ML-Implode News - Congress Considers $15,000 Rebate Checks For All Home Buyers

Isakson is pitching an idea to his colleagues in Congress: a $15,000 tax rebate check to anyone who agrees to buy a home. Congressional budget analysts project the program would cost $14 billion over the next few years. But Isakson said the rebate checks are well worth the hefty price tag. "If we can convince buyers to come back to the marketplace and buy these houses, then the houses aren't vacant. It's replaced by an owner-occupant, who is there making payments on a loan and helping all of the other houses around."

This is so dumb it is hard to determine where to start. How is effectively paying a home buyer's downpayment going to solve problems created by them having "no skin in the game"? The FHA's own research on the higher rate of default in downpayment-assistance should be proof enough this is an idiotic idea.

Besides, isn't it enough that mortgage interest is tax-deductible, PMI is tax-deductible, home sales capital gains are tax-deductible, and mortgage origination is supported by an alphabet soup of government and quasi-government organizations? Are politicians ever going to tire of the false promise of government "props" to housing?

I won't even get into the fact that this is horribly unfair to people who still can't afford to buy a house or whom are already homeowners, and hence will be subsidizing the "rebate" checks for everyone else.

Enough damage has been done already -- we need to let the market correct. The most reasonable idea I've seen is for government funds to buy up foreclosures and get them off the sales market, putting them on the rental market.

Relevant:

Congress Considers $15,000 Rebate Checks For All Home Buyers