patrick.net

We all know that the first time homebuyer tax credit was a dismal failure. Displacing future sales to the past, driving up already-bubbled prices, giving a false sense of a bottoming market (as well as a sustainable recovery), and creating more underwater homeowners. Are they trying to do it again via Fannie Mae?

http://www.credit.com/blog/2011/06/fannie-mae-introduces-incentives-for-foreclosure-purchases/

Fannie Mae recently announced that it would grant consumers incentives to purchase a home listed on a lender’s foreclosure list between now and October 31 through its HomePath program. Included in these deals is up to 3.5 percent of the final sales price being put toward the closing costs the homebuyer would have to pay.

The incentives are being expanded in an effort to help boost slumping property values in areas badly affected by the national foreclosure meltdown, the company said.

This language is awfully familiar and the 3.5% assistance target hardly seems arbitrary since it's exactly the amount that the FHA requires as a minimum down payment. The tax credit was meant as a "boost" to the housing market. Are they trying to pull the same gimmick here? Will the impact be the same, or will it possibly have an opposite effect, like incentivizing banks and other sellers to come up with more aggressive selling tactics? Will it not "create" buyers like the tax credit did by taking those who haven't saved enough money to "buy" a house and essentially paying for their entry into the market?

#housing