I recently read an article on the abuses that have been made to the first time home buyer tax credit that is set to expire in November. I am not going to get into the politics of whether or not the program should have been established in the first place, but it was established with the hope that it would help people decide to go ahead and make a house purchase by making houses a little more affordable. With the mortgage interest rates being as low as they have been over the last year or so, and house prices dropping down to more reasonable levels, I can’t help but think that this tax credit helped some families purchase their first house, perhaps an old house that needed to be saved.
Yet, it always seems like there are people who will abuse a system for their financial benefit. We have all heard about the abuses that have taken place over recent years on Wall Street, the risky loans that big banks made to realize large profits, the problems of the large automakers, but the problems exist at all levels of our society. It seems like no matter how good intentioned a program or company is there will always be someone who will abuse the program for their own financial gain.
I remember a few years ago in the aftermath of Katrina how inspirational the stories were of the people and groups who went to Louisiana to help rebuild the area. The people who helped rebuild the damaged houses, the groups that gave newly homeless families a place to live, the animal organizations that helped the pets, yet even with all the great stories of assistance that came out of that tragedy there were also the other stories. The companies and individuals that took advantage of the situation to line their own pockets with funds that were intended for those who really needed the help.
The funds for the first time home buyer tax credit are evidently being abused in much the same way with thousands of people taking the credit when they hadn’t met the criteria. Realtors and home builders were starting to be more optimistic about the future, house sales were improving during the past year. How much of the increased sales activity can be attributed to the tax credit? I don’t think anyone can say for sure. If the credit was extended would house sales continue to increase? Would an extended tax credit allow even more young families to buy their first house, to perhaps buy an old house in need of being saved? Again, I don’t know if anyone knows the answer to those questions, but I do know that people abusing a program can ruin it for everyone else.