New Housing Bill Criticized as Scant Help for Distressed

Washington Post (04/04/08) P. D1; ElBoghdady, Dina; Montgomery, Lori
Under the Foreclosure Prevention Act introduced in the Senate on April 3, homeowners not eligible for mortgage interest tax deductions because they do not itemize will qualify for deductions up to $1,000 for families and $500 for individuals this year. Additionally, in an effort to massage residential sales, home buyers who purchase a foreclosed property within 12 months of the legislation's implementation will qualify for a tax credit totaling $7,000 over two years. However, critics say the bill does little to prevent homeowners from losing their properties or ease the housing crisis, although extra money in borrowers' pockets will provide some assistance. Real estate agents add that the tax break will help sell lower-priced dwellings but say it will have little impact in communities where home prices are high. Meanwhile, housing counselors say a provision in the bill that earmarks $100 million for counseling programs will not solve anything unless it is accompanied by other measures to help the housing and mortgage markets recover. Consumer groups also were disappointed by the Senate's decision to remove language that would have authorized bankruptcy court judges to rewrite the terms of distressed loans held by bankruptcy filers.