What's In The Foreclosure Prevention Bill
Friday, April 04, 2008SUSIE GHARIB: Next week, the U.S. Senate is expected to approve what it calls a foreclosure prevention bill. Lawmakers debated the measure today and then expanded it, adding more tax breaks for corporations. But as Stephanie Dhue reports, some lawmakers want the bill to go back to basics, to focus on helping struggling homeowners avoid foreclosure.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Home builders are facing huge losses with the real estate bust. The Senate proposal would let builders and other businesses count their current tax losses against their previous tax gains for an extra two years, a benefit worth an estimated $7 billion. Jerry Howard represents home builders' interests in Washington. He says the tax break will help stabilize the housing market.
JERRY HOWARD, CEO, NATIONAL ASSN. OF HOME BUILDERS: For the bigger builders, when they are capital strapped, like many of them are, what they have to sell assets and when home builders talk about selling assets -- the big builders -- they are talking about selling land. If the big builders have to dump land to recapitalize their business operations, they'll dump the land at whatever price they can get for it, further destabilizing house prices.
DHUE: The Senate plan would also give a $7,000 tax credit to people who buy a foreclosed home. It would raise the limit on government backed FHA loans to $550,000 and it would give states the authority to issue $10 billion in revenue bonds to help borrowers refinance their mortgages. John Taylor of the National Community Reinvestment Coalition says that help may be too late.
JOHN TAYLOR, CEO, NAT'L. COMMUNITY REINVESTMENT COALITION: Every month, we're having roughly 250,000 foreclosure filings every month, so it's entirely possible that several months will go by before the 50 states and the apparatus that they are now putting together is in place to have any impact.
DHUE: Economist Dean Baker says overall, the bill does little to either prevent foreclosures or boost demand for housing.
DEAN BAKER, CO-DIR, CTR. FOR ECONOMIC & POLICY RESEARCH: It's sort of like if you had a patient -- you had someone, an accident victim who's bleeding to death and you go, I'm going to call for pizza. It's very hard to see how this addresses the problem.
DHUE: Still, Senator Chris Dodd defends the package he helped craft as an important first step.
SEN. CHRISTOPHER DODD (D) CONNECTICUT: Anyone who thinks that this bill is the end-all is making a huge mistake. This bill is a step in right direction; it's a positive one and a good one, but there are key missing ingredients.
DHUE: Dodd would add those ingredients to a separate bill that would give the FHA the authority to buy troubled mortgages. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
