Home | Business
House passes housing bill
By Alan Zibel
Associated Press
Jul 24, 2008
WASHINGTON - The House passed a sweeping housing bill yesterday that President Bush could sign as early as this week - easing some of the market's problems but providing only modest benefits for homebuyers or borrowers facing foreclosure. While the bill was widely praised by real estate industry groups, doubts remained about its real-world effect on consumers.
"This isn't going to be the catalyst for a better housing market," said Mark Zandi, chief economist at Moody's Economy.com in West Chester. "It may staunch some of the downturn, but it's going to have a very modest positive impact."
Highlights of the bill include: $300 billion to provide more affordable mortgages to troubled homeowners, nearly $4 billion in grants to help communities fix up foreclosed properties and a $7,500 tax credit for first-time homebuyers.
"Every little bit helps," Andrew Lenz, 27, a first-time buyer in Minneapolis, said of the tax credit.
But many first-time buyers won't get help. The tax break applies onlyl for homeowners who purchase between April 9, 2008 and July 1, 2009. The full amount of the credit also is available only for individuals with incomes of less than $75,000 or couples earning less than $150,000.
Moreover, the credit will have to be paid back, interest-free, over 15 years.
In Baltimore County, Md., where foreclosure filings between January and March were running at nearly four times last year's levels, Liz Glenn was grateful to see the provision in the bill for $3.9 billion in grants to help local governments buy and fix up empty homes.
The money "would enable us to acquire and rehab more homes and offer them at an affordable price," said Glenn, a community planning official.
Cash-strapped homeowners, who are spending more than 31 percent of their income on their house payment, may qualify for a new, more-affordable loan backed by the Federal Housing Administration under the bill.
Lenders, however, would have to agree to take a loss on the existing loans, and would walk away with at least some payoff and avoid the costly foreclosure process. Lender participation is also voluntary.
"The industry really has to step up and use it," said Bruce Dorpalen, director of housing counseling for Acorn Housing Corp.
In addition, homebuyers who purchase a property with an FHA loan will no longer be able to receive financial assistance from the sellers. The bill closes a loophole that let sellers channel money to buyers through charities.
While critics say defaults from these no-money down loans are rising to such an extent that they threaten to put taxpayers on the hook, supporters say many borrowers with good credit but without enough money saved up for a down payment will be locked out of the market.
Copyright 2008
Powered By Zebra Mobile
