Thursday, April 3, 2008

DEMOCRATS BOMB ON HELPING HOME OWNERS

WASH POST Senate Democratic and Republican leaders rushing to address the nation's housing crisis reached agreement yesterday on a package that would provide billions of dollars in tax rebates to the slumping home-building industry while offering little to homeowners threatened with foreclosure.

After working through Tuesday night to flesh out a bipartisan agreement, lawmakers unveiled a bill that rejects the most ambitious plans for aiding distressed homeowners, including a Democratic proposal to permit bankruptcy judges to modify the mortgage on a person's primary residence.

Instead, lawmakers settled on a sharply scaled-back array of measures that would provide $4 billion in grants for cities to buy foreclosed properties, temporary tax breaks worth up to $7,000 for home buyers who purchase foreclosed properties, and new tax deductions for almost every American who owns a home. The package, which would cost about $15 billion over the next 10 years, also would jump-start stalled legislation to streamline the Federal Housing Administration, one of the top priorities of the Bush administration.

Families who cannot afford to repay their home loans -- the group at the heart of the mortgage meltdown -- would benefit mainly from $100 million to expand foreclosure counseling services and greater latitude for local housing authorities to use tax-exempt bonds in refinancing subprime loans.

Home builders and other businesses suffering losses in the flagging economy, meanwhile, would get the lion's share of federal spending in the bill: $6 billion in tax rebates. . .

"It's not clear what good it's really doing," said Dean Baker, co-director of the Center for Economic and Policy Research. "It's a bipartisan effort not to help the right people."

"This is a case of Congress thinking they have to do something, rather than actually doing something that will make a difference," said David C. John, a senior research fellow at the Heritage Foundation.

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