April 9th, 2008 8:32 PM by Uletas Greene Carter
U.S. Senate leaders recently crafted a compromise bill to offer billions in refinancing and other help to homeowners and communities hit by the crisis in the housing market, according to Kevin Drawbaugh and Patrick Rucker of Reuters.
The bipartisan Senate Bill still faces days of debate. As drafted now, the Senate bill would give the Federal Housing Administration (FHA) a bigger role in the mortgage market and offer tax measures to stimulate housing.
The Senate bill attempts to ease the impact on communities of foreclosed homes by offering a $7,000 tax credit spread over two years to buyers of homes in or near foreclosure.
To help people get out from under bad subprime loans, the bill calls for issuance of $10 billion more in tax-free revenue bonds to help troubled borrowers refinance their mortgages.
For 2008 and 2009, the net operating loss carry-back tax rule would extend to four years from the present two years.
Another piece of the bill would give all U.S. homeowners who pay property taxes a standard deduction of $500 for single filers and $1,000 for joint filers. At present, only taxpayers who itemize may deduct state and local property taxes.
The bill seeks to expand the role of the FHA, a government agency that insures mortgages, by raising the limit on the size of mortgages it can back.
The FHA loan limit would rise to 110 percent of an area’s median home price, with a cap of $550,000 and 3-1/2 percent down payment required from the borrower, under the bill.
An economic stimulus package earlier this year temporarily raised the FHA loan limit to $729,500 from about $417,000 for the rest of 2008. The Senate limit would be permanent.
In another provision of the Senate bill, $4 billion in federal grant money would go to communities to buy and fix up or redevelop homes that have been foreclosed upon and are sitting vacant, dragging down home values in a neighborhood.
To help families avoid foreclosure, the bill would devote $100 million in federal money to debt counseling; require lenders to give special treatment on mortgage matters to military veterans returning from service, and require more timely and more clearly worded mortgage paperwork.
For more information on the Senate compromise bill, please contact me at 213-804-3369.