Legislators on both sides of the aisle in the U.S. House and
Senate came together this past week to pass a housing bill
designed to help homeowners, banks, and communities that have
been stung by the recent housing crisis. As banks are closing,
homes are being foreclosed upon, and borrowers are facing
bankruptcy, the economy, well, let's just say that it has
looked better than it does right now. Our legislators are
confident this new legislation will provide some relief to all
affected parties. President Bush has reservatiosn about the
bill but has agreed to sign it. Now it's time to move forward
and see where this new law takes us.
Gail Perry, CPA
After several attempts at reaching agreement 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:
"This is undoubtedly the single most important piece of housing
legislation we have seen in many years," commented Michael
Rubinger, president and CEO of Local Initiatives Support
Corporation, the national nonprofit force behind comprehensive
community development. "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.
$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
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
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
"I want to emphasize here having passed this bill today doesn't
mean miraculously everything tomorrow gets better," Dodd
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."