The $8,000 federal tax credit for first-time home buyers is soon to expire, causing anxious house hunters to hustle and prompting a debate in Congress over extending a program that some say is central to the fragile real estate recovery.

Nicole and Jared Kitchen, with son Dillon, say the tax re…Nicole Kitchen, with son Dillon, says the tax rebate help…

The rebate is available to anyone who has not owned a home in the past three years. The government introduced the program in February as part of the stimulus package, and several studies estimate that by the Nov. 30 expiration date, it will have spurred several hundred thousand home sales.

The real estate industry in California and across the nation is lobbying Congress to extend the credit through next summer. Meanwhile, local Realtors and prospective buyers are eager to complete sales – which sometimes take months – not knowing whether the credit will be continued.

Full story is available on San Francisco Chronicle

In a sign that the region’s housing market could be on the mend, sales of single-family homes in the Bay State rose modestly for the second consecutive month.

“The $8,000 tax credit, low mortgage rates, low home prices and pent-up demand are fueling the rise in sales,” said Alan Pasnik, data analyst for the Warren Group, the company that provided the data yesterday.

Last month, single-family home sales totaled 4,480, up from 4,390 in August 2008. The 2 percent gain follows an 11 percent year-over-year increase in July home sales.

Full story is available on Boston Herald

In their quest to move out of their rented Rockville townhouse and buy a single-family home, Lisa Hollaender and her husband, Laurent, first considered the Carderock Springs neighborhood of Bethesda, then moved on to Potomac and later explored Olney. They also ventured across the Potomac to Vienna. But they haven’t been to a single open house, let alone made an offer.

Hollaender is first finding the school she considers best suited for her son, who is both very bright and physically challenged.

Full story is available on The Washington Post

Foreclosure has become the norm as homeowners are watching their house values plummet at the same time as their interest rates and payments skyrocket. What is the best thing for a homeowner to do? Walk away from the mortgage all together, lose their house, ruin their credit and deal with the stress for years of having a foreclosure on their record?
It’s a disheartening spiral…mortgage payments increasing as home prices plummet. Most homeowners can’t afford to keep paying the higher payments and can’t sell their house for a high enough price to cover the remaining mortgage. So they are abandoning their homes along with their mortgages. Is this the best option?
We all know someone that is or has handed the keys back to the lender rather than trying to keep up with rising payments and dealing with the disastrous effects on their credit reports.

Full story is available on Big News

Debt relief is not as simple as it seems. Consider, for example, what happens when mortgage lenders give struggling borrowers the go-ahead on a short sale.

Short sales can happen when your house is “underwater,” meaning you owe the lender more than the house is currently worth. A short sale seems to offer a painless way out of the deal.

Say your real estate agent presents a contract from someone willing to buy the house for $50,000 less than the mortgage balance. Your lender — after months of delay — approves the sale at that price, and now you can hardly wait until settlement so you will be relieved of that mortgage debt.

Full story is available on The Washington Post

If your income slumped along with the economy, you’ve got plenty of company these days. So much so that the government has a program meant to help you out by cutting your mortgage payments to 31% of your gross income. But it turns out that qualifying for this benefit will probably take some fancy footwork, a sympathetic partner and a little luck. Here are some pointers for navigating the terrain.

Get to Know the Program

The program in question is the Obama administration’s $75 billion Making Home Affordable program.

It applies to mortgages held by Fannie Mae ( FNM – news – people ) and Freddie Mac ( FRE – news – people ), the two giant mortgage holders that the government took control of a year ago.

Full story is available on Forbes.com

Rates for 30-year home loans were unchanged this week and remain close to record-low levels.

The U.S. Treasury Department on Friday announced five new lenders joined its Home Affordable Modification Program, or HAMP.

AMS Servicing of New York, Schools Financial Credit Union of California, Glass City Financial Union of Ohio, Central Jersey Federal Credit Union of New Jersey and Yadkin Valley Bank of North Carolina are the new providers. More than 40 financial lending companies have joined.

Full story is available on Wall Street Journal

The housing market is making a comeback, but it’s not impressing anybody. New home sales rose a tepid 0.7 percent last month, missing Wall Street expectations.

Builders are seeing a drop-off in foot traffic because homebuyers are running out of time to take advantage of a federal tax credit of up to $8,000 for first-time owners.

The new home sales report tallies sales contracts signed in August, rather than final purchases. And to qualify for the credit, both the construction and the sales transaction must be completed by the end of November.

One of the nation’s largest builders, KB Home, eased back on its promotions for the tax credit last month and saw sales decline.

Full story is available on Associated Press

Dave Peterson of Warren County read our recounting of the Crisciones — the family that struggled to get a modification on their second mortgage. Peterson had a story, and a question, of his own.

Working in sales, Peterson earns as much as 50 percent of his salary from commission. In this economy, he’s watched his income drop. In March, Peterson’s wife lost her job. She’s since found work, but the couple still had great concerns about meeting financial obligations.

Back in February, the Petersons requested a modification from their lender, Chase Home Financial. They filled out forms and wrote a hardship letter. After many follow-up calls, faxes and e-mails, they were offered a modification that would significantly reduce their mortgage payment.

The couple were thrilled. Then they asked the $64,000 question: what would happen to their credit scores?

Full story is available on  NJ.com