The Hill - Proposals Continue Emerging to Boost Housing Market

News Article

By Vicki Needham

Plans to boost the stymied housing market continue to emerge, with a New York Democratic lawmaker adding his proposal that would provide incentives for real estate investment to sell 3 million existing homes into the mix.

Rep. Gary Ackerman will introduce a bill when Congress returns from its August recess designed to spur home sales and "to decrease the glut of 3 million existing unsold, vacant, often-blighted and foreclosed properties that are currently impeding economic recovery across the country."

The measure would offer 2 million qualified borrowers a matching subsidy of up to $20,000 for a down payment for single-family home purchases.

The subsidy would be a loan, with 20 percent forgiven in each of the first five years of owner-occupancy.

The measure would provide a 10-year tax exemption on rental income for the first million individual homebuyers who purchase existing single-family homes as rental properties.

"This valuable exemption would further stimulate the real-estate market and occupy otherwise vacant, deteriorating properties that depress entire neighborhoods," Ackerman said in a statement.

"Each of these incentives -- 2 million homes for families to live in, 1 million homes for investors to rent out -- would help spur the traditional housing market as the existing inventory overhang of housing is depleted. Over a million workers would be productive again."

To help cover the cost of these programs, the bill would use currently unrealized revenue by leveraging the first $500 billion of the estimated $1.2 trillion "in idle capital that U.S. companies have sitting off shore and incentivizing those companies to bring the money home by reducing the corporate tax rate on repatriated earnings to 10 percent."

"That revenue would cover the cost of the program," Ackerman said.

Last week, the Obama administration announced that it is seeking creative ways to revive the sluggish housing market by selling off certain repossessed properties, a move Sen. Jack Reed (D-R.I.) has said goes along with his plan to turn vacant, foreclosed homes into rental units.

Reed's proposal seeks to increase the resale value of vacant foreclosed homes for Fannie Mae and Freddie Mac by turning them into profitable rental units that could be sold to the private sector. The senator's plan to retrofit and renovate the houses would create jobs.

The Treasury Department, the Federal Housing Finance Agency and the Department of Housing and Urban Development put out a "request for information" seeking imaginative ways to clear the backlog, specifically by turning foreclosed properties into rentals.

Foreclosure filings dropped 4 percent in July from the previous month and 35 percent from the same time last year, hitting a nearly four-year low.

There were 212,764 foreclosure filings -- default notices, scheduled auctions and bank repossessions -- reported last month, the fewest in 44 months, as lenders and state and federal programs ramped up activity to help homeowners stave off losing their homes, according to a report from California-based RealtyTrac.

The yearly drop marks the 10th straight month of year-over-year decreases in foreclosure activity and the lowest monthly total since November 2007, the firm said.

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