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Early Christmas for real estate industry
November 29th, 2009 6:36 PM

Months of dire warnings from the National Association of Realtors and other real estate lobby groups appear to be paying off.

Uncle Sam will keep propping up the still shaky real estate market for months to come under a slew of proposals advancing in Congress.

The most obvious are plans, now gaining momentum, to extend the first-time home buyer tax credit.

While the credit has had its share of critics, a proposal winding its way through the Senate would not only extend it into the spring, but would also expand it as well.

But amid the debate over the credit, Congress has also sped along two other darlings of the real estate industry.

One would prevent higher limits on jumbo loans from expiring, while the other would gut tough new appraisal standards real estate brokers contend have been killing sales.

Without fanfare, Congress late last month agreed to extend the higher jumbo limits, keeping the ceiling at $729,750. The top limit had been poised to drop to $625,500 Jan. 1.

That should help keep alive the budding revival in the hard-hit jumbo market, though it also adds more high-end loans to the already strained portfolios of Freddie and Fannie.

A bipartisan amendment, also passed in October, would require the new chief of the proposed Consumer Financial Protection Agency to replace controversial new regulations on appraisals.

The aim of the new rules was to prevent the epidemic of inflated appraisals that helped inflate prices during the bubble years. Real estate brokers and industry groups, however, have blamed the regs for killing deals.

Of course, the biggest present of all is the tax credit package, still being packaged and wrapped in Congress.

Under the Senate proposal, trader uppers, not just first-time buyers, would also get the credit. Income eligibility would also be boosted significantly as well.

Sarcasm aside, extending the credit and keeping the higher jumbo limits in place, though costly, makes more sense than the alternative.

Forcing the still recovering recovering real estate market to go cold turkey would seem a recipe for disaster at this point.

But it certainly also points to the lobbying power of the real estate industry.


Posted in:General
Posted by Roch Lemieux, III on November 29th, 2009 6:36 PMPost a Comment

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