In one of what turned out to be many short-term jobs during my extended experience known as college, I worked for a collection agency run by a dour mustachioed Greek named Angelo who drove a Bricklin at incredible speeds and was rarely in the office.

The setup went like this: Angelo also operated a neighboring health club where he would sell overpriced membership contracts whether people could actually afford them or not.

If they fell behind on their payments, their files would immediately be marched next door to his collection business where folks like yours truly would try and coax them by any means necessary to pay.

“They need pay up!” he would scream in a sort of an English-Hellenic dialect on the rare occasions he saw fit to make a personal appearance. “They lie always. I know money is there.”

So, in essence, they were set up to fail.

Which brings us to the subject of The Foreclosure Prevention Act of 2008 and the first-time homebuyer credit ensconced within said legislation.

Qualifying people for mortgages who had neither the means nor the financial savvy to be homeowners, played a not insignificant role in the current housing and credit crises, although to be fair there was plenty of blame to go around.

So let’s examine, as others have already done, the first-time homebuyer credit. Because upon a closer look it resembles something Angelo could have devised  many years before.

The credit gives first-time homebuyers a temporary refundable credit equal to 10 percent of the purchase price — up to $7,500 or, half that amount for married couples filing separately.

Therefore under the plan, lower-income taxpayers can receive a check from Uncle Sam for up to the aforementioned $7,500. The credit, however, phases out at income levels of between $75,000 and $95,000 for single filers and between $150,000 to $170,000 for those filing jointly.

The money has to be repaid over a 15-year span — interest free — starting in the second year after purchase. The repayment part is something that’s sort of buried in the bill’s agate, and many have pointed out that while it’s billed as a credit, in reality it’s a loan.

And guess what? Loans have to be repaid.

For those who qualify, it’s probably not a bad idea to view it as an interest-free loan and little beyond that. Much brighter minds than mine have urged those involved to assess their ability to repay the loan on time.

Come to think of it, isn’t that a large part of how we got into this mess in the first place – a failure to ascertain?

One insider said that this could eventually culminate in a  “record amount of collection actions for the IRS.”

And if they can’t handle the overload, I think I still have Angelo’s card.

He’s seen this all before.


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