Unless Congress takes action, loan limits in high-cost areas will revert back to $417,000 in October. But the loan limit on home-equity conversion mortgages was permanently raised to $625,500. Given HECMs can be used on purchase transactions, the use of HECM’s on transactions in excess of $417,000 could rise.
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A partial shutdown of the federal government forced by the budget impasse in Congress would delay release of U.S. economic data, making it more difficult to determine the influence on growth of the recent jump in commodity prices.
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The report’s release is the opening bell for a political battle in Congress over how to fix mortgage financing
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Washington, DC, United States (AHN) – Federal extended unemployment benefits for 2 million long-term jobless Americans will run out Nov. 30 unless Congress acts within the next few weeks.
State unemployment benefits run out after 26 weeks, but the unemployed can qualify for up to an additional 73 weeks of jobless benefits from the federal government in times of high unemployment, such as now. The unemployment rate is at 9.6 percent and has been at just under 10 percent all year.
Almost 15 million people are unemployed and about 9.5 million have collected federal jobless benefits in 2010 that average around $290 per week.
Only about 65 percent of working age Americans are participating in the labor force with either a part- or full-time job, according to the Bureau of Labor Statistics. That figure is normally 89 percent or higher.
In addition, the Center on Budget and Policy Priorities credits unemployment benefits with keeping about 3.3 million jobless Americans out of poverty last year.
Republicans have blocked extensions of federal jobless benefits several times this year, claiming it would be bad for the economy because it would add to the nation’s deficit.
Lawmakers return to Congress on Nov. 15 to work a week before taking a break for Thanksgiving. If jobless benefits are extended, it must be done then or benefits will expire on Nov. 30, leaving unemployed workers without a check.
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Washington, DC, United States (AHN) – Lawmakers passed a resolution on Wednesday, their last day of session before the mid-term elections, funding government operations until after they return from their recess. The stopgap measure was needed since both the House and the Senate haven’t passed a single appropriations bill for the next fiscal year, which begins on Friday.
By 228-194, the House passed a continuing resolution extending into December appropriations for the State Department, foreign operations and related programs past the fiscal year ending Sept. 30. Only one Republican, Rep. Joseph Cao (R-LA), voted in support.
In the Senate, the the temporary spending measure passed 69-30 with Sen. Russ Feingold (D-WI) as the sole Democrat opposing. Sen. John Thune (R-SD) offered amendments providing funding until February and reducing all non-defense spending by 5 percent, but both measures failed along party lines.
“With the new fiscal year beginning on Friday, the continuing resolution put forward by my Democrat colleagues only perpetuates the out of touch federal spending levels we have witnessed in recent years,” Thune said in a statement.
Lawmakers are scheduled to return to the Capitol for a lame-duck session on Nov. 15, when the 12 annual appropriations bills for the 2011 fiscal year are expected to be approved. A backlog of bills will also be tackled, including the repeal of “Don’t Ask, Don’t Tell” and the extension of 2001 and 2003 Bush tax cuts that are due to expire in January.
Democrats were hoping to pass a jobs bill to address the 9.6 percent unemployment rate before the elections, but could not muster enough votes to overcome Republican opposition. They sought to extend tax cuts for middle class families earning less than $250,000 a year.
The GOP, however, wants to make the tax cuts permanent for all including high-income earners. They’ve been accused by the White House of “holding the middle class hostage,” but they argue that the government should not raise taxes during a recession.
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Multiple Bills
As I mentioned before, there are already nearly half a dozen bills being considered by Congress. The most popular bill simply extends the current credit’s deadline from November 30th, 2009 to May 30th, 2010. However, there are other variations that would expand the credit even further. One seeks to raise the value of the credit from $8,000 to $15,000 while others would change the credit so that all homebuyers, as opposed to just those who have not purchased a house within the past three years, can take advantage of it.
Economy Still in Trouble
The main reason that supporters want to extend the bill is simple: the economy is still in trouble. Without a tax incentive, U.S. home sales will drop in 2010. Specifically, many are worried that sales during the winter months (when real estate activity is typically low) will plummet and put our economy back into trouble. Senator Isakson from Georgia, who actually worked in real estate before running for office claims “December through February is historically the worst time for home sales anyway because of the winter months, so with the credit ending November 30, you have a double whammy.”
Popular Credit
In all honestly, one of the largest reasons Congress is considering extending the credit is because of its mass popularity. Politicians are always thinking about their next reelection, and supporting legislation that is popular among your constituents is a great way to get reelected. Average taxpayers are always claiming that Congress does not do enough for “main street Americans” extending or expanding the current credit would be a great way to please them.
Opposition
There is quite a bit of opposition to extending the credit. First and foremost, there is concern over its costs. The first credit was passed in a state of economic emergency. Americans were frightened that the banking system would collapse, and that the housing marketing would crash entirely. Therefore, Congress was able to get the credit created without much debate about the costs. However, when you look at the math, this credit has already been very expensive. If 1.4 million families have already taken advantage of the credit, and 400,000 more will before it expires, then we are looking at a total cost of nearly $15 billion. Additionally, experts are worried that excessive credits will be the first step in creating the next real estate bubble.
Industry Pressure
Another thing to consider when examining the housing credit is the amount of pressure real estate and construction lobbyists have put on Congress. The National Association of Home Builders, The National Association of Realtors, and even the Business Roundtable (an association of chief executives) have all published statements promoting an extension of the credit. They are also pushing for lower interest rates, and an extension of the limits on loans eligible for government backing or purchase
Likelihood of Extension
With all of this debate about whether the credit has worked or not, what exactly are the odds that the credit will be extending? Lisa Poole of Time Magazine says there is a 2 to 1 chance that it will be either extended or expanding, but I would say that the odds are probably better than that. I doubt that it will be increased to $15,000, but I am pretty confident we will see some type of extension on the $8,000 credit for first time homebuyers.
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