A Housing Bill For Regular Folk

The housing bill doesn't just help out Fannie Mae and Freddie Macs; it could make a big difference for regular folks, too. Ron Lieber, who writes a column for The New York Times called "Your Money," talks about the incentives, rebates and credits in the bill.

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ANDREA SEABROOK, host:

Now, the housing bill isn't just for the Fannie Maes and Freddie Macs of the world. They could make a big difference for you and me, too. There are plenty of incentives, rebates, credits, and more. We just need to know how to take advantage of them.

Ron Lieber writes a column for The New York Times called "Your Money." He joins me from our New York bureau. Hi, Ron Lieber.

Mr. RON LIEBER (Columnist, New York Times): Hello.

SEABROOK: You wrote a column about this. What can regular homeowners get?

Mr. LIEBER: One of the best breaks in this bill is a break for first-time homebuyers. You can get what's being called a tax credit but is really an interest-free loan over 15 years of up to $7,500 if you're buying a home for the very first time.

SEABROOK: Now, how does that work? The government gives me a loan?

Mr. LIEBER: Well, it works as a tax credit. So, essentially - let's say you own the IRS $1,000 at the end of the year and the tax credit is worth 7,500. Well, you're going to get a $6,500 refund from the IRS. And the idea there is that you're supposed to be incentivized if you're sitting on the fence to go out and buy a house and stimulate the economy some.

The idea being that the credit can effectively help boost your ability to raise the money that you might need for, say, a down payment.

SEABROOK: But then I have to pay it back.

Mr. LIEBER: You pay it back over 15 years in 1/15th chunks. You pay back each year through a line on the 1040 form when you pay your taxes.

SEABROOK: Okay. But not with interest.

Mr. LIEBER: No interest.

SEABROOK: And there are limits, right? This isn't for people who make 200, 300 thousand dollars a year.

Mr. LIEBER: Exactly. There are some limits. So, if you are a single person, it phases out $95,000 of income. If you're married filing your tax returns jointly, it phases out completely at 170,000. So, you know, the vast majority of Americans will be able to avail themselves of this if they choose to buy a home for the first time.

SEABROOK: Something about this makes me feel a little funny. This message of, you know, get yours while you can while this bill was really about helping people who were hurting.

Mr. LIEBER: You know, I've gotten a lot of emails from folks who are really irritated, that they behave themselves they got a loan that they can afford and they're not getting anything out of this bill. You know, I have some sympathy for that but the fact of the matter is, is that there's no shame in taking advantage of all or any of the giveaways or breaks that have been added to this bill.

You know, this is the law that we live under and you might as well take advantage of whatever break you're eligible for.

SEABROOK: What about other people? Senior citizens, for example.

Mr. LIEBER: The biggest sort of direct break for senior citizens comes out a product called a reverse mortgage, which is essentially a way to tap your home equity without having to make payments on the loan. You get a big chunk or you get monthly checks that essentially come straight out of your home equity.

What's gone on there is that there have traditionally been a lot of fees associated with these loans. These fees are now capped. You can also get a bigger reverse mortgage than you used to be able to, so that may help some people as well.

SEABROOK: And what about veterans returning home from war?

Mr. LIEBER: There are a couple of deals from veterans. Instead of 90 days, lenders will now have to wait nine months before beginning foreclosures proceedings on homes owned by people who are returning from the military.

SEABROOK: Okay. So, if they're just coming out, they're coming back from Iraq or Afghanistan, they're having a little trouble, they don't get foreclosed on immediately?

Mr. LIEBER: Exactly. And they're essentially getting another six months to kind of collect themselves, get back on their feet. A number of the deals that exist on this loan have been added in to make certain members of Congress, senators, you know, feel better about supporting the bill.

You know, the original idea here was that people who are in deep trouble with mortgage were the ones who were going to be helped. But, you know, as often happens with legislation, other people end up being helped as well.

SEABROOK: Ron Lieber, he writes the "Your Money" column for The New York Times. Thanks very much.

Mr. LIEBER: Thanks for having me.

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Housing Bill Clears Senate, Awaits Bush's Signature

After months of stumbles and false starts, Congress has put its stamp on a package of measures lawmakers hope will give a boost to the housing sector, where high foreclosure rates and declining prices have had a ripple effect throughout the economy.

The legislation the Senate passed 72-13 in a rare Saturday session aims to bolster the sagging housing market and shore up Fannie Mae and Freddie Mac, which together back nearly half the nation's mortgages. The president says he'll sign the bill when it reaches his desk, early next week.

Senate Majority Leader Harry Reid said the bill offered a ray of hope and "a chance to turn the page on the housing crisis and begin a new chapter that gives more families a chance at the American dream of responsible home ownership."

The bill addresses the flood of home foreclosures brought about by overly aggressive lenders and homeowners who got in over their heads. It would give several hundred thousand qualified borrowers a chance to get lower cost government-backed mortgages, if their lenders go along. It authorizes the government to back up to $300 billion worth of such loans. It also provides nearly $4 billion for communities to buy foreclosed properties and resell them, along with tax credits to encourage first-time homebuyers.

Opponents of the measure said it represented an unprecedented government intrusion into the housing market.

"No matter what's wrong with [the bill], most of the members of this Senate are going to come in and vote for it," said Republican Sen. Jim DeMint of South Carolina, who single-handedly forced the Saturday session. "[They're going to] check the box and go home and say they did something for housing. I'm afraid they may compromise the future of America as they do it."

Conservatives were especially unhappy with the rescue plan for Fannie Mae and Freddie Mac, which the Bush administration said was crucial to restore investor confidence in the institutions. The bill will give the two mortgage backers an unspecified line of credit and will allow the government to buy equity in them should Fannie and Freddie need more capital. It's unclear what the cost of all that will be to taxpayers, but Republican Sen. Kay Bailey Hutchison said Congress didn't get a very good deal.

"I am troubled by the inclusion of an unlimited U.S. Treasury credit line for Fannnie Mae and Freddie Mac, including the authority for the U.S. government to purchase stock in these private companies without the necessary intervention in their governance," she said.

But backers of the housing bill, led by Connecticut Democrat Chris Dodd said Congress had to do something.

"I can't promise it's going to work in every detail," he said. "I can't promise that we've designed a silver bullet here. All i can tell you is that ... inaction was unacceptable. Doing nothing was intolerable, and what we've done here is fundamentally alter the way we do business when it comes to housing."

A spokesman said despite some misgivings over its provisions, President Bush will sign the bill because of the need for action now.

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