Tampa Tribune Op-Ed: New Housing Law Is Ray Of Hope For Tampa Area's Gloomy Market

Op-Ed

Tampa Tribune Op-Ed: New Housing Law Is Ray Of Hope For Tampa Area's Gloomy Market

Bradenton Village HOPE VI Funding Announcement

New federal help for the big mortgage lenders and first-time homebuyers could help revive Tampa's housing market. The quicker markets stabilize, the less taxpayers will have to pay in the complex bill with an unknown price tag.

President Bush signed it last week, but we don't blame him for doing it quickly, without fanfare.

Like the farm bill, the new housing law is wide-ranging and intentionally hard to comprehend. It includes a tax break for Chrysler without even mentioning the name of the struggling automaker. The reference is to an "applicable partnership" defined as one that has produced at least 675,000 automobiles this year.

It also expands a hurricane recovery zone in Alabama to give a tax break to a Canadian railcar company, an odd addition to a housing bill.

Most important locally are its main provisions to strengthen credit markets, encourage first-time home buying, and help some homeowners avoid foreclosure. The generous package of federal assistance for the housing and financial markets irked many conservatives because, while it supports free enterprise and encourages economic growth, the law helps cover losses of investors, government-sponsored lenders and buyers at the expense of us all.

The Libertarian Party calls it a waste, "like Congress painting a collapsing house."

Every Florida Republican in the House voted against it, but Florida's Republican Sen. Mel Martinez supported it, saying the law "will bring immediate relief to the suffering homeowners facing foreclosure, while addressing long-term changes necessary to strengthen the housing industry."

The Tampa area needs that kind of help. In the past 12 months, this area has lost 23,100 jobs. Housing prices are down about 25 percent from the 2006 peak.

Here's one way the new law can help individuals. First, in what the National Association of Home Builders calls the centerpiece of the bill, it grants up to $7,500 to homebuyers who haven't owned a home in at least three years. The offer is half as much for single buyers, but the rules are flexible as to what constitutes a couple.

The money will show up as a tax credit on the buyer's next income tax return, which won't put money in your pocket in time to buy the house. But the money is a credit, which means you get it even if you pay no taxes.

Lawmakers call it a "temporary tax credit," a confusing name for what is really a no-interest, 15-year loan. But if your house loses value and you sell it, you don't have to repay the money. Taxpayers are taking the risk for you.

The credit applies to homes purchased in the 15-month period between April 8, 2008, and July 1, 2009. You can find out more details at http://www.federalhousingtaxcredit.com.

Another way the bill helps is through a rescue plan for some homeowners who can't make their payments. If your payments are at least 31 percent of your income, you may qualify for a 30-year fixed-rate loan on 90 percent of your home's value, if your lender agrees.

Some critics say the assistance is not enough to keep homeowners from walking away from houses that are worth significantly less than the mortgages.

The object is not to rescue everyone stressed by the housing bubble. The goal is to provide just enough help to restore confidence. If the new law does that, it should be well worth the price.

Source