DODD-SHELBY LEGISLATION TO ADDRESS NATIONAL HOUSING CRISIS PASSES SENATE
Bipartisan bill will help struggling homeowners, communities, housing markets
July 14, 2008
WASHINGTON, DC – Senators Chris Dodd (D-CT) and Richard Shelby (R-AL), Chairman and Ranking Member of the Senate Committee on Banking, Housing and Urban Affairs, today announced that the Senate passed the Housing and Economic Recovery Act. This landmark bipartisan legislation drafted by Dodd and Shelby includes major efforts to address the root of our economic problems – the housing crisis – by providing relief to hundreds of thousands of American homeowners and introducing broad improvements to the nation’s housing sector.
“This bill provides long-overdue relief to millions of homeowners struggling to keep their homes and the communities affected by this crisis,” said Dodd. “In addition, this legislation will work to stabilize the housing markets and reform and strengthen our housing sector. Today, we were able to rise above partisan differences and come together in the interest of American homeowners. I am committed to advancing this legislation through the legislative process and into law.”
“The housing crisis continues to threaten the stability of the U.S. economy,” said Shelby. “During difficult times such as these, the American people expect their elected representatives to respond in a timely and effective fashion that restores confidence. This legislation meets those qualifications by stabilizing our mortgage finance system through meaningful GSE reform, and by providing a reasonable option to those at risk of losing their homes. I am particularly pleased that we have safeguarded the interests of the American taxpayer in the process. Hopefully the House and the President will soon take advantage of the overwhelming momentum we have established on this legislation today.”
The Dodd-Shelby legislation contains a number of provisions that will help homeowners and communities. The legislation also includes several tax measures authored by Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Chuck Grassley (R-IA). Key provisions include:
- The HOPE for Homeowners Act: Creates an initiative within the Federal Housing Administration (FHA) to prevent foreclosures for hundreds of thousands of families at no estimated cost to American taxpayers.
- Assistance for Communities Devastated by Foreclosures: To ensure that communities can mitigate the harmful effects of foreclosures, $3.92 billion in supplemental Community Development Block Grant Funds will be provided to communities hardest hit by foreclosures and delinquencies.
- Foreclosure Counseling for Families in Need: To help families avoid foreclosure, the bill provides $180 million in additional funding for housing counseling and legal services for distressed borrowers.
- Preserving the American Dream for Our Nation’s Veterans: This bill contains several provisions to help returning soldiers avoid foreclosure, including lengthening the time a lender must wait before starting foreclosure from three months to nine months after a soldier returns from service.
- GSE Reform: Creates a world class regulator for the government-sponsored enterprises (GSEs) so that these vital institutions can safely and soundly carry out their important mission of providing our nation’s families with affordable housing.
- FHA Modernization: Reforms to modernize, streamline and expand the reach of the FHA, allowing families in all areas of the country to access secure and affordable mortgages through FHA.
- Affordable Housing Fund: A new, permanent fund that will help create more affordable housing for Americans in communities across the country.
- Enhancing Mortgage Disclosure: To ensure that consumers know the exact amounts of their mortgage payments, including the maximum possible payment under the terms of the loan and changes in payments associated with adjustable rate mortgages, lenders will be required to provide borrowers with more timely and meaningful mortgage disclosures on all home purchase loans, loans that refinance a home, and loans that provide a home equity line of credit.
- Standard Property Tax Deduction: To make tax relief available to all American homeowners, the bill will provide a standard deduction – $500 for single filers and $1,000 for joint filers – for the 28.3 million non-itemizers who pay property taxes. Present law allows only those who itemize deductions on their federal tax returns to deduct state and local property taxes from their income.
- Mortgage Revenue Bonds: To provide for refinancing of subprime loans, mortgages for first-time homebuyers and multifamily rental housing, $11 billion of Federal tax-exempt private activity bond authority is included in this bill.
- Credit for First-Time Homebuyers: The bill includes a refundable tax credit that is equivalent to an interest-free loan equal to 10 percent of the purchase of the home (up to $8,000) by first-time homebuyers to help reduce the existing stock of unoccupied housing.
- Increase in low-income housing tax credit: The Low-Income Housing Tax Credit program helps finance the development of rental housing for low-income families. Under current law, there is a state-by-state limit on the annual amount of federal low-income housing tax credits that may be allocated by each state. The bill would increase these limits.
A detailed summary of the legislation is attached.
Click link for summary of the legislation