Senate leaders agreed on a compromise housing-relief plan in non-senatorial fashion—fairly quickly.
The $15 billion to $20 billion plan (depending on who’s counting) would give couples who don’t itemize a thousand bucks in property-tax deductions, hand housing agencies $10 billion in tax-free bonds to help subprime borrowers refinance and first-time borrowers get loans, create $4 billion in block grants for local governments to buy foreclosures, and give $100 million to counsel homeowners at risk of foreclosure, says The New York Times on C1.
The Wall Street Journal notes that the plan is no done deal, and wins our Captain Obvious Quote of the Day for this bit of insight on A3:
Election years often tempt lawmakers to score political points. This year, voters could see pre-election fights over Iraq and fiscal policy, especially whether to renew President Bush’s income-tax cuts.
The business of America
The Washington Post on A1 and the WSJ on A3 report that one of the biggest benefits of the plan goes to—you guessed it—business. A tax provision aimed at home builders and banks would cost $6.1 billion, and the Los Angeles Times says that number could be “much higher.” Here’s how the WaPo puts it:
Families who cannot afford to repay their home loans —the group at the heart of the mortgage meltdown—would benefit mainly from $100 million to expand foreclosure counseling services and greater latitude for local housing authorities to use tax-exempt bonds in refinancing subprime loans.
Home builders and other businesses suffering losses in the flagging economy, meanwhile, would get the lion’s share of federal spending in the bill: $6 billion in tax rebates.
The Journal notes that in February the home-builders trade association cut off the money spigot to Congress because it was ticked that it didn’t get this tax benefit included in the economic stimulus plan that’s about to dump $1,000 checks all over America.
We assume the home builders with the prospect of new-found billions will now go back to their regularly scheduled Congress-bribing.
Countrywide’s good luck continues
In other housing news, the Justice Department won a ruling in federal court to go deep into Countrywide’s mortgage-processing systems to see just how bad the lender abused its borrowers. The judge may have been inclined to let the government peek because, as the WSJ reports on A3, he’s got some 300 cases alleging Countrywide wrong-doing before him.
Let the games begin!
More mission, less mammon
The WSJ says in a good story on A4 that Fannie Mae and Freddie Mac are being torn between their fiduciary duty to shareholders to make them money and their “public mission of propping up the housing market in times of distress.”
But the latest sniping underscores the possibility that Congress eventually will impose a much-tighter regulatory grip on the companies in an effort to make them focus more on mission and less on mammon…
Chartered by Congress to ensure a steady flow of money into housing finance, they can borrow cheaply because investors believe the government probably would rescue them in a crisis. But they are owned by private shareholders who want profit growth and dividends.
The FT notes that Fannie, Freddie, and the Federal Home Loan Banks are now responsible for virtually all home loans in the U.S. as “purely private sources of finance have all but dried up.” The two enable lending by buying up other lenders’ mortgages.
The New York Times has a good front-page story on an interesting bit of fallout from the housing bust, one that could further choke the economy—people aren’t quite as mobile as they used to be because they can’t sell their homes:
The rapid decline in housing prices is distorting the normal workings of the American labor market. Mobility opens up job opportunities, allowing workers to go where they are most needed. When housing is not an obstacle, more than five million men and women, nearly 4 percent of the nation’s work force, move annually from one place to another—to a new job after a layoff, or to higher-paying work, or to the next rung in a career, often the goal of a corporate transfer. Or people seek… an escape from harsh northern winters.