By Mike Stetzer
Last week, the U.S. Senate passed a bill meant to address the housing crisis mainly by offering tax breaks and community funding to certain groups, according to reports from the Associated Press. Though Senators have reportedly noted that the bill still needs some improvements, many view the bill's passage as the first step toward addressing the problems caused by the collapse of the subprime housing market, which has left many in bankruptcy.
In its current form, the bill allots $15 billion over the next ten years to help those hardest hit by foreclosure, reports Reuters.
Some of the money would be spent on tax credits for homebuyers who purchased foreclosed-on properties. Evidently, legislators believe this incentive will encourage the purchase of abandoned homes. Homebuilders, too, would see benefits in the form of tax breaks.
An additional six billion smackeroos would be allotted for tax breaks for companies producing renewable energy sources. Some Senators apparently feel that this measure will help tackle one of the sources of the country's current economic problems.
In addition to the various tax breaks, the bill would allocate $100 million for pre-foreclosure counseling and outline stricter standards for loan disclosures. Another four billion dollars would apparently be funneled to community programs designed to allow communities to purchase and fix up foreclosed properties.
Interestingly, similar tax breaks to the energy and housing industries were eliminated from a stimulus bill that took effect this February, as many in Congress evidently believed they would cost too much money and provide too few benefits economically.
The bill also calls for an update of the Federal Housing Administration, which would be revamped in order to be able to back more home loans.
Sources indicate that in its present state, the bill has drawn criticism from both the House and the President. The House, it seems, thinks the bill favors businesses over individuals too much and the Bush Administration has reportedly expressed the belief that the bill's measures would only worsen the housing crisis.
But members of the Senate are apparently aware of the bill's shortcomings, and hope members of the House of Representatives will offer improvements.
Senator and Democratic Presidential hopeful Barack Obama (D-IL) has apparently expressed the opinion that special interest groups have had too great an influence on the bill, promoting tax breaks for big businesses and blocking reform to bankruptcy law that would help struggling homeowners.
The House of Representatives is reportedly working with a different bill in trying to address the same economic issues. This bill would apparently give $300 billion in funding to the FHA, which could help a million or more homeowners. Tax breaks would be given to first-time homebuyers and those investing in low-cost rental housing, according to reports.