Landmark Housing Bill Awaits Signature of President Bush
Culminating months of intensive advocacy efforts by the entire NAHB federation, the Senate has approved a major housing stimulus package that will go to the President’s desk to be signed into law shortly.
“This landmark bill contains several provisions to help home buyers, stop the slide in home prices, provide a lifeline to borrowers facing foreclosure, improve mortgage liquidity and bolster confidence in Fannie Mae and Freddie Mac,” said NAHB President Sandy Dunn. “We commend Congress for working in a bipartisan fashion to provide much-needed relief to the American people.”
For the past year, NAHB has been in the forefront in pushing for legislation to address the turmoil in the financial and housing markets and to bolster the nation’s faltering economy.
Senate Banking Committee Chairman Chris Dodd (D-Conn.), a chief architect of the bill, calls it “the most important piece of housing legislation in a generation.”
Echoing those comments, House Speaker Nancy Pelosi (D-Calif.) said that the bill “represents the most far-reaching reform of our nation’s housing finance system in a generation.”
H.R. 3221, the Housing and Economic Recovery Act of 2008, includes several provisions aimed at ending the current cyclical downturn in the housing industry and strengthening the housing finance system so that it will provide critical support as the marketplace gains strength.
The House on July 23 approved the legislation by a vote of 272 to 152, sending the measure back to the Senate where Majority Leader Harry Reid (D-Nev.) shortly thereafter attempted to bring the bill up for immediate consideration through a unanimous consent agreement.
Reid’s effort was thwarted by Sen. Jim DeMint (R-S.C.), a long-time opponent of the bill, who used parliamentary maneuvers to delay a final vote on the bill until today when the Senate approved the measure by a solid bipartisan vote of 72 to 13.
The key elements of the bill are:
- A temporary first-time home buyer tax credit. The tax credit will stimulate home buying, reduce excess supply in housing markets and shore up home prices.
- FHA modernization. A revitalized FHA will have greater flexibility to respond to the needs of borrowers, enable more working families to become home owners and play an important role in the mortgage markets. To address the foreclosure crisis, the FHA will guarantee up to $300 billion to refinance troubled mortgages with federal insurance.
- GSE (government-sponsored enterprise) reform. The law reforms the regulation of Fannie Mae and Freddie Mac and permanently increases the conforming loan limit to help buyers in high-cost markets. To reassure financial and global markets, the government will temporarily expand its line of credit to Fannie and Freddie and permit the U.S. Treasury to purchase an equity stake in the companies through the end of 2009.
- Mortgage Revenue Bond Program. The measure gives states the ability to issue an additional $11 billion in mortgage revenue bonds, which will help strapped borrowers seeking to refinance their home loans.
- Low Income Housing Tax Credit. Enhancing this program will expand the supply of much-needed affordable rental housing.
Tax Credit Centerpiece of Housing Bill
The centerpiece of the housing bill is a temporary, $7,500 first-time home buyer tax credit for the purchase of any home. The tax credit can be used for a home sale closing on or after April 9, 2008 and before July 1, 2009. It is expected to provide a significant financial incentive for home buyers.
“The tax credit is the best stimulative measure,” said Dunn. “It will increase housing demand, get home buyers back into the marketplace and fight falling home prices, which threaten the economy as a whole.”
As first drafted, the tax credit was set to expire on April 1, 2009. At NAHB’s urging, Congress extended the expiration date through June 2009.
“Extending the credit an additional 90 days was important so that home buyers would have use of the credit during the critical 2009 spring and early summer buying season, when we believe the bulk of home purchases will occur,” said Dunn.
Once President Bush signs the legislation into law, NAHB will launch a new Web site — www.federalhousingtaxcredit.com — which includes a set of comprehensive questions and answers about how the credit works and how consumers can put it to their advantage.
Further resources to help NAHB members promote consumer awareness about the credit will also be available at www.nahb.org/mythbuster.
For more specifics on provisions of the housing and economic stimulus legislation, read the stories in the Government section of this special edition of Nation’s Building News.
The legislation would also:
- Provide $3.9 billion in Community Development Block Grant funding for the purchase of foreclosed homes and the rehabilitation or redevelopment of residential property.
- Provide a $500 additional standard deduction ($1,000 for married couples) in tax year 2008 for taxpayers who do not itemize their deductions but pay property taxes.
- Increase the Department of Veterans Affairs home loan limit for high-cost housing areas so that veterans have more homeownership opportunities.
- Help returning soldiers to stay in their home by requiring lenders to wait nine months, instead of 90 days, before starting foreclosure proceedings. Lenders must also wait one year before raising interest rates on someone returning from the military.
- Encourage states to establish mortgage licensing and registry systems and direct the Department of Housing and Urban Development to step in if the states fail to accomplish this task.
To read the legislation, click here and enter H.R. 3221 in the box at the center of the page.
For more information on the tax portion of the housing legislation, e-mail Rob Dietz at NAHB, or call him at 800-368-5242 x8285; or contact Dave Ledford about the bill’s other provisions, x8265.