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| Many States Already Monetizing Tax Credit |
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(May 14, 2009) --
Some states have already beat the U.S. Department of Housing and Urban Development to the punch on making bridge loans available to households who want to claim the First-Time Homebuyer Tax Credit
HUD Secretary Shaun Donovan yesterday announced that the department will allow consumers to obtain a bridge loan, repayable with proceeds from their tax credit, to help cover their down payment. Guidelines for the new policy will be released shortly, he said.
But even before the announcement, nearly a dozen states have made this happen by setting up programs to provide similar bridge loans through their housing finance agencies. And state REALTOR® associations were often behind these proactive efforts.
During the Federal Taxation Committee gathering at the 2009 REALTORS® Midyear Legislative Meetings on Wednesday, Bryan Wahl, the government affairs director for Washington REALTORS®, explained how his association worked with state officials to set up its program.
First, Wahl and other association representatives had to sell Washington’s treasury department on the idea. Although the state had made significant cuts in spending, there were some funds available in the capital budget for investment. Wahl proposed that some of that money be used to help shore up the state’s slumping housing market by lending to first-time home buyers.
“We needed to figure out how to provide an advance-loan program—a bridge loan, if you will,” he said.
The Washington REALTORS® association was able to convince treasury officials that the money loaned to home buyers would not only be paid back when tax credits took effect, but also increase the state’s funds. According to their calculations, every 1,000 home sales represented approximately $140 million in new tax revenues. To help close the deal, the association put up $400,000 to help cover the risk.
There are currently 10 states that have created or are in the process of creating a program similar to Washington’s, and that number is expected to increase following Secretary Donovan’s announcement. Wahl said the remaining states need to be convinced that they will get a return on this investment, or at least break even, before they seriously consider these proposals.
—Brian Summerfield, REALTOR® Magazine
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| Reprinted from REALTOR® Magazine Online (http://www.realtor.org/realtormag), May 14, 2009 with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2009. All rights reserved. |
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