Democratic and Republican senators spent most of the day Wednesday
working out the details of a deal that includes $100 million for counseling at-risk homeowners. The legislation also includes $4 billion to buy
foreclosed properties under the notion that abandoned properties cause even more problems for their communities.
The bill, which will be the subject of considerable debate Thursday, gives tax breaks to people who buy new homes and provides protection for active service soldiers who face foreclosure. Altogether, the bill would cost about $15 billion over the next 10 years.
McClatchy's news service explains:
Over the next several days, senators will debate both the core plan
and more controversial amendments, such as a Democratic plan to give
judges the power to change the terms of a mortgage when a homeowner has
filed for bankruptcy.
Current law prevents judges from reworking the terms of a home
loan. Both Republican lawmakers and President Bush oppose this
provision, arguing that however well intentioned, it would prompt
lenders to rein in lending to all but the safest borrowers,
exacerbating the current near-freeze in mortgage lending.
You can read a detailed but easy to understand
summary of the bill [PDF], as it stands Thursday morning.
The guts of the bill include:
-Increase the Federal Housing Administration's loan limit from
95 percent to 110 percent of an area's median home price. This would
allow families in all areas of the country better access to FHA loans
with down payments of 3.5 percent.
-Provide $4 billion in federal aid to local governments in areas hit hardest by foreclosures and mortgage delinquencies.
-Provide $100 billion in additional federal funding to groups that provide mortgage counseling.
-Prevent lenders from foreclosing on a home owned by a soldier within nine months of his or her return from active duty.
-Force lenders to give active-duty soldiers one year's relief from a mortgage rate that adjusts upwards.
-Raise the standard income tax deduction for property taxes by $500 for single filers and $1,000 for families.
-Provide $10 billion for federal tax-exempt bonds whose proceeds
can be used to refinance sub-prime loans or finance first-time home
purchases.
-Give a $7,000 tax credit to purchasers of newly built homes,
properties in foreclosure or those whose owners have defaulted on their
mortgages. This aims to reduce the supply of homes for sale.
One Wall Street Journal columnist wonders why we don't just bulldoze the foreclosed homes and get rid of the excess housing inventory.
How about a solid portrait of the people going through...
