Senate Passes Mortgage Mitigation Bill: Tax Benefits

The Senate passed a bill to help ease the mortgage foreclosure crisis that includes:

• o - large tax breaks for homebuilders and credits for people who buy foreclosed properties,


• o - $4 billion in grants for communities with the highest foreclosure rates to buy and rehabilitate foreclosed properties.


• o - $100 million for pre-foreclosure counseling and stronger loan disclosure requirements.


• o - $7,000 tax credit for the purchase of foreclosed homes.


• o - modernization of the Federal Housing Administration that would enable more homeowners to refinance into loans backed by the Depression-era agency.


• o - $10 billion in tax-free mortgage revenue bonds to help homeowners refinance subprime loans

A House bill steers tax breaks toward first-time home-buyers and investors in low-income rental housing and would have the FHA step in to back $300 billion in refinanced loans for 1 million or more homeowners who otherwise might face foreclosure.

The Bush administration opposes the plans, saying it would make the mortgage mess worse. House Democratic leaders regard the Senate proposal as benefitting businesses rather than homeowners.