The Senate begins debate Thursday on a bipartisan measure to deal with the housing slump. The Foreclosure Prevention Act of 2008 aims to address the problems faced by families and their communities dealing with foreclosures. Unveiled Wednesday night, the package includes tax credits, grants and expanded federal programs.
"Obviously, for millions of people on Main Street who wonder whether or not the Congress is paying attention to their concerns, what's happened to their homes, to their economic well-being, this effort that we've put into the last several days, I think, is a major step in the right direction of offering some real hope to people on Main Street," said Senate Banking Committee Chairman Chris Dodd (D-CT). "It's not the end of the road, but it's a very strong beginning."
The measure, ironed out behind closed doors, comes after lawmakers reported hearing from constituents that the government seemed more interested in helping Wall Street, as shown by the Federal Reserve's $30 billion rescue of the investment bank Bear Sterns.
"We're going to work in a bipartisan way to tell the American people that we have heard from you; we know there are housing problems as well as financial problems," said Sen. Richard Shelby (R-AL), a co-sponsor of the measure. "And this is going to be our first reaction to a lot of this. It will not, as Sen. Dodd said, be the end."
The bill attempts to tackle the foreclosure crisis in a number of ways. It makes loans backed by the Federal Housing Administration more widely available, an issue Congress has been deadlocked over. It makes $4 billion available to communities to buy and rehabilitate foreclosed homes. It also gives tax credits of $7,000 for buying a foreclosed home. There are also tax credits aimed at homebuilders and other businesses hurt by the housing crisis, and funds for counseling. Returning soldiers would be given an additional six months before foreclosure proceedings could begin against them.
The measure is already being criticized for not going far enough. Sen. Norm Coleman (R-MN) says the measure may not be everything, but it will help: "I think it helps overall confidence, when people look at their elected officials and see them actually coming together to try to move something forward. Is it a magic bullet? No. Is it a cure-all? No. But is it a very strong and substantial step in the right direction? Absolutely."
Senators will spend the next several days debating and trying to improve the bipartisan bill. Democrats will try to attach an amendment that was stripped from their original measure, to allow bankruptcy court judges to lower mortgage payments for homeowners facing foreclosure. That provision, opposed by the banking industry and the Bush administration, led to Senate Republicans blocking the housing bill in late February.
For now, most senators seem to be on the same page, largely because they can all tell tales similar to Sen. Bill Nelson's (D-FL):
"Our people are hurting. There's no doubt that the housing market in my state of Florida is in shambles. Florida home sales just last month were down 28 percent compared to this time last year."
While the White House says it likes some of the provisions in the Senate bill, it says it has serious concerns that other provisions would hurt homeowners more than help them.