Housing Relief Bill Clears Congress
Over the weekend, in a rare show of industry, the Senate passed a housing relief bill. This bill has been in Congress for weeks, with President Bush regularly threatening a veto. However, Bush has changed his tune, and lately encouraged Congress to pass the housing relief bill. Bush is expected to sign the bill into law fairly soon — possibly even this week.
The change of heart was enacted with the help of adding relief for Fannie Mae and Freddie Mac to the bill. The bill now allows the government to bail out the two mortgage lenders if the need should arise. With everyone acknowledging that the two government sponsored enterprises (GSEs) couldn’t be allowed to fail, adding provisions to the housing relief bill made it a slam dunk.
What else is included in the housing relief bill
There are other items included in the housing relief bill. Some of the highlights include the following:
- Creation of a regulator for the GSEs. This is a big step, since Fannie and Freddie have been enjoying the fruits of private enterprise, without true government regulation, while enjoying the implicit government guarantee.
- New tax breaks for homeowners.
- Loose standards for refinancing mortgages in trouble.
- Partial profit recovery by FHA from homes it refinances.
Some of these make sense (actually regulating GSEs, for example). However, loosening requirements for mortgage borrowers in trouble may not be the best policy. It merely delays the inevitable and puts taxpayers on the hook to boot.
Additional provisions in the housing relief bill
In addition to items directly related to the mortgage market, the housing relief bill offers two additional provisions that are quite troubling:
- The national debt ceiling has been raised to $10.6 trillion. This represents an authorization for the government to borrow an additional $800 billion. The whole idea of a ceiling is a farce, since it clearly does nothing to stem the irresponsible borrowing practices of the government.
- Electronic payment processors and credit card processors are now being required to report transactions to the IRS. This adds another layer of work to any number of enterprises, and can be hard on small businesses and banks alike. Not to mention the new privacy concerns that come with this provision.
What do you think of the housing relief bill?
Tags: housing relief bill, mortgage lenders, home mortgage loan, mortgage loan blog,
housing bill Congress, Fannie Mae, Freddie Mac
