Focusing on problems faced by the home building industry in the current housing crisis, the U.S. Senate voted overwhelmingly last Thursday to give home builders a $6 billion tax break by temporarily extending a rule that lets businesses count current losses against taxes from prior profitable years. The bill would also permit money-losing companies to accelerate use of accumulated tax credits for new business investments, the Washington Post reports.
The Senate bill also gives a $7,000 credit to buyers of foreclosed properties, raises the limit on mortgages backed by the Federal Housing Administration (FHA) to $550,000, provides $180 million for counseling to help homeowners avoid foreclosure, and contains provisions that give military service personnel special protections against foreclosure and more easily affordable mortgages.
Calling the vote "just the beginning of a process," Senate Majority Leader Harry Reid (D-NV) said that he "[hopes] that when the process is complete, we will have a strengthened bipartisan bill that will do even more to help families, communities and our economy."
The House of Representatives is currently considering plans to assist homeowners facing foreclosure. Some form of the combined House and Senate proposals will be included in a final housing bill that will be sent to the President for approval.
A House of Representatives proposal supported by Representative Barney Frank, (D-MA) and chairman of the House Financial Services Committee would allow homeowners who may now owe more on their homes than they are worth, to refinance from adjustable rate mortgages to 30-year fixed rate mortgages backed by as much as $300 billion in FHA insurance. Frank claims that the plan could help as many as 1.5 million homeowners at risk of foreclosure.
The administration announced their own plan at a meeting of the Financial Services Committee last week, which like the House proposal, focuses on distressed homeowners. The administration's plan would expand an existing FHA mortgage insurance program and provide aid to state and local governments. The plan is less expensive and would assist fewer homeowners.
The Senate bill, which calls for expenditures of $15 billion over ten years, is opposed by the White House, the Post reports.