Home buyer tax credits may lead to debt

Officials are concerned about the effects of an eight thousand dollar federal tax credit for first time homebuyers, saying it could sink struggling families deep into debt.

Officials are concerned about the effects of an eight thousand dollar federal tax credit for first time homebuyers, saying it could sink struggling families deep into debt. They expressed their concerns at a hearing in Philadelphia Thursday.

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The credit has helped more than 1.4 million families across the country purchase new homes. But some are worried it could be an incentive that causes people to bite off more than they can chew. Liz Hersh is Executive Director of the Housing Alliance of Pennsylvania.

Hersh: There’s still an affordability gap between what an individual at a 12 dollar an hour job or on disability income or retirement income can’t be able to pay that market rent so we need something to close the gap between what people can afford and what it costs to own and operate a rental unit.

A U.S. Congressional Oversight panel held hearings in Philadelphia debating the current mortgage crisis. The panel agrees with housing advocates, saying banks need to help struggling homeowners by negotiating lower mortgage payments. The panel will issue a report on the issue next month.