Home Buying After Fannie and Freddie

  • Share
  • Read Later
UPI / Landov

Corporate logo for Freddie Mac seen outside its headquarters in McLean, Va.

(2 of 2)

States are also waiting to hear details about the $11 billion in tax-exempt bonds they'll collectively be allowed to issue to help refinance subprime loans, provide low-interest mortgages to first-time home buyers and finance the construction of low-income rental housing. The Michigan State Housing Development Authority (MSHDA), for example, already has two programs to help homeowners refinance into lower-rate loans, using funds from tax-exempt-bond issues. "This is more of a preventive tool," says Mary Townley, director of MSHDA's homeownership division. "We're trying to have an option for homeowners before they're four or five months delinquent." Word on how much each state will be allowed to issue comes on Oct. 1.

Housing-counseling organizations are busy writing grant applications to claim a slice of the $180 million the federal housing bill slots for pre-foreclosure counseling. NeighborWorks, the nonprofit network of community groups that's responsible for handing out the money, estimates some 350,000 homeowners might be reached through counseling sessions, foreclosure-prevention fairs and campaigns to raise awareness about what options are available. The money, which comes in addition to $180 million of emergency funding Congress allocated last year and which should hit communities by December, should also help counseling agencies add much needed manpower. "They're triaging folks as they walk in the door — they want to spend time with folks who have a foreclosure auction in a few weeks before folks who aren't even delinquent," says NeighborWorks CEO Ken Wade. "Our intention all along has been to reach consumers earlier in the process, to get ahead of the problem."

Further down the road, there's one more provision that will directly affect homeowners: tax breaks. As of tax year 2008 (what you file shortly before April 15, 2009), homeowners who don't itemize but who do pay property taxes can add up to $500 to the standard deduction ($1,000 for joint filers). And first-time homebuyers who earn less than $75,000 a year ($150,000 filing jointly), can take a tax credit worth 10% of the value of their new home, up to $7,500. One catch: Starting two years after you buy the house, you'll have to start paying that money back (really, it's an interest-free loan). But by that time we hope we will be well into the next housing-market upswing, and people will be doing all these things — buying homes, making loans, building houses— without billions of dollars' worth of government prompting.

  1. 1
  2. 2
  3. Next