and consumers.

The administration didn't put a price tag on the new plan and said it won't ask Congress for more money, at least right away.

"Instead of catalyzing recovery, the financial system is working against recovery. And at the same time, the recession is putting greater pressure on banks. This is a dangerous dynamic, and we need to arrest it," Geithner said. "It is essential for every American to understand that the battle for economic recovery must be fought on two fronts. We have to both jumpstart job creation and private investment, and we must get credit flowing again to businesses and families."

The key points in the administration's new Financial Stability Plan include:

Testing the health of big banks to weather an even deeper economic downturn. Geithner said the Treasury will "stress-test" the biggest banks and provide capital to those that need it, as the nation sinks deeper into its worst recession in decades.

He said the stress test will apply to institutions with more than $100 billion in assets - a list that comprises 13 banks, from giant JPMorgan Chase (JPM, Fortune 500) to Cleveland's KeyCorp (KEY, Fortune 500), according to a report from analysts at the Stanford Group in Washington.

Analysts say big U.S. banks could use at least $1 trillion in new capital as job losses mount and more borrowers default on mortgage, auto and credit card loans. But Geithner said the administration won't ask Congress now for more money - raising the question of how much capital it actually expects to provide.

Making credit more available to consumers and businesses. The Treasury will provide $100 billion in seed money to expand the Federal Reserve's Term Asset-Backed Securities Loan Facility, in which investors in bonds backed by credit card and other loans can swap those bonds for Treasury securities, enabling them to get additional financing.

The move - which could create as much as $1 trillion in financing for consumers and businesses - shows the government is eager to bolster the capital markets, which provided a large percentage of funding for consumer loans before the bond markets seized up in late 2007.

Creating a private-public partnership to take toxic assets off banks' balance sheets. Policymakers believe clearing bank balance sheets of badly deteriorated loans and securities is a prerequisite for restoring the normal flow of credit into the economy. Geithner said the plan will aim initially to use public financing to create as much as $500 billion in private sector buying capacity, with the prospect of an expansion to $1 trillion down the road.

Observers say drawing private capital back into the market is a key objective of any workable plan.

"Because the new program is designed to bring private sector equity contributions to make large-scale asset purchases, it not only minimizes public capital and maximizes private capital," the Treasury Department said in a fact sheet about the plan. "It allows private sector buyers to determine the price for current troubled and previously illiquid assets."

It remains to be seen, however, how the administration can break the stalemate between banks that are holding troubled assets at one price and investors who would buy only at a lower one.

Addressing the housing crisis. The Fed and Treasury will commit $50 billion to reduce mortgage payments and establish loan modification guidelines. Firms that receive federal aid will have to commit to participate in foreclosure mitigation plans, the Treasury Department said.

The administration said it will soon announce a comprehensive housing plan, which will lean in part on the Fed's efforts to drive down mortgage rates by buying mortgage-backed securities issued by government-sponsored mortgage companies Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).

The new financial rescue plan comes at a tricky time for the Obama administration.

Economic fundamentals are in steep decline around the globe, with the U.S. having lost 598,000 jobs in January and more than 3 million since the recession started in late 2007. Economists have called on governments to expand their spending to avoid a downturn as severe as the Great Depression.

But the $800 billion-plus fiscal stimulus plan championed by congressional Democrats has won little support from Republicans. Many of them say current stimulus proposals will be wasteful and ineffective.

Meanwhile, the government's first effort at righting the financial problems - the Bush administration's Troubled Asset Relief Program, which pledged some $350 billion to banks and other big companies starting in October - has been criticized as a giveaway to well-connected financial interests.

Geithner admitted Tuesday that the shortcomings of the first half of TARP are weighing on Americans' minds.

"Our challenge is much greater today because the American people have lost faith in the leaders of our financial institutions, and are skeptical that their government has -- to this point -- used taxpayers' money in ways that will benefit them," Geithner said.

"We believe that the United States has to send a clear and consistent signal that we will act to prevent the catastrophic failure of financial institutions that would damage the broader economy," he added.

The Obama administration has said it will tighten the terms of further aid to financial companies and demand greater accountability for how taxpayer funds are used. Last week, the administration unveiled a plan to restrict CEO pay at firms receiving government assistance.

Geithner didn't ask Congress for additional funds Tuesday, though he suggested such a request could come down the road. Observers say the government will need much more money to fill the holes in the financial system before an economic recovery can take place.

"I want to be candid: this comprehensive strategy will cost money, involve risk, and take time," Geithner said.

$15,000 Home Buyer Tax Credit: What We Know So Far

One of the most talked about new proposals to hit the home buying industry has been that of a $15,000 home buyer tax credit. This credit was part of added amendment to the Senate's version of currently proposed economic stimulus package. This new provision would provide a tax credit of as much as $15,000 or 10 percent of the home's purchase price, whichever is less, to anyone buying a primary residence during a one-year period beginning on the date of enactment. Here is what we know so far about this proposal.

DO HOME OWNERS WHO BOUGHT HOMES ALREADY AND QUALIFIED FOR THE $7,500 TAX CREDIT, QUALIFY FOR THIS $15,000 CREDIT AS WELL? - Most likely the answer is no, because the effective date of the new amendment is effective date the new provision will be enacted. This means that if you already purchased a home, you will probably not qualify for the new program.

WHAT WOULD HAPPEN TO THE EXISTING $7,500 TAX CREDIT? - The current $7,500 new home buyer tax credit will be replaced by the proposed $15,000 credit and this new provision applies to all home purchases. So essentially, no one will be able to take the $7,500 tax credit any longer once the new credit is enacted.

WILL THIS ACTUALLY PASS? -We should know this answer very soon as it is a component of the new version of the economic stimulus package. The House of Representatives has already passed its version of the stimulus bill, and the White House is putting pressure on the Senate to do the same. However, there are still hurdles to go through to pass the $900 billion package. However, chances are that if and when a version of this stimulus package is passed, this new home buyer tax credit will remain in the bill and passed into law.

DOES THE NEW CREDIT HAVE TO BE PAYED BACK LIKE THE CURRENT CREDIT? - In the case of the new $15,000 home buyer tax credit, it will not have to be paid back. This will be in contrast from the current $7,500 first-time home buyer credit, which was essentially an interest free loan.

WHAT TYPES OF RESTRICTIONS ARE ON THE NEW HOME BUYER TAX CREDIT? - The new tax credit would be limited to primary residences, but will not come with an income restriction. In addition, you must occupy the home for at least two years as your primary residence and will apply to any home, meaning a condo, a house, foreclosed, new or previously owned property.

WHAT IS THE TAX LIABILITY RESTRICTION? - One potential drawback to the $15,000 tax credit for lower income families is that the tax credit will also correlate to your amount of tax liability. Your tax liability is the amount of taxes paid out to the government, after your deductions. For example, if you had $9,000 withheld from your paycheck for the entire year and received a $1,000 refund at the end of year from the government, your tax liability would be $8,000 and you would be able to only receive that amount back from the tax credit. However, you could also split the credit over two years, meaning you could take the additional $7,000 in left over credit the following year if you had that much tax liability the following year.

IF I PURCHASE A HOME IN 2009 CAN I TAKE THIS CREDIT FOR MY 2008 TAXES? -You will be able to take the credit toward your 2008 taxes, even if you purchase the home in 2009.