The Housing Chronicles Blog: Senate moves forward on bi-partisan housing bill

Friday, April 4, 2008

Senate moves forward on bi-partisan housing bill

Finally recognizing that spending time on political posturing while the housing market continues to tank is not an ideal re-election strategy, key Senators have reportedly agreed on a plan to spur the housing market with compromises on both sides. Compromises? In the Senate? Wow, this must be serious. From the Wall Street Journal:

Key senators agreed on a $15 billion bipartisan plan to spur the housing market, a surprisingly fast compromise that shows how political momentum is shifting toward a more aggressive response to the struggling economy...

Democrats, for their part, dropped a bankruptcy provision opposed by Republicans, even though it was a major part of their housing agenda. They, too, are under pressure to show accomplishments this year, amid low public-approval ratings for Congress. They may try to add the provision as an amendment, but it faces an uphill fight.

Democrats also agreed to halve funds for counseling at-risk homeowners to $100 million. Republicans accepted $4 billion in block grants for communities to buy and refurbish foreclosed properties, and they agreed to a smaller tax credit for homeowners than they initially wanted.

The plan would raise the size of loans backed by the Federal Housing Administration to $550,000 and increase the down-payment requirement to 3.5% from 3%. The bill doesn't include a controversial Democratic proposal to give the FHA the ability to insure $400 billion in mortgages. Sen. Chris Dodd (D., Conn.), the concept's sponsor, said he will hold hearings later on the idea.

The legislation includes a $6 billion tax break for home builders and other troubled companies, an additional $10 billion of mortgage-revenue bonds that states can issue for refinancing and for first-time home buyers, and a provision to allow an estimated 28 million homeowners who don't itemize their taxes to get a deduction on their property taxes. In addition, people buying a residence facing foreclosure would get a two-year, $7,000 tax credit...

The White House continues to oppose funding the purchase of foreclosed homes and the tax credit for home buyers.

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