Industry Presses Forward on FTHB Despite Allegations of Abuses

The mortgage industry is still pressing forward with its lobbying efforts to extend the first time home buyer tax credit, despite new allegations from the Treasury Department that the program is being abused by some mortgagors. Industry lobbyist Howard Glaser who works with the Lenders One Alliance said Friday that FTHB fraud is "inexcusable" and "the IRS must do a better job" but noted that extending the tax credit for several more months is critical to the nation's economic recovery. A former Housing and Urban Development attorney, Mr. Glaser told CNBC that "if we pull the plug now we pull the plug on the recovery." The Treasury inspector general for tax administration found that 19,300 people claimed $139 million in deductions on their tax returns before actually purchasing a home. (The FTHB law requires that the home purchase must take place before the deduction can be granted.) Also, $500 million in credits may have been granted to home buyers who already owned a house at least once.