--- title: 'Housing tax credit: Cure or curse?' description: It's not shocking that the National Association of Realtors is working hard to have the $8,000 first-time home buyer tax credit extended past its current… authors: - name: timestaff url: https://money.com/author/timestaff/ articles: 459 covers: - Housing - Banking - Career Advice - Credit - Credit Cards - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes former_staff: true published: '2009-09-21T21:02:12.000Z' modified: '2009-09-21T21:02:12.000Z' section: Housing word_count: 593 canonical: https://money.com/housing-tax-credit-cure-or-curse/ type: Article source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Housing tax credit: Cure or curse?](https://money.com/img/logo-social.png) It's not shocking that the National Association of Realtors is working hard to have the $8,000 first-time home buyer tax credit extended past its current December 1st expiration. But what is surprising is how little public discussion there is of the downside of this extension. It's a full-court press from the NAR: The powerful trade association has its lobbyists pushing the case on the Hill, and it's asking its members to get the message out too. In a video featuring member Realtors talking up the virtues of the credit, the NAR includes a message superimposed on a wave of stars evoking the U.S. flag: *Congress: Don’t Let America’s Real Estate Recovery Expire.* As if NAR members don’t have enough incentive to get the credit passed, the trade association is even sponsoring a contest for the best Realtor video imploring Congress to extend the credit. [Watch video](https://www.youtube.com/watch?v=N7Tm_C7YMH8) The grand prize is a $500 American Express gift card (wouldn’t Home Depot or Lowe’s been a better tie-in?) and the honor of having the video played at the NAR’s upcoming annual meeting. The NAR was even good enough to make a video explaining to its members [how to make the video](http://www.realtoractioncenter.com/video/ "NAR making of the video"), complete with suggested material: “Tell us about the single mom who never thought she’d be able to afford her own house.” The NAR stopped short of suggesting a soundtrack of tear-rendering strings Congress is listening. Six different bills are floating around the House and Senate that would extend the credit into 2010; one bill even calls for [increasing the credit to $15,000](http://moneyfeatures.blogs.money.cnn.com/2009/06/16/senator-wants-to-sweeten-home-buyer-tax-credit/). And the growing sense in Washington is that the credit could indeed live on into 2010. According to a source quoted in [*U.S. News & World Report*](http://www.usnews.com/money/blogs/the-home-front/2009/09/18/will-the-8000-first-time-home-buyer-tax-credit-be-extended.html) the odds have recently increased from 50-50 to 75-25. Which is sort of interesting given that just last week there was this lovely bit of news: the Federal Housing Administration, which has seen its insured mortgages grow from under 5% of the mortgage market just a few years ago to more than 20% today, is taking an ugly financial hit. The default rate on its insured loans is now up to 7.8%. In this [*Washington Post* article](http://www.washingtonpost.com/wp-dyn/content/article/2009/09/17/AR2009091704594.html?hpid=topnews), the head of the FHA insisted that although the FHA’s reserves have been whittled down to its lowest level ever (reserves will be below 2% when the new fiscal year begins October 1, down from 6.4% a few years ago), there would be no need for a taxpayer rescue of FHA. That’s a bit of a head scratcher, but I will leave that topic for another post. What I can’t get past right now is why there’s seemingly no discussion of how these two issues might, um, be related. Does it really make any sense to encourage more first-time buyers by extending the tax credit into 2010, when the FHA data sure make a case that there’s a problem brewing with plenty of those first-time buyers? While the FHA does more than back loans to housing-market newcomers, it undisputedly has become the go-to lender for first-timers. An FHA-insured loan requires a down payment of just 3.5%, compared to the 10%-20% down you need these days to land a conventional mortgage (read: those backed by Fannie Mae or Freddie Mac). FHA-insured mortgages also became a more viable product for many borrowers this year courtesy of another Congressional gift: Loan limits were raised to as much as $729,750 in high-cost areas. But given the deteriorating finances of the FHA, do you really want Congress to rubber-stamp extension of the first-time buyer tax credit? ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/housing-tax-credit-cure-or-curse/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Housing", "item": "https://money.com/housing/" }, { "@type": "ListItem", "position": 3, "name": "Housing Market", "item": "https://money.com/housing-market/" }, { "@type": "ListItem", "position": 4, "name": "Housing tax credit: Cure or curse?" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/housing-tax-credit-cure-or-curse/#webpage", "url": "https://money.com/housing-tax-credit-cure-or-curse/", "name": "Housing tax credit: Cure or curse?", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2009-09-21T21:02:12.000Z", "mainEntity": { "@id": "https://money.com/housing-tax-credit-cure-or-curse/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/housing-tax-credit-cure-or-curse/#breadcrumb" }, "dateModified": "2009-09-21T21:02:12.000Z" }, { "@type": "Article", "headline": "Housing tax credit: Cure or curse?", "articleSection": "Housing", "image": [ { "@type": "ImageObject", "url": "https://money.com/img/logo-social.png", "width": 300, "height": 300 } ], "author": [ { "@type": "Person", "name": "timestaff", "url": "https://money.com/author/timestaff/", "@id": "https://money.com/author/timestaff/#author" } ], "publisher": "https://money.com/#organization", "datePublished": "2009-09-21T21:02:12.000Z", "description": "It's not shocking that the National Association of Realtors is working hard to have the $8,000 first-time home buyer tax credit extended past its current…", "abstract": "It's not shocking that the National Association of Realtors is working hard to have the $8,000 first-time home buyer tax credit extended past its current…", "@id": "https://money.com/housing-tax-credit-cure-or-curse/", "inLanguage": "en-US", "dateModified": "2009-09-21T21:02:12.000Z", "wordCount": 593, "about": [ { "@type": "Thing", "name": "Housing in the United States", "sameAs": [ "https://en.wikipedia.org/wiki/Housing_in_the_United_States" ] }, { "@type": "Thing", "name": "Housing market", "sameAs": [ "https://en.wikipedia.org/wiki/Housing_market" ] } ] } ] } ```