I am going to annoy, anger and irritate a lot of my fellow real estate agents with this.

Let the $8000 first time home buyer tax credit expire at the end of November. Congress should not vote to extend it.

It is not that I want the market to slow further, prices to drop more or the real estate market overall to get worse than it currently is.

I do have several reasons for my belief that we should let it go...for  now.

1. Deadlines are good!

The credit was out there a long time before people really started to focus and pay attention. What got them to pay attention was a deadline! An indefinite tax credit does very little to help the market. Human nature is to procrastinate. Deadlines give them a reason to stop procrastinating.

2. Fraud

Apparently there have been a fair number of people claiming the credit who are not eligible for it. These are people who are either not first time home buyers, or who never actually even bought a house. The IRS is not requiring proof that you qualify for this tax credit and so there are some people taking advantage. If you're tempted, be aware that there are now over 100,000 tax returns flagged for an audit because of this and one tax preparer is already headed to jail!

Let them work out these issues before they give another tax credit or extend this one.

3. Assess

There are a multitude of arguments both for and against extending this tax credit. Each side has their economists with their data. Let's take some time to assess how much good this is doing and whether to extend it and what form that extension should take. Should it be more or less than $8000? Should it apply to more than first time home buyers? The current guidelines are not because data showed this was the best solution. It was a political compromise. Why not look at actual data now, analyze it and determine what makes sense?

I'm not anti-credit. I'm pro a thoughtful approach to this.

The HUD announcement that it would allow the $8000 first time homebuyer tax credit to be used for a downpayment didn't last out the week. All mention of it was pulled from HUD's home page.

Apparently the program as orginally discussed looked too much like the down payment gift programs that were essentially eliminated last year because of the higher foreclosure rates associated with those programs.

NAR (National Association of REALTORS) says HUD is retooling the program and that there will still be a way to do this.

Stay tuned to this space for updates.

The Senate is busy debating the Foreclosure Prevention Act of 2008. It's an important bill and one that has the potential to have a very large impact on the real estate market. It's worth taking a closer look at some of these provisions.

The bill covers these items:

• Increased FHA Loan Limits
• Assisting Communities Devastated by Foreclosures
• Providing Pre-Foreclosure Counseling for Families
• Enhancing Mortgage Disclosure
• Assisting Veterans In Danger of Foreclosure
• Property Tax Deduction
• Mortgage Revenue Bonds
• Help for Homebuilders
• Tax Credit for Purchase of Homes in Foreclosure

I'm going to talk about two provisions today that I believe could significantly help our market. One is the Tax Credit for Purchase of Homes in Foreclosure. This would provide a tax credit of $7,000 for buyers of homes in foreclosure or pre-foreclosure. The credit would be taken over two years. This could only be used on owner occupied homes, not on investment properties.

This could provide a significant incentive to buyers to get back in this market. It would also help to start providing a floor to price declines as the number of foreclosures on the market would likely decrease faster.

The down side to this is if you're a homeowner who is selling your home and you're not in foreclosure. You would definitely seem to be at a significant disadvantage!

The other provision that has the potential to make a huge difference is the Assisting Communities Devestated by Foreclosures provision. This would be available to communities hit hard by foreclosures and would provide Community Development Block Grant Funds to allow purchase of foreclosed homes. Those homes culd then be rehabilitated or redeveloped by the community. They could be used as workforce rental housing, or eventually resold. Perhaps partnerships could be established with organizations such as Habitat for Humanity.

What we don't know is which local communities would be eligible for this assistance. But, again, this could help enormously with bringing down inventory and stabilizing prices. I'm hoping that, at a minimum, Culpeper and Prince William Counties would be eligible.

The prospects for passage look good at the moment, at least in the Senate. And, I suspect in an election year the House will be even more interested in getting this one passed!

If you've got questions on some of the other provisions, let me know and I'll get you more information.