Bill Passed By Senate Will Do Little For Foreclosure Mess

April 14th, 2008

A housing bill has been passed by the Senate as a result of some Democrats agreeing with the Republicans. Getting the bill passed through the Senate is one thing but general support is another matter. The Bush administration opines that it will further mire the foreclosure mess. Democrat leaders alleged that the bill was tilted more in favour of the business community rather than the foreclosure victims.

There will be large tax breaks for the construction lobby, generous credit incentives for those who buy foreclosed houses, together with $4 billion sanction for those communities suffering from the maximum number of foreclosures to enable purchase, repair and sale of units.

A tax break will be offered to those who are working on renewable energy alternatives as a major step towards alleviating the economic woes of the nation. $100 million is being offered for strengthening the pre-foreclosure counseling infrastructure and for enforcing loan disclosures.

Last February the tax break clause amounting to a tax holiday of $25 billion for the construction lobby and benefits for the energy group had been dropped. The critics had been vociferous that these would have done more harm than good for the economy. But the worsening of the foreclosure crisis has most probably caused this change in thinking causing the amount of deficit to meet the deficit to swell to $9 trillion.

$7,000 tax credit has been set aside for those who buy foreclosed houses. The Bush administration argues that this will unjustly reward those who buy foreclosed houses. On the rebound it will rather encourage more foreclosures and also devalue the price of other houses.

The Federal Housing Administration, running since the post-Depression, has been asking for a shake up for quite sometime. The measure calls for it. The change will enable more house owners to refinance loans backed by this agency. For this purpose $10 billion tax free mortgage revenue bonds will be issued to help the refinancing programme that will benefit foreclosure victims. President Bush has his support for this plan.

The house bill has changed its course taking into its gambit those who are buying houses for the first time as well as those investing in houses that would be rented out to the low income group. This measure will be tied with a bigger package initiated by Barney Frank – Democrat, Massachusetts. According to the latter plan the FHA will back $300 billion in refinancing loans benefiting more than 1 million house owners.