Tax Credit Extension--Good or Bad news.

I think not good, which is the same as bad, and I wrote about it earlier on my blog at www.terradigmrealestate.com. Here it is:

"Today, Fannie Mae, the country's largest insurer of mortgages, requested another $15 billion from the government. Looks as though they had an $18 billion 3Q loss (guess they didn't need the other $3 bill-what's a billion here or there among friends?).

"Anyway.

"That brings the total Fannie has needed to $60.9 billion. I haven't checked what Freddie Mac has needed to date, but when they were first bailed out, the total to rescue them both was projected at $25 billion. It's going to hit $100 billion, easily. Does this matter?

"Hmm. The Congress today passed an extension of the $8000 tax credit for first-time buyers. But it wasn't enough. A $6500 credit for trade-up buyers was added to the dessert tray. Nevermind that 70% of the first timers who have already used the credit would have bought a home without it. And the trade up people? The people who have to move somewhere after selling their homes to first-timers? Apparently, the government felt these people wouldn't buy without taxpayer help. I guess the feds felt these people would move into FEMA tents or something.

"Most of the first-time buyers are using FHA. Ginnie Mae insures FHA (and VA) loans. Ginnie's debt load is up to $680 billion last time checked. That portfolio has an explicit government guarantee, which gets us on the hook for $780 billion and counting.

"Don't get me wrong. The government had to step in and shore up the finance market, because if they hadn't, we wouldn't have an economy right now. I think the Feds did a good job keeping the country afloat.

"I like hot fudge, too, just not a gallon of it at one sitting."

Let me know if you agree with this. It seems to me that more of us have to stand against the NAR's lobbying and make our opinions known.