Some critics of the new housing bill have opined that it is a "giveaway" to first time home buyers.  Not exactly.  It is an interest-free loan for 15 years.

Here's what I mean.  Individuals who qualify for the $7500 tax credit (or 10% of purchase price, whichever is lower) will repay the amount over 15 years at $500 per year (if the maximum) amount.  By the way, if the buyers' tax liability is less than the amount of credit, they will receive a check from the IRS for the balance.

If the buyers sell the home before the fifteen years is up, the balance of the interest-free loan is due and payable to the IRS.  Even though the buyers are paying back 1/15 of the loan per year, if history is any indicator, those payments will be in dollars of less value than the original loan.  Still not a bad deal.

The market is changing in every area, especially in those areas where change was most needed.  Ask a local Realtor® for help in determining how you can benefit.

Yesterday, July 16, in a very thoughtful article in Realty Times, Peter G. Miller pointed out that Wall Street frenzy over Fannie Mae and Freddie Mac was unwarranted, given the substantial assets they have plus their access to the credit markets.  There is no doubt that both GSEs (Government Sponsored Enterprises) have "major accounting issues," but Miller contends that those are not sufficient reason to make a run on the stocks.

A few hours after Miller posted his article, Jim Cramer, screaming mimi of hedge fund promotion, on the "Today" show proposed that Fannie and Freddie be shut down and that ten smaller GSEs be created in order to help the economy.  He was less than forthcoming on why that would be desirable, but would it make it easier to manipulate a market or GSE if the GSE is smaller?

Miller raises the suggestion that the rumors causing a run on Fannie and Freddie stock were made by someone who might benefit.  The media certainly pick up quickly on rumors that blaze around the globe at Internet speed.  Since home sales seem to be picking up virtually everywhere, and oil seems to have plateaued for the present, I guess Fannie and Freddie were selected to sell papers and grab eyeballs.

The news on Friday that the Federal Deposit Insurance Corporation (FDIC) was taking over IndyMac Bank should not have come as any great surprise. 

Why no surprise?  As far as I am concerned, IndyMac was the poster child for irresponsible lending (and borrowing).  In my experience as a real estate agent for nearly 30 years, marginal borrowers could always find a loan at IndyMac, regardless of their income.  IndyMac specialized in "stated income" loans, the so-called "liar loans."  Potential borrowers would simply state their occupation and income, without providing any documentation or verification.  This would allow people like independent contractors to obtain mortgages, but it also was open to outright fraud.

When a buyer of one of my listings resorted to IndyMac for financing, I held my breath until the closing.  They usually closed, but not without a lot of, shall we say, excitement.

Senator Charles Schumer (D. New York) has taken a lot of heat for suggesting in a letter of June 26 that IndyMac was in trouble.  So, he's blamed for the Emperor not having any clothes on?  Or for the heavily-made-up pig?

The bigger surprise is that IndyMac held on this long after another lender, Countrywide, fell into a hole.  The FDIC claims that it has 90 institutions on its list, and it has been reported that IndyMac wasn't even on that list.  That's scary, but we live in scary times.