After several passes back and forth between the House and Senate, on Saturday, in a rare weekend session, the U.S. Senate voted 72 to 13 to pass the bi-partisan Housing and Economic Recovery Act of 2008, a bill passed by the House last Wednesday. President Bush has indicated he will sign the bill into law in spite of several objections he has to the bill.
In the wake of 10 bank closings in the past 18 months, the new housing bill is the government's latest response to the national housing crisis. First National Bank of Nevada, based in Reno, and First Heritage Bank, based in Newport Beach, California, were closed last week by U.S. regulators and their deposits and assets were acquired by Mutual of Omaha Bank.
The new housing bill has been described as the most comprehensive housing legislation in more than a generation.
Features of the new housing bill include:
- $300 billion in guarantees to help refinance troubled mortgages.
- An opportunity for as many as 400,000 homeowners to qualify for low-cost, government-backed mortgages to refinance existing mortgages that they are no longer able to afford.
- Government support of mortgage lenders Fannie Mae and Freddie Mac including an opportunity for the government to buy stock in the mortgage backers.
- $3.9 billion to help local governments and communities buy and rehabilitate foreclosed homes.
- Tax credits for first-time home buyers.
- $1.3 billion in tax relief to Gulf Coast homeowners and businesses recovering from Hurricanes Katrina and Rita in the form of relieving taxation on Road Home Tax grants for affected taxpayers who took hurricane-related casualty losses on their tax returns.
"This is undoubtedly the single most important piece of housing legislation we have seen in many years," commented Michael Rubinger, LISC president and CEO. "At a time when so many communities are struggling, the Congress has created new vehicles to return foreclosed and vacant homes to stable occupancy, save homeowners threatened by foreclosures, and support affordable housing development. It has given critical new authority to FHA, and both strengthened Fannie Mae and Freddie Mac and updated their affordable housing missions," he added. "The magnitude of this legislation is really remarkable. The nearly 700 pages in this bill will have a significant, lasting impact on the quality of life in communities across the country," he added.
Opponents to the legislation argued that the bill would reward irresponsible lenders and consumers and warned that passage of this bill would give the Government too large a role in the housing market.
According to a National Public Radio report, Democratic Senator Chris Dodd of Connecticut, one of the bill's authors, said the measure was not a silver bullet, but that inaction was unacceptable.
"I want to emphasize here having passed this bill today doesn't mean miraculously everything tomorrow gets better," he said. "What we've done with this legislation is create a clear path - a roadway if you will = toward helping us get back on our feet and stabilize the situation, but there's nothing in this bill that solves the problem tomorrow."
Update: President Bush signed the Housing and Economic Recovery Act of 2008 on Wednesday, July 30.