While the credit has current increased sales, there are questions about whether the credit has stimulated new sales or just encouraged already decided buyers to purchase sooner rather than later. In other words, no real boost to the overall housing sales that would have occurred anyway over the next several months.
If this is the case, then the sales in the coming months may be adversely impacted by the present tax credit incentive.
Other objections are the cost to the treasury, and the apparent fact that the buyers and the areas benefiting from the tax incentive may not be those most needing the help.
The good news for the economy is that in a few months there will be billions of dollars in tax credits being spent by the lucky recipients. Of course it is billions of dollars that will be provided by us good old tax payers.
In a recent post, I tried to review the considerations for extending the credit - its effectiveness, its cost, its target. One comment suggested that I had mentioned the problems, but had not offered an alternative solution. I felt that was a fair criticism of the post.
How else might the government stabilize the housing market, if the tax credit idea is not effective and is too costly?
Here is my alternative solution, using the same $11 billion that is the reported cost of the credit to date. (Of course, with still another several weeks before the deadline, I suspect the final cost will be close to double.)
Use the $11 billion, in increments of up to $8,000, to encourage new home buyers - those who want to purchase but have found that in the new lending realities, they are no longer qualified to purchase.
A year they could have purchased with lower scores or with a lower down payment. Today they are locked out.
One of the problems with the housing market is that prices have dropped because of surplus homes and the impact of foreclosure sales.
Another reason for depressed prices is that the pool of qualified buyers has dropped significantly. Credit score requirements have increased. Unemployment has increased. Down payment requirements have increased.
Fewer buyers. More inventory. Lower prices.Less sales.
If we use the tax credit money to offer a guarantee, matching dollar for dollar, to private and government mortgage insurance then it might enable the qualifying requirements to be lowered. Providing more qualified buyers.
More buyers. Less inventory. Higher prices. More sales.
For those who would participate in the subsidized MI program, they could receive a higher rate that could offset some of the cost and risk. But these new borrowers would be able to qualify with less down or with lower credit scores.
These borrowers would still meet underwriting guidelines, just relaxed guidelines.
If we used the $11 billion so far spent in the credit, largely by people who would have bought anyway (no net increase in home sales over time), then there might have been over 1,300,000 home sales that were actually new buyers.
(A real net increase in home sales over time.)
Most home buyers who would qualify unter tighter guidelines would not take the higher rate or higher MI required for the subsidized MI program. Those buyers would still purchase, without the incentive.
We would have the funding for over 1,000,000 new purchasers who would not have qualified without the subsidized MI.
The MI companies could charge the full premium and cover only half the risk. This would help restore the MI industry. (Damage to the MI industry has not received much discussion, but it is a critical issue.)
It might be possible to subsidize MI even for qualified buyers who purchase in targeted, depressed areas. This would give a reduced MI premium, and be market driven solution.
If we consider that the MI subsidy would not really be all be spent, but only for those homes lost to foreclosure, most of the buyers receiving subsidized MI would keep their homes, then the $11 billion could be used to subsidize even more purchases.
Using a 30% default rate, the $11 billion might be stretched to cover 4.5 million new home sales.
Now that would stabilize the housing market.
The film, Main Street: More than a Home, documents the story about the first LEED certified Habitat home in Tennessee.
Several months ago Habitat for Humanity in Chattanooga announced the first LEED certified home in Tennessee. The home was completed in April.
Today Habitat announced the film documenting the effort and the client's story - a remarkable story - will be featured at the Brownfields Film Festival on Tuesday, November 17th.
The LEED certified project was a joint effort with local entrepreneur - architect, Thomas Palmer; green builder Ethan Collier; and local nonprofit, green|spaces - and Habitat. The client is Baja Dalla, a Sudanese refugee, who Sudan's civil war in which his parents and siblings were killed to come to Chattanooga.
The Chattanoogan has a story about Baja and his family. This is the 4th refugee family helped by Chattanooga Habitat.
The story was so inspiring that David Porfiri and Linda Duvoison, with Mindflow Media, decided to produce a documentary film: Main Street: More than a Home.
Collier Construction has provided a resource sheet to describe some of the design features that makes the new home a green home. It includes planned features such as advanced framing, insulated crawl space and attic
You can donate to the green Habitat construction projects here.
Last month another successful Race for the Cure was held in Chattanooga.
This year a record crowd came 
out for the annual 1k Fun Run and the 5K Competitive Race.
As a follow up to the Susan G Komen Race for the Cure two more events are scheduled in October.
Tomorrow at 4pm, organizers with the Chattanooga Affiliate of Susam G Komen for the Cure® are going for the Guinness Book of Records for the largest human awareness ribbon.
Anyone over the age of 15 can participate. Participants will meet at Chamberlain Field, UTC.
The next event is October 29 at the Chattanooga Spa, from 6 to 9pm. $15 admission for hors d'oevres and mini spa treatments, with proceeds going to the Chattanooga Affiliate of Susam G Komen for the Cure®.
encouraging
Reviewing the recent story lines in the Times Free Press reveals postive stories that bear out a trend of economic recovery in the Chattanooga area.
Chattam, a local consumer products manufacturer, has seen its stock price jump as investors take note of its rising sales and profits. The article reports that the company's top 4 brands, Gold Bond, ACT, Icy Hot, and Cortizone-10, are having strong sales. The article reports that the company is planning an $18 million expansion that will employ over 60 additional people.
The Volkswagen plant of course is big news in Chattanooga.Plant construction is moving along well. This week VW representatives held a gathering for potential suppliers. Plans now are to have a high percentage of supplier plants on site and locally in Chattanooga. About 100 VW suppliers gathered to hear VW expectations for its new plant in Chattanooga.
Southern Fabrication Contractors, another local company, announced it received the contract for installing equipment support steel for the VW plant. Contract terms were not announced but it is very good for the Chattanooga employer and community.
Another local company, CBL, a locally based commercial property developer and management company, announced the grand opening of The Promenade, a 700,000 square foot shopping center in D'Iberville, Mississippi. The first phase is opening with 96% of the commercial space leased or committed. The shopping center is the largest project in the Mississippi Gulf Coast since Hurricane Katrina.
Another local company, eSpin, a leader in nanofiber technology, announced it has received the license to provide dry wipes for use at Department of Energy nuclear energy facilities. These wipes replace wet wipes and are more effective and require no other chemicals to clean. The company hopes to offer similar products for general consumer use.
It has been my pleasure to post frequently the high ratings Chattanooga receives as a top city on the international scene.
This morning I must now post our high ranking as the least physically fit city in the US, according to the Center for Disease Control and Prevention.
Come one folks - we are better than this.
We have the Riverwalk, bike trails, numerous gym facilities, even some public facilities. 7 area YMCA's. Each community has a walking track with its youth athletic association.
We are better than this.
Let's go for a walk! Today!
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The right Home Loan for you. American Acceptance Mortgage. Chattanooga, TN. Conventional and government home loans and mortgages in Tennessee, Georgia, and Alabama. Purchase, refinance, renovation.
Home purchases and home refinances for Tennessee, Georgia, and Alabama. The right real estate loan for you. That is 
what American Acceptance Mortgage is all about. Each mortgage loan officer at American Acceptance is focused on providing the service you need. I have over 20 years experience as a mortgage loan officer. We have been making mortgage loans in Chattanooga, TN since 1994.
We know real estate finance. And we provide top service to each locality in our 3 state service area of Tennessee, Georgia, and Alabama.
Purchase Loans - We offer loans designed to keep your down payment low. These include conventional, FHA, VA, and Rural Development loans. We participate in the FHA approved down payment assistance programs and other nonprofit grant programs. By offering loan programs from several top national lenders, you can be sure that you can get the best approval terms around. Our promise is to get you to the closing table on time and with no surprises. We have real estate agent contacts in every area and can recommend agents that provide you with excellent service.
Refinance Loans - Understanding your refinance objectives is critical to obtaining just the right loan terms. Making certain that your goals are achievable before we even begin the process saves time and money. Working with me means that you will be fully informed at each step of the process.
Construction Permanent - With builders finding construction lines getting tight, experienced construction permanent lending is needed to get you your new custom home. We offer construction permanent loans through 5 different national lenders. This means that you get to choose the best options for you - fees, draws, construction interest, permanent lock in terms.
FHA Renovation - In today's market, you may find that a renovating your home is a good option. With an FHA renovation loan you get excellent terms. Also the FHA loan amount calculations typically allow you to receive more money for your renovations, meaning that you may very well get all the work you want.
If you are interested in a government loan, FHA, VA, or Rural Development, go to an experience lender. We have offered government loans since 1994. Our lender relationships and experience will make a difference for you. We close many loans that others cannot.
We are experienced with HUD foreclosures, and working with other foreclosure companies.
Relocation is made smooth with our local contacts and use of internet technology - secure online applications, toll free fax number, secure website user accounts, daily status reports, and the informative lock recommendation. Your move will be the happy experience it should be, because you will not be worrying over the financing of your new home.
Local focus - you can find ready resources to learn about the local communities in our service area.
Credit repair - You will not find better credit consultation anywhere. If you need professional assistance to repair your credit, you will know exactly what they need to do for you. For the most part you and I can work through credit issues. We even offer a service to help you build a credit file from scratch.
American Acceptance Mortgage, Inc
Home Office
I am active with the Red Bank Lions club and have served serveral terms on the board of my church, the Chattanooga Community Kitchen, and the Episcopal Commission of South East Tennessee. I am active with the Chattanooga Chamber of Commerce, and serve proudly as one of their ambassadors.
Currently, I am a committee chair with the Women's Council of Realtors, a member of the Chattanooga Association of Realtors, the Home Builders Association of Southern Tennessee, the mortgage brokers association,and the mortgage bankers association.
My goal is to WOW you.
We specialize in FHA, VA, and Rural Development mortgage loan programs. We offer these programs along with the traditional conventional mortgage programs. We are experienced FHA lenders, with proven results in credit repair and credit building. We take pride in serving our customers and have developed excellent reputations and relationships with our lender partners.
My real estate agents know they receive my full commitment and the commitment of my staff. I stay fully accessible. I return phone calls. I tell the truth. My clients and partners are kept fully informed of the status. My experience both as a mortgage loan officer and as a mortgage lender helps me to identify potential loan approval issues early in the process. This allows my clients to have right expectations about their home financing transaction. I know the financial goals of my clients and work hard to develop a lasting relationship with them.
Recently I have become involved with the Chattanooga Office of Multi Cultural Affairs. This is a group of local 
professionals from government, private, and industry entities who are working to educate consumers and businesses about discrimination and minority opportunity. I am very excited about this effort as a way to increase home ownership potential in Chattanooga.
Credit repair and credit building have become increasingly important in today's market. We have demonstrated results for many of our clients in helping them improve their credit histories without using for fee credit repair companies. In fact, we have been helping our customers with their credit for several years. In today's market, good credit management can have a significant impact on loan approval and loan terms. We are credit management experts, and we take the time to review, explain, evaluate, and advise.
FHA home loans have always been a specialty of our company. Even when FHA was losing market share to subprime and Alt A mortgages, we were closing FHA mortgage loans. Other brokers steered borrowers into subprime loans. We worked with borrowers to get an FHA home loan approved. We gained considerable processing experience with the art of manual underwriting and full documentation. Processing can make all the difference in getting a loan approved.
We are closing FHA loans that other lenders cannot. We prove that every day.
We put technology to work for you. This makes your loan process smooth. You know the status. You have the information. You can make the informed decision. Lending is local. We use technology to give you local service - right where you are.
"Richard is a professional and I would recommend him to anyone needing sound advice about their mortgage." BH Chattanooga, TN
"This is my first purchase. We just had a baby last year. And we are so excited. Richard has keep us informed of the status with daily emails. He always makes sure that we know what to expect next. On top of that, during the loan, my wallet was stolen. Richard came in over the weekend to help with all things I needed to do about indentity theft and to notify the charge card companies and the credit bureaus. He really helped." CK East Ridge, TN.
"My loan went well, really quickly. But there was a problem with the lender taking the appraisal. Richard stayed in touch continuously. I always new what was next. He worked with the realtor and with the appraiser and got the loan done. Even going to another lender, he kept my rate and still closed quickly. " RH Chattanooga, TN
"Richard is one of the most professional and knowledgeable broker/bankers I have had the pleasure of working with, it is refreshing to see his commitment and dedication to our industry." ST Nashville, TN
"I needed to purchase the salon where I worked. It was a great opportunity. Richard told me what needed to be done, but another lender kept making promises. Those promises were never kept. Richard was patient. He told me to keep working with the other company as long as I thought things were going to go through. He would keep my loan ready if I needed it. Well, I needed it. Now I have my salon and it is going well. Richard knew how to get it through." Cleveland
"Richard has been great to work with. I love it when my clients take charge of their advertising campaigns and want to be personally involved to really make it their own. He worked hard to personalize his commercial and has worked to keep his website up-to-date. Thanks Richard for making it easy to work with you and being a man of integrity. If you're interested in making your dreams come true and having financial freedom, Richard is the man to talk to to!" GH Chattanooga, TN
"Richard works hard for my buyers. I know that. He calls me before I call him most of the time. I love the daily updates. He sends weekly articles about changes and other news. I really feel like I know the status. And when something comes up, I know he is giving me the right information. That really is important to me." LP, Chattanooga
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