Home Purchase Incentives Win Support from Lobbyists and Builder

WASHINGTON, DC—New tax credit incentive plans enacted by President Barack Obama and California Gov. Arnold Schwarzenegger (bottom right photo) are winning expected support from lobbyists and home builders, despite some heated criticisms of the measures in other public and private quarters.

In California, the Legislature has approved a tax credit of up to $10,000 for the purchase of a newly constructed home.

Nationally, the Stimulus Bill passed by the Congress provides a credit of $8,000 or 10 percent of the home’s purchase price (whichever is less), to buyers who haven’t owned a home in the last three years, and who are within certain income limits.

In a letter to the Mortgage Insurance Companies of America, Federal Housing Finance Agency Director James B. Lockhart III (top right photo) emphasized “the vital role” the private mortgage insurance industry will play in President Obama’s housing recovery program.

“I would reiterate my belief in the importance of a vibrant, healthy private
mortgage insurance market for conventional mortgages,” Lockhart says.

“Mortgage insurers, as participants in the assessment and pricing of mortgage credit risk, play an important role in our housing finance system.

“While the extraordinary circumstances in housing finance have greatly stressed mortgage insurers, I remain hopeful that the industry successfully recapitalizes so that it may continue its important role.”

MICA President Kevin D. Schneider (middle left photo) praised Lockhart for sending the letter, outlining the specifics of the incentive program.

“We commend Director Lockhart for offering this important clarification of the President’s housing recovery program,” said Schneider.

“The purpose of the program is to help mitigate losses to American homeowners during this stressful period.

“We support these efforts because they will help families maintain their homes by easing the financial strain of mortgage obligations they may be unable to afford.”

Added MICA Executive Vice President Suzanne C. Hutchinson: “The private mortgage insurance industry is a vital component of the nation’s housing finance system,

“Mortgage insurers make homeownership more affordable by helping borrowers seeking a low down payment home loan. We will continue to work with Fannie Mae and Freddie Mac to mitigate losses in the mortgage market.”

“This bill provides a meaningful incentive to buyers looking to buy a home for the first time in their lives,” says Jeffrey T. Mezger, (top left photo) president and chief executive officer of Los Angeles-based KB Home, one of the largest home builders in the U.S.

“With lower prices, low interest rates and this new housing tax credit, there is a golden opportunity for first-time buyers to realize the American dream of home ownership.”

Mezger adds, “This fully refundable tax credit reduces a homebuyer’s tax bill or increases their refund dollar for dollar, which means it will be paid out even if a taxpayer owes no tax or if the credit is more than the tax they owe.

“To qualify, the home purchase must close before December 1, 2009, so buyers should act quickly.”

Of California’s $10,000 housing tax credit, Jerry M. Howard,(top right photo) president and CEO of the National Association of Home Builders, calls the legislation “an effective measure to help resuscitate the Golden State’s ailing economy.”

Howard adds, “We encourage other states to take similar action to bring about a housing and economic recovery.”