Homebuyer tax credit off the radar

There’s no serious talk of reinstating the homebuyer tax credit, the White House and real estate industry trade groups say, quashing speculation that followed statements Housing Secretary Shaun Donovan made on a Sunday morning news show.

Appearing on CNN’s "State of the Union" on Aug. 29, Donovan said July’s housing sales numbers were worse than expected. The Obama administration was rolling out a new FHA refinancing program targeted at underwater borrowers, he said, and an emergency loan program aimed at helping unemployed borrowers keep their homes.

Pressed by host Ed Henry on whether the administration was also considering reviving the homebuyer tax credit "to try to prop this industry up," Donovan said, "I think it’s too early to say after one month of numbers whether the tax credit will be revived or not. All I can tell you is that we are watching very carefully."

In extending the tax credit for a third time last fall, lawmakers warned that they would not do so again. But Donovan’s remarks suggested that the strategy might come back into play.

Two other guests on the show, Florida Gov. Charlie Crist and Rep. Kendrick Meek, D-Fla., candidates for U.S. Senate in November, said they’d welcome a restoration of the homebuyer tax credit program.

Three days later, Donovan clarified that bringing back the tax credit "is not high on anyone’s list that we have heard," Reuters reported. "We have not heard Congress talking about renewing it."

Donovan also told Reuters that the Federal Housing Administration’s refinance program was "something that we have talked about before, so it wasn’t any new program."

FHA announced the FHA Short Refinance program in March, and released guidance to lenders on Aug. 6 for a Sept. 7 launch.

As for resurrecting the homebuyer tax credit, neither the National Association of Realtors nor the National Association of Home Builders — industry groups who lobbied hard for its extension last fall — want to see it come back now that it’s expired, the San Francisco Chronicle reported.

Before the tax credit expired, NAR was reportedly lobbying for it to be extended through the end of the year, and an issue summary posted on the association’s website still states that as the group’s position.

There’s been considerable debate about whether the credit — three different versions of which were in place between April 9, 2008, and June 30, 2010 — was worth an estimated $22 billion loss in revenue through 2019.

While more than 2.25 million homebuyers had claimed the credit in its various forms as of July 3, some critics say many of them would have bought a home anyway, and that the tax credit spurred only a fraction of those transactions.

The U.S. Government Accountability Office (GAO) released a report Thursday analyzing the number of claims received by state to date and the estimated dollar amounts of those claims. Claims topped $1 billion in California, Texas and Florida, and amounted to less than $50 million in less populous states like Vermont, Alaska, Hawaii, Delaware and North Dakota.

Top 10 states for homebuyer tax credit claims

Source: U.S. Government Accountability Office