I read some interesting developments with the $8k home buyers credit over on Calculated Risk. I'll summarize and add some sarcasm of my own.
The internal watchdog for the U.S. Internal Revenue Service is expected to warn the agency for the fourth time about fraud in the multibillion dollar homebuyer tax credit program ... The inspector general found at least 70,000 tax credit claims, totaling $489 million, were granted to individuals who do not appear to qualify for it. ... The agency has opened 107,000 civil cases related to the credit and identified 167 criminal schemes
The government is giving away $8k and it seems some people are shocked to find there may be a lot of fraudulent applications for this money. Did they learn nothing from the Katrina relief? Every lowlife in America applied for that money. Who knew there were 60 million people living in New Orleans! The IRS is starting to audit the $8k tax credit, they are examining 100,000 suspicious credits. Heck that's only 800 million, why worry about chump change. How many crack heads from Detroit (or Hemet for that matter) will apply for this money? Probably more than a few. Heck in Detroit you can buy a house for less than the credit. Lets see, we have Welfare Fraud, FIMA Fraud, Tax Fraud, Medicare Fraud, etc, etc, etc. Get the government involved and you can pretty much guarantee a fraud free for all.
On of the caveats of the credit is that you must live in the house for 36 months. How many of those low end first time buyers will find themselves having to repay ALL of that $8k credit should they lose the house. I wonder if they all know about that little stipulation.
It looks like the $8k credit is losing it's shine fast. A couple of months ago it looked like a slam dunk for extending the tax credit. But lately there is growing opposition to extending the credit. It's looking like it really might actually expire come Dec 1st. The real estate propaganda machine must be working day and night on this latest development.