By U.S. Senator Benjamin L. Cardin (D-Md.)
The recent Senate passage of the Housing and Economic Recovery Act of 2008 (H.R. 3221) will help the American housing market and provide relief to homeowners and communities burdened by foreclosures and falling property values. The House recently passed the bill by a vote of 272-151 and the President has indicated that he will sign it.
Marylanders are hurting today because of what is happening in the housing market. Nationally, 8,500 more families fall into foreclosure each and every day. This legislation will provide families, communities and even financial institutions the tools they need to stabilize our economy and keep people in their homes, said Senator Cardin. Our housing crisis, which was the trigger for our current economic downturn, is a complex, multi-faceted problem that called for a comprehensive solution. This bill will help prevent another crisis of this magnitude, stop foreclosures before they begin and, for future generations, save the American Dream of home ownership.
I am particularly proud of the provision in this bill that provides a tax credit or no-interest loan of up to $7,500 to first-time homebuyers. It is similar to the first-time homebuyer tax credit that I introduced earlier this year. Today, its estimated that 40% of the market is first-time home buyers. While we must provide a lifeline for current homeowners, we also recognize the urgent need to stimulate the housing market. There are people who are ready and able to buy a home, but they reluctant, worried about their investment. We need to get these people into the housing market now. I believe that this tax credit of up to $7500 will encourage them move forward with their purchase.
Whole communities are affected by the housing crisis, not just the individual homeowner who may lose his or her home, which is why this bill had to be balanced in its relief. It provides vital financial and counseling assistance to current homeowners on the brink of foreclosure, it helps stimulate the market by encouraging first-time homebuyers, and it helps stabilize the housing market with support and increased oversight of Fannie Mae and Freddie Mac, as well as support for local communities that have been devastated by falling property values and lost property/sales tax collections related to housing.
Highlights of the Foreclosure Prevention Act (H.R. 3221):
-- Provides mortgage refinancing assistance to keep at least 400,000 families from losing their homes, to protect neighboring home values, and to help stabilize the housing market at no cost to American taxpayers.
-- Provides $180 million for financial and legal assistance to help families stay in their homes.
-- Helps stimulate the housing market by creating a $7,500 temporary tax credit or no-interest loan for first-time homebuyers.
-- Provides $4 billion in emergency assistance through Community Development Block Grants to communities hardest hit by foreclosed homes and falling property values.
-- Modernizes the FHA and strengthens oversight of Fannie Mae and Freddie Mac.
-- Gives the Treasury Secretary temporary authority to increase an existing line of credit to raise capital, buy stock and stabilize markets.
-- Protects taxpayers by requiring lenders and homeowners to take responsibility. This is not a bailout; in order to participate, lenders and mortgage investors must take significant losses by reducing the loan principal. In exchange for an FHA guarantee on the mortgage, borrowers must share any profit from the resale of a refinanced home with the government.
-- Helps seniors by making it easier for them to tap into equity through reverse mortgages.
-- Helps veterans by increasing housing and financial counseling available through the VA and increases loan limits on VA Home Loans.