Senate acts to extend aid for jobless homebuyers - Big Big Forums

Jolie Rouge · 11-05-2009, 12:26 AM

If they don't have a job ... how can they pay a house note ?

Senate acts to extend aid for jobless homebuyers
By Jim Abrams, Associated Press Writer Wed Nov 4, 6:31 pm ET [/i]

WASHINGTON – Recognizing that a weak economy still needs a government boost, the Senate voted overwhelmingly Wednesday to provide the jobless with up to 20 weeks in additional unemployment benefits and expand a first-time homebuyer tax credit to include a far larger pool of people entering the dormant housing market.

The $24 billion bill, passed 98-0, also provides tax relief for struggling businesses. It comes to the rescue of more than 1 million out-of-work people who will run out of benefits by the end of the year. Everyone will receive 14 weeks of additional benefits, while those in states with unemployment rates of 8.5 percent and above get six weeks on top of that.

With enactment, the jobless in the hardest-hit states could receive up to 99 weeks of benefits, which average about $300 a week. That would well exceed the previous record of 65 weeks during the 1970s.

The $8,000 tax credit for first-time homebuyers, enacted as part of the stimulus package last February and set to expire this month, would be extended and expanded to include a $6,500 credit for people who have lived in their current residences at least five years.

Congress has no choice but to act when there are 15 million jobless chasing 3 million jobs and 7,000 people run out of benefits every day, said Senate Finance Committee Chairman Max Baucus, D-Mont. Economists talk about the end of the recession, he said, but "for most Americans, it will still be some time before things start getting better."

The legislation now goes to the House, which is expected to quickly send it to President Barack Obama for his signature.

House Majority Leader Steny Hoyer, D-Md., said Wednesday that the bill was "vital to Americans who have lost their jobs as a result of the deepest recession in over three-quarters of a century" and he planned to bring it to the floor for a vote as early as Thursday.

The House acted in late September to extend unemployment benefits, but only to the jobless in the 27 states where the unemployment rate is above 8.5 percent.

The bill bogged down in the Senate, first when senators from states with lower jobless rates demanded that the extension apply to all people exhausting their benefits, then with negotiations over adding the homebuyer and business tax credits. Then, Republicans held up floor action when Democrats blocked them from offering amendments on matters unrelated to the base bill.

"Opponents have put up obstacles at every turn to delay the passage of this bill, and as a result of these delaying tactics approximately 200,000 workers have lost their benefits in this last month," said Sen. Jeanne Shaheen, D-N.H., a chief proponent of the more expansive benefit extension.

Judy Conti of the National Employment Law Project said it was "shameful" that the Senate procrastinated while an estimated 1.3 million face a loss of benefits by the end of the year. "We are in the middle of a national catastrophe as far as unemployment is concerned," she said. "This bill would provide a lifeline for those who are desperate, who are unemployed for no fault of their own."

The current unemployment rate is 9.8 percent and is expected to move into double digits before companies start rehiring despite a recent improvement in gross domestic product. The benefit extension would be the fourth since June of last year and the first since passage of the $787 billion stimulus package last February.

"You can't feed your family GDP," said Democratic Sen. Jack Reed of Rhode Island, where the unemployment rate is 13 percent. "you need a job. you need to be able to work."

The legislation would extend the $8,000 tax credit through June of next year as long as the buyer enters into a binding contract before April 30. It doubles the income ceiling for qualification to $125,000 for individuals. The credit is available for homes purchased at under $800,000.

The measure also strengthens the ability of the IRS to stop people who are not eligible for the program from filing fraudulent claims.

The new $6,500 credit for existing homeowners, said Sen. Johnny Isakson, R-Ga., a cosponsor of the measure, "is going to help us boost what is the problem in the U.S. housing market today and that is what is called the move-up market."

The third leg of the bill extends to all businesses that have incurred losses in 2008 and 2009 to seek refunds for taxes paid on profits over the past five years.

The two tax credits, each costing more than $10 billion over 10 years, are paid for by delaying enactment of a law giving international companies more leeway in how they allocate interest expenses between U.S. and foreign sources in determining tax liabilities.

The $2.4 billion cost of extending unemployment benefits is offset by extending through June, 2011, the federal unemployment tax that employers pay for each employee.

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The bill is H.R. 3548

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On the Net:

Congress: http://thomas.loc.gov

Jolie Rouge · 11-08-2009, 01:22 AM

Why the new $6,500 homebuyer tax credit is wrong
the Monitor's Editorial Board
Fri Nov 6, 4:00 am ET

Congress and President Obama keep throwing money at the housing industry, hoping its revival will also revive the economy. The industry itself pines for the halcyon days of McMansions on every block and home prices that never fall.

The latest example of this government largess: the extension and expansion of a tax credit for home buyers – $8,000 for first-time buyers and $6,500 for those living in homes at least five years – in a bill signed by the president Friday.

And that money from the US Treasury comes on top of the expensive bailout of Fannie Mae and Freddie Mac, more subsidies for the Federal Housing Administration, and the Federal Reserve's purchase of nearly $700 billion of mortgage-backed securities.

US lawmakers still won't recognize that a policy of loose credit for shaky home buyers since the 1990s created the housing bubble that finally went pop, leading to the 2008 Wall Street meltdown. (A lobby of real estate agents, homebuilders, and mortgage sellers keeps the subsidy gravy train flowing.)

But Congress needs to stop directing capital into an industry that does little to make America competitive in world trade and instead channel the nation's savings into industries with long-lasting, high-paying jobs.

Take a cue from postwar Japan. It directed capital into export firms like Toyota and constrained financing for homes. Jobs were plentiful while house sizes were small. By 1979, a visiting European official remarked that Japan was a nation of "workaholics living in rabbit hutches."

Japan may have gone overboard with an industrial policy that curbed consumer choices. But it did become the world's second-largest economy, one that didn't overinvest in residential real estate and still focuses on manufacturing jobs. (China has become a faithful student of Japan's model of directed development.)

US manufacturing, once the world leader, has shrunk to 12 percent of the economy and 8.7 percent of all jobs. Congress has begun to direct billions of dollars into the "green" energy industry, hoping to make it a major global competitor and a sustainable job creator. But in addition, Americans need more incentives to put savings into investments that support a range of export manufacturers in cutting-edge fields.

Homeownership has its value as a stabilizer for society. But its days as a nest egg and a source of credit may be over.

The US must put its eggs into world-class factories, not real estate.

Jolie Rouge · 11-16-2009, 06:04 PM

Frank floats loan plan for unemployed homeowners
By Michelle R. Smith, Associated Press Writer
40 mins ago

FALL RIVER, Mass. – Rep. Barney Frank said Monday he is pushing a proposal to use some of the interest the government collects from the financial industry bailout to give loans to unemployed homeowners struggling to pay the mortgage.

The lack of aid to jobless homeowners has been identified as a big weakness in the Obama administration's plan to tackle the mortgage crisis. A report by a congressional oversight panel said last month that the $50 billion program "was not designed to address foreclosures caused by unemployment," which are now the main cause of default.

Frank, chairman of the House Financial Services Committee, said in Fall River and New Bedford at appearances with Housing and Urban Development Secretary Shaun Donovan that he favors providing government help in the form of federal loans to homeowners who have lost their jobs until they get another job.

"These are people who are very responsible, very thoughtful. They got a home, it's above water, they've got equity, but they're unemployed, and you can't afford mortgage payments on unemployment," said Frank, D-Mass.

Frank said the program would be funded using interest banks pay on the $700 billion Wall Street bailout, known as the Troubled Asset Relief Program.

Frank spokesman Steve Adamske said the program was actually developed by Congress in the 1970s but never funded. The proposal is now part of legislation introduced in September, called the Main Street TARP bill.

It would provide $2 billion in TARP money for low-interest loans to homeowners who have lost their jobs but who have good prospects for being able to resume mortgage payments in the future. The emergency loans would be provided for up to 12 months with the possibility of extending them for another year.

A Treasury Department spokeswoman declined to comment on Monday when asked about Frank's proposal.

On Capitol Hill, many lawmakers have complained about the slow pace of loan modifications. Sen. Jack Reed, D-R.I., said in an interview last week that his staff has been considering ways to make mortgage companies do more loan modifications.

Reed said the Obama administration's foreclosure assistance program hasn't been working fast enough for his home state. Thirteen percent of Rhode Island homeowners were delinquent or in foreclosure as of June 30, the same as the number nationally, according to the Mortgage Bankers Association.

The foreclosure crisis is increasingly tied to joblessness, Reed said, as more borrowers with good credit lose their jobs and their ability to make monthly payments.

Lenders, meanwhile, have modest programs to aid the unemployed. Citigroup, for instance, has been reducing payments to an average of $500 for three months for some customers who have recently lost their jobs. Other banks give homeowners a break from payments for as long as six months.

http://news.yahoo.com/s/ap/20091116/...s_foreclosures