First-Time Home Buyer Tax Credit

Opportunity of a Lifetime for First-Time Buyers For aspiring home owners who find their goal stubbornly elusive, newly enacted legislation providing a tax credit of as much as $7,500 for first-time home buyers might just be the opportunity of a lifetime.

But like so many of the good things in life, time is of the essence for buyers who want to take advantage of this outstanding opportunity. Only homes purchased on or after April 9, 2008 and before July 1, 2009 are eligible. Use the links below to learn more about the tax credit.

First-Time Home Buyer Tax Credit at a Glance

• The tax credit is available for first-time home buyers only.
• The maximum credit amount is $7,500.
• The credit is available for homes purchased on or after April 9, 2008 and before
  July 1, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
• The tax credit works like an interest-free loan and must be repaid over a 15-year period.

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Freddie Mac to let residents rent homes after foreclosure

Freddie Mac on Friday plans to announce a first-of-a-kind plan that lets homeowners and tenants temporarily stay in homes in foreclosure by renting them back, an effort to stop many of the sudden evictions that have come along with the housing crisis.

The program will let thousands of qualified former homeowners, as well as families renting from landlords, enter into a monthly lease on their homes after they have been acquired by Freddie Mac through foreclosure.

Freddie Mac officials expect the program to help about 8,600 families in 2009.

The program gives homeowners and renters more time to find a new place to live and also keeps homes occupied. That's a plus for neighborhoods where numerous foreclosures have led to empty, unmaintained, vandalized properties.

"For tenants, it's a big difference," says Mark Zandi, an economist with Moody's Economy.com. "If this acts as a benchmark for other mortgage servicers, it would be a very positive development. It's a win-win. "

Details of the program:

•Leases will be on a month-to-month basis.

•Tenants and homeowners will only have to pay market-value or existing lease rents, not the mortgage payments. Freddie Mac will hire a property management company to determine that amount.

•Tenants and homeowners must be able to show proof that they have enough income to pay the monthly rental amount.

•Freddie Mac will also explore loan-modification options that might be available for some borrowers.

The Freddie Mac initiative comes as the government is stepping up efforts to stem a wave of foreclosures that caught more than 2.3 million homeowners last year, up 81% from 2007.

The Obama administration has pledged to spend up to $100 billion to help people avoid losing their homes.

In mid-December, Fannie Mae also rolled out a policy that allows renters in a property that is being foreclosed on to rent that home rather than be evicted. It does not include homeowners. Up to 10,000 families are expected to be helped by Fannie's rental policy; Freddie expects about a 30% acceptance rate.

The Federal Reserve this week announced a policy to help some distressed homeowners avoid foreclosure. The Fed said it would work with companies servicing mortgages now owned by the Fed to modify qualifying mortgages of homeowners that are 60 days or more delinquent on payments.

Stocks' January performance could be bad news for 2009

Here's a Wall Street adage that investors hope doesn't come true in 2009: As January goes, so goes the rest of the year.

Market historians have observed for decades that when stocks fall in January, they tend to post losses for the year. With the Dow Jones industrials and Standard & Poor's 500 losing 8.8% and 8.6% in January, respectively — their nastiest start to a year ever — followers of the so-called January Barometer are hunkered down for the worst.

"I'm hoping it's wrong," says Jeffrey Hirsch, editor of the Stock Trader's Almanac, which popularized the January Barometer in the early 1970s. "Nevertheless, we do have a negative January, and that's something to be concerned with." Consider:

•The January Barometer has frequently been correct. Since 1950, it has been wrong by a wide margin only five times, says the Stock Trader's Almanac.

•Investors who heeded the warning last year avoided much of the 2008 shellacking. The S&P 500 declined 6.1% in January 2008 — a year it ended with a 38.5% loss.

The biggest down years started with a down January. Every year the Dow fell 15% or more since 1973 started with a negative January, says Ken Winans of financial advisory firm Winans International. "This captured every single time hell broke loose," he says. The indicator has reliably predicted midyear corrections and below-average years back to 1928, he says.

One factor in support of the barometer is that a down January means stocks have to crawl out of a hole to end the 12 months higher. An up January gives a bit of a cushion for the rest of the year.

Also, many of the government policies that steer markets for the year are made known in January, says Bryan Taylor, market historian at Global Financial Data.

Some, though, aren't prepared to write off 2009 just yet. Still to come are the Obama administration's plans for aiding banking and housing, and passage of an economic stimulus plan.

Sam Stovall of S&P points out that the fact stocks fell in January 2008 and January 2009 is mildly bullish. Stocks have fallen two consecutive Januarys only five other times since 1929, and in three of them the market gained the second year.

Also, the January Barometer missed the market recoveries in 1982 and 2003.

The belief a month's returns can predict the rest of the year shows the folly of mining historical data looking for predictive patterns, says Burton Malkiel, professor of economics at Princeton and author of A Random Walk Down Wall Street.

"The problem with looking at past correlations is not that you won't find any," he says. "It's that they don't mean anything."