More than 8 million homes are expected to enter foreclosure or a distress sale over the next five years, according to Morgan Stanley. So how do we make a dent in the glut of foreclosures nationwide?
One economist came out this week with an intriguing if not incomplete solution: Let’s give veterans financial incentives to purchase these wayward properties.
Richard Peach, an economist with the Federal Reserve Bank of New York, called for a “Homes for Heroes” tax credit Wednesday in a post on the bank’s blog. His vision is that veterans would receive tax credits to purchase foreclosed properties owned by Fannie Mae, Freddie Mac, the FHA and the VA. Modeled on the home buyer tax credits of recent years, the proposed “Home for Heroes” credit only be available to Iraq war veterans who have served since September 2001.
“While all veterans are deserving of our gratitude, this particular group is most likely to lag behind their peers who did not serve in terms of wealth accumulation,” Peach wrote in the post. “Such a credit would be a ‘win-win’ policy, an expression of the nation’s gratitude for a significant sacrifice, while at the same time speeding the onset of a more robust recovery of the economy. And its net cost to the government is likely to be relatively low.”
It’s a fascinating idea, and you can read his full article at the New York Fed’s Liberty Street Economics blog.
What are you thoughts on this “Homes for Heroes” tax credit? Is it a much-deserved opportunity or a concept that makes for good politics but bad policy?
Photo courtesy of taberandrew