Senate backs legislation to stem housing crisis

Friday, April 11, 2008 at 1:17am

The U.S. Senate, seeking to address the housing crisis blamed for the nation’s economic slowdown, backed a $24 billion plan that focuses on providing new tax breaks for home builders.

The chamber voted 84-12 to approve legislation providing tax cuts worth about $18 billion during the next 18 months for home builders, banks and other businesses affected by the subprime mortgage debacle. The bill offers about $6 billion in tax breaks, spending increases and other forms of assistance to individual homeowners.

The measure, which is opposed by the Bush administration, must be reconciled with a House plan that omits the business tax breaks in favor of more generous assistance to individuals. Lawmakers are debating how best to address a wave of housing foreclosures amid the worst housing slump in a quarter century. Foreclosures jumped 60 percent in February after reaching a record rate in the fourth quarter of 2007.

Senate Majority Leader Harry Reid, a Nevada Democrat, predicted today that lawmakers and the administration would overcome their differences and devise a compromise plan.

“This is the beginning of the process,” said Reid. “We could come up with a piece of legislation fairly quickly” meshing the House, Senate and administration proposals, he said. Reid added that he was “very satisfied” with a discussion yesterday with President George W. Bush regarding housing.

Aid to states

All 12 votes against the bill came from Republicans. None of the three presidential contenders — Democrats Hillary Clinton of New York and Barack Obama of Illinois and Republican John McCain of Arizona — voted on the plan. Both Clinton and Obama issued statements today criticizing the legislation for including the business tax breaks, which they said were unnecessary.

The Senate bill would provide aid to states, especially those with large numbers of unoccupied properties, while providing new tax breaks for those who buy foreclosed homes. In addition, it would allow 28 million Americans who don't itemize their tax returns to claim a property-tax deduction.

The bill would raise the Federal Housing Administration's loan limit to $550,000, boost funding for mortgage-counseling programs and tighten loan-disclosure requirements. Republicans blocked a proposal, opposed by the mortgage industry, that would have allowed judges to alter loan terms in bankruptcy court.

Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said that while he was unenthusiastic about some of the provisions in the bill, it was nevertheless a “positive step in the right direction.”

— Bloomberg News

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By: Dragon on 12/31/69 at 7:00

One provision of Bush's "Ownership Society" initiative (2004) was expanding homeownership."In June 2002, President Bush issued America's Homeownership Challenge to the real estate and mortgage finance industries to encourage them to join the effort to close the gap that exists between the homeownership rates of minorities and non-minorities. The President also announced the goal of increasing the number of minority homeowners by at least 5.5 million families before the end of the decade.""President Bush's initiative to dismantle the barriers to homeownership includes: American Dream Downpayment Initiative, which provides down payment assistance to approximately 40,000 low-income families; Affordable Housing. The President has proposed the Single-Family Affordable Housing Tax Credit, which would increase the supply of affordable homes; Helping Families Help Themselves. The President has proposed increasing support for the Self-Help Homeownership Opportunities Program; and Simplifying Homebuying and Increasing Education. The President and HUD want to empower homebuyers by simplifying the home buying process so consumers can better understand and benefit from cost savings. The President also wants to expand financial education efforts so that families can understand what they need to do to become homeowners."Home demand and prices soared. Financial intitutions gobbled up mortgages, including risky sub-prime mortgages. Families overextended themselves to "own" a home.The house of cards fell down.

By: Kosh III on 12/31/69 at 7:00

Home builders should not get a penny unless they can prove that their workforce is composed of citizens and legal aliens.

By: idgaf on 12/31/69 at 7:00

Why don't they call it what it is a welfare program. They created the problem now want to bail it out at taxpayer expence keeping home prices high so responsible individuals cannot afford them.Overall defaults are rather low and those are of people that had no business buying houses to begin with or over bought with the help of the greedy corrupt lenders.Bush even let the government finance illegals.

By: Muzhik on 12/31/69 at 7:00

Yet another giveaway with absolutely no benefit to the American citizen. Americans are being sold out by their so-called represenratives.