Fri, July 25th, 2008
HOUSING RESCUE BILL - PLEASE READ!

You have heard on the news about the Fannie Mae and Freddie Mac Bill endorsed by President Bush and passed by the US House of Representatives with a vote of 272-152 on Wednesday.  The bill will now move to the Senate for a vote this week-end.   As a real estate professional, I thought it important for you to read what is being said about this bill.  I will share with you what is being said pro and con to the bill.

First, here is an article forwarded to me by RISMedia with a pro point of view to the bill.  RISMedia is a leading real estate resource and the publishers of the Real Estate Magazine, a trade journal for real estate professionals:

 By Avrum D. Lank

RISMEDIA, July 25, 2008-(MCT)-The House approved a sweeping housing bill Wednesday that would provide tax credits of up to $7,500 for first-time home buyers and help an estimated 400,000 strapped homeowners avoid foreclosure.

The measure also would prop up troubled mortgage giants Fannie Mae and Freddie Mac, by giving the Treasury Department the ability to extend them an unlimited line of credit and buy up some of their stock, if necessary. The two companies back or own nearly half of the nation’s mortgage debt.

Hours before the vote, President Bush dropped his opposition to a provision offering $3.9 billion in block grants to help local communities devastated by foreclosures. With the White House’s support, the bill is likely to pass the Senate and become law this week.

A spokeswoman for Milwaukee Mayor Tom Barrett said the city intends to apply for some of the block grant money.

The 272-152 vote reflected a congressional push to send election-year help to struggling borrowers and to reassure nervous financial markets about the health of Fannie Mae and Freddie Mac.

The bill includes a program to help financially distressed homeowners refinance mortgages under better terms, by encouraging lenders to voluntarily restructure those mortgages. Lenders would agree to take less, and borrowers would agree to split any profits from the eventual sale of their home with the government. Borrowers could not get a second mortgage for five years.

The Congressional Budget Office estimates the program would cover about 400,000 homeowners with mortgages totaling $68 billion.

The bill also would include:

–A $7,500 tax credit for first-time home buyers.
–A $500 to $1,000 deduction for 2008 property taxes for people who don’t itemize deductions on their tax returns.
–Higher limits, up to $625,000, on mortgages insured through Fannie and Freddie. A temporary limit of $729,750 until Dec. 31 would remain in place.

The backing for Fannie and Freddie is “a massively important provision” because it will help to restore confidence to the mortgage market, which has been buffeted by a large number of defaults, said Joe Murray, director of political and government affairs for Wisconsin Realtors Association in Madison.

Congressional analysts estimate that a rescue of the mortgage giants could cost $25 billion, and perhaps more, but they predict there is a better than even chance it will not be needed.

Murray said the other parts of the bill aimed at providing direct help for homeowners and potential buyers also will help the market.

Details of how the $3.9 billion in block grants would be distributed were not immediately available, but the city of Milwaukee already is planning how to use the money, said Eileen Force, press secretary for Mayor Barrett. Barrett was out of town on a family vacation Wednesday.

Among the city’s objectives for the money would be increasing the percentage of foreclosed properties that are sustained as primary residences, reducing the share of evictions that are foreclosure-related, and lowering the number of vacant properties, Force said in an e-mail.

U.S. Rep. Gwen Moore (D-Wis.), who represents Milwaukee, said she was pleased with the bill.

“The legislation provides the tools necessary to our local governments to address the blight of widespread foreclosure (and) it also gives working and low-income families access to affordable and sustainable housing,” she said in a statement.

But U.S. Rep. Paul Ryan (R-Wis.), whose district includes southern parts of Milwaukee County, voted against the measure, saying he objected to its provisions to stabilize Fannie and Freddie.

“This bailout plan aggravates the fundamental problem that led us here: Fannie and Freddie remain for-profit corporations but still enjoy a federal guarantee at the taxpayers’ expense against any risk of loss,” he said in a statement. “To force Americans already struggling to make ends meet to take on this risk is a dangerous precedent.”

Wisconsin’s delegation voted along party lines, with Democrats Moore, Tammy Baldwin, Steve Kagen, Ron Kind and David Obey voting in support, and Republicans Ryan, Tom Petri and Jim Sensenbrenner opposed.

In all, 45 House Republicans voted in favor of the bill.

The legislation gives Treasury Secretary Henry Paulson power to inject capital into Fannie and Freddie and provides for a federal agency to insure refinanced home loans. Paulson overcame opposition to the bill within his own party, such as that expressed by Ryan.

Democrats were more supportive.

“This is the most important piece of housing legislation in a generation,” Senate Banking Committee Chairman Christopher Dodd (D-Conn.) told reporters in Washington.

Senate Majority Leader Harry Reid (D-Nev.) said earlier he aimed to get it through the Senate by the end of the day. The bill is “a very good piece of legislation,” he said. Sen. Jim DeMint (R-S.C.) threatened to delay that schedule if he can’t amend the legislation, his spokesman Wesley Denton said.

Rep. Barney Frank (D-Mass.), who chairs the House Financial Services Committee, helped steer the bill after backing Paulson’s call for the emergency measures for Fannie and Freddie, which would last through 2009.

Lawmakers, intent on limiting any losses to taxpayers, tied the potential aid to the federal debt limit. Still, they also raised that ceiling to $10.6 trillion from the current $9.815 trillion in the bill.

Washington-based Fannie and McLean, Va.-based Freddie own or guarantee about half of the $12 trillion of U.S. home loans outstanding. The companies face mounting losses stemming from the collapse of the subprime market.

Also standing to benefit from the legislation are companies such as General Motors and Northwest Airlines. Provisions in the measure would allow unprofitable companies to use tax credits that they have already accumulated to make investments in their businesses and work force.

An economic stimulus plan approved earlier this year included tax breaks that gave companies an incentive to increase their capital investments. But lawmakers who represent manufacturing states said it left out companies such as General Motors Corp. and Ford Motor Co. that have not been profitable.

Automakers, manufacturers and other companies that qualify for the tax credits would benefit by as much as $30 million for making the investments this year.

Lawmakers said automakers could benefit from the tax changes as well as airlines; manufacturers such as Goodyear Tire and Rubber Co. and Owens-Illinois Inc.; and energy companies such as CMS Energy Corp., Arch Coal Inc., and Murray Energy Corp.

Reacting to the passing of this legislation, Speaker Nancy Pelosi said, “The bill the House takes up today, if enacted, will represent the most far-reaching reform of our nation’s federal housing finance system in a generation…Owning a home is an essential part of the American Dream. It’s not only about what it means to individuals, it is what it means to the community, putting down roots. It is what it means to the economy as we take an interest in our homes and make them habitable. By expanding homeownership opportunities and protecting families against foreclosure, we are helping keep the American dream of owning a home alive. By restoring confidence in the housing market, our economy can begin to grow and create jobs for the American people again.”

What’s more, the National Association of Realtors® President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif said, “Realtors® are in the business of building communities, and our 1.2 million members understand that this legislation will go a long way in helping people buy and keep their homes,” said NAR President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. “We look forward to prompt Senate action to finalize this bill, helping ensure that every American who can afford to own a home and wants to do so will have the opportunity and that everyone who responsibly owns a home is able to keep it. This bill must get to the president quickly, and we urge him to act immediately to sign it into law.”

“The $7,500 tax credit for first-time home buyers is a needed stimulus for a weak housing market,” said Gaylord. “This bill would extend the tax credit availability through June 2009, which would have a further positive effect on the housing market.”

Bloomberg News and The Associated Press contributed to this report.

Copyright © 2008, Milwaukee Journal Sentinel
Distributed by McClatchy-Tribune Information Services.

 For an opposite point of view, Republicans in the House who voted against passage of the Housing Bill, did so because they say it will place US Taxpayers money at risk!  In the US Senate, there is concern that the Housing Bill does not have any language in it to prevent “Fannie Mae and Freddie Mac from lobbying”.  It is being said that a big conflict of interest is being created to have a company being bailed out by the US Government with Taxpayers’ money.  Republicans feel the passage of this Bill will leave the US Taxpayer on the hook for countless billions of dollars.

 

The following was sent to real estate professionals, lenders, etc. on Friday from Senator Shelby (R-Ala):  

 

July 25th the Senate will vote on the stimulus package that was passed by

Congress yesterday. Over the last few days it was brought to our attn that if

this passes it will kill all Down Payment Asst Programs. They are assuming that

FHA only accts for 9 0/0 of Mtg transactions. This would be fact up until March

of 08 when Fannie and Freddie ended all 100 0/0 transactions. As of April our 10

to 15 mill of production has completely swaped to over 80 0/0 FHA. Our pipelines

are full of FHA Down Payment Asst Program clients, this will be a disaster to

the nations housing market. If your not familiar with loan limits here in

Alabama it is 270k in other parts of the country it is as high as 700k and these

are customers with good jobs and great credit. This will not just effect Alabama

but every state should have the same outcome. I believe they are working off

data from earlier this year and is very important that they  address this before

they make the biggest mistake since the start of the housing crisis. The

majority of the clients effected are not currently invested in the housing

market and is our best source for decreasing our nations tremendous inventory.             

The part that bothers me the most is the fact that we are substituting a

customer that is able and willing to buy and afford a home with one that has had

a chance to be responsible and in most cases has and always will be a

irresponsible . They where in this shape when the original loan was made and was

given a opportunity to for a second or in some cases a third chance. I do

understand that our financial markets may not be able to with stand and may be

necessary to extend these losses to later point when our economy has gained

ground and becomes stable. However we are giving up the good to put a band aid

on the bad.  With out the good to help offset the bad we will set ourselves up

for much greater loss in the near future. We need to stop the seesaw, knee jerk

reactions and deal with changes that are balanced and informed.

THIS HAS TO BE STOPPED!!!!  WE HAVE TO ACT TONIGHT OR FIRST THING IN THE

MORNING!!!!!

Call and ask all to do the same. Call and call often. Phone lines are open and

receptive.

Senator. Shelby 202-224-5744

 

The preceding information is provided for your information only.  The contents of this information is neither supported or opposed by the writer.

 

 

 

 

 

 

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