HOUSTON – Instead of helping the real estate market, the First-Time Homebuyer Credit program has the federal government dealing with numerous accounts of fraud.
The government estimates over 100,000 people have committed fraud equaling hundreds of millions of dollars.
The Treasury Department's Audit of the IRS's overseeing the First-Time homebuyer Credit shows nearly 600 claims were made by buyers under 18. It also shows about 19,000 people got checks without buying a house first.
Many did later buy the home, but many did not because no documentation was required to substantiate the purchase of the house. All they needed to provide were two forms from the internet signed by a taxpayer.
The most expensive fraud issue has to do with the approximate 74,000 people who apparently were not first-time homebuyers. That payout was $500 million.
Despite the fraud issues, Congress will extend the tax credit program --but with new conditions. The new rules now state that you must be over 18, the purchase cannot be between relatives and you have to provide a HUD closing statement.
