I have received numerous calls, emails and questions asking about the “new refinance program” that President Obama mentioned briefly in his speech Tuesday night. While the concept sounds great, it is important to note that specifics were not discussed, except for charging a fee to “the big banks” to offset the cost. Even that requires more clarification.
More details are needed, as are investors besides Fannie, Freddie and FHA . At present, we have a number of programs that have fallen far short of their stated goals, such as the FHA Short REFI, HARP1 and HARP 2, and others. Expect a flood of web ads, web sites, calls and letters touting the “new refinance program in Mr. Obama’s speech” but be wary, since no program exists. Identity thieves and disingenuous sales people will try to take advantage of the confusion.
Just when we thought that the mortgage interest deduction was safe from Congress, Maryland has decided to be the first state to attempt to remove it in phases. This is a slippery slope on many levels. First, will it gradually apply to every homeowner? Will other states follow? Will home prices stagnate in Maryland or drop further?
Maryland also has included removing the property tax deduction for homeowners. True, it still has to go to a vote on the floor, but the fact that it has gone this far is of great concern. I contacted Dr. Peter Morici, University of Maryland Professor and noted economist as well as frequent guest on CNN, CBS, BBC, FOX, ABC, CNBC, NPR, NPB and other national outlets, for his opinion.
Dr. Morici informed me that “Phasing out the home mortgage and tax deductions won’t be good for the housing market. At a time when Marylanders’ incomes are stagnating, and many can’t sell their homes, it’s another cynical tax increase on the middle class”.
Rates are low; inflation seems tame; homebuyers are back and consumer sentiment is rising as a result. Eliminating homeowner’s deductions coupled with new onerous rules just announced by FHA (more on that in a future column) would simply douse the struggling embers of a housing recovery, and as an extension, an economic recovery.
Instead of eliminating deductions and adding additional barriers to homeowners, wouldn’t it make more sense to stimulate housing so recordation taxes, property taxes and other associated housing revenue fill state coffers?
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