CONGRESSMAN HENRY CUELLAR SUPPORTS COMPREHENSIVE HOUSING OVERHAUL BILL
Legislation will aid individual home-owners and help restore confidence and stability in the U.S. housing and financial markets
U.S. Representative Henry Cuellar voted today for the comprehensive housing overhaul bill, H.R. 3221, which is the most complete response to the American mortgage crisis to date. Amendments to the legislation, which will assist struggling homeowners and help strengthen the domestic housing market, passed the House by a vote of 272 to 152.
Although Texas has fared better than other states in the housing foreclosure crisis, in the past year, Texas home sales decreased by 10 percent, housing permits decreased by 31 percent, and 9.1 percent of adjustable rate mortgages were foreclosed. H.R. 3221 provides mortgage refinancing assistance to keep at least 400,000 families from losing their homes, to protect neighboring home values, and to help stabilize the housing market at no cost to American taxpayers. The bill expands the Federal Housing Administration (FHA) program so many borrowers in danger of losing their homes can refinance into government-insured mortgages, and it protects taxpayers by requiring lenders and mortgage investors to reduce the loan principal. In exchange for an FHA guarantee on the mortgage, borrowers must share any profit from the resale of a refinanced home with the government.
“Recent record foreclosure rates underscore the urgency of completing a comprehensive housing bill,” Congressman Cuellar said. “At no cost to the American taxpayer, this bill will help significant numbers of hard-working American families in danger of losing their homes to refinance into government-insured mortgages they can afford to repay. It will provide the relief necessary to increase confidence and stability in the U.S. housing market and bring us one step closer to getting our economy back on track.”
In an effort to stabilize neighborhoods most affected by the housing foreclosure crisis, the legislation provides $4 billion in Community Development Block Grant (CDBG) Funds to purchase foreclosed homes and to stem the significant losses in home values of neighboring houses. Under the legislation, rehabilitated homes would be sold or rented to moderate-income individuals and families. The bill also provides $180 million for pre-foreclosure counseling and $30 million for counseling to assist homeowners in foreclosure, to be distributed in grants by the Neighborhood Reinvestment Cooperation, with 15 percent targeted for low-income and minority homeowners and neighborhoods.
Key provisions of the legislation provide $15 billion in tax benefits, including tax credits to first-time homebuyers, a property tax deduction for non-itemizers, an additional $11 billion in mortgage revenue bonds for states, and improved access to low-income housing. Specifically, the bill provides taxpayers that claim the standard deduction with up to an additional $500 ($1,000 for those filing a joint return) standard deduction for property taxes in 2008, and for first-time home buyers, it creates a refundable tax credit up to $7,500 that would be repaid, interest-free, over 15 years.
The legislation includes the recent proposal by Treasury Secretary Paulson to provide explicit government backing for the next 18 months to the two mortgage giants, Fannie Mae and Freddie Mac, which guarantee nearly half of all mortgages in the United States. The bill also gives the Secretary of the Treasury Department standby authority to buy stock in those companies to restore confidence in the lenders and stabilize housing markets.
In recent years, regulated loan limits for Fannie Mae and Freddie Mac have not allowed the lenders to evolve with the housing market to meet the needs of borrowers. H.R. 3221 will raise the current loan limits for single family homes by granting loans for moderately priced homes up to 115% of the local area median home price and will make loans effective in high-cost areas by raising the permanent loan limit from $417,000 to $625,500.
The cost of these incentives, and of the community grants, is completely offset by other tax provisions in the package.
Congressman Henry Cuellar is a member of the House Homeland Security, Small Business,