-“The Treasury tax-oversight office said at least 19,000 filers who hadn't bought homes claimed $139 million in tax credits and were reimbursed.”
-“Treasury oversight officials said they have found an additional 74,000 tax-credit claims, valued at $500 million, where evidence of previous home ownership could make their claims invalid.”
-“More than 500 people under the age of 18, including a 4-year-old child, also had their names on applications for the credit, which has no minimum-age requirement.”
What does this mean? In all likelihood this means that the proposal to extend and expand the tax credit is D.O.A. A major sponsor of the bill that is up for a vote next week is Senator “Johnny” Isakson (R.GA). His comments on the fraud in the program:
Sen. Johnny Isakson (R., Ga.) said he is "cautiously optimistic" that an extension -- with procedural safeguards added -- can move in the Senate next week. "Just because someone used fraud [to claim the credit] doesn't mean the credit is a bad idea,it means there are some bad folks running around," he said.
Mr. Isakson does not get it. If the bill is passed it will double the size of this subsidy. It will also double the number of tax cheats who abuse the program. There is no way that this bill will pass given the cloud that has now been revealed.
I wroteabout the Administrations plans to provide an alternative to the tax subsidy this past week. In that piece I said, “I am confused”. I am no longer confused. The Administration was no doubt aware of the tax fraud and failure of the existing subsidy. They knew that the story would break in the MSM this week. They desperately need a program to support housing, but they understood that the tax subsidy was not going to work. So they came up with Plan B, and implemented it in a short period of time.
The Administration plan uses the resources of the Treasury, Fannie, Freddie and FHA. If one is concerned about the fraud and losses that the taxpayers will incur in the existing program, wait until the results of the losses from the Administrations plans are revealed a year from now. They will be spectacular.
The following is a cut and paste of the program description. You tell me, does this make sense? Do you have any idea reading this who is doing what to whom? Keep in mind that this is all going to be managed by the same folks who failed miserably in the first place. The mortgage mess will cost us more than the wars in Iraq and Afghanistan before this is over. We can’t afford it.
The full description can be found in the 10/23Freddie 8K.
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