BankRate.com Calls Housing Bill "Wacky"

As a few of you know, I've been watching the Housing Bill with great interest. This is the Senate's version that has been debated for the past couple weeks. It's hard to follow, in part, because it's massive in scale. Washington Post reported that the current version now weighs in at 631 pages. Some feel that the Senate could have this passed in a few days. Bush is threatening a veto but there's so much bi-partisan support that the chances of that are becoming more slim.

Here are some of the major points of the bill:

• Tax break for first time home-buyers ($4-8K). It may include those who haven't owned in three years.
  

• FHA Refinancing of upside down loans. Allowing persons to take on more affordable loans.
  

• Higher limits for Fannie Mae and Freddie Mac.

• Tax rebates in various sizes and flavors.

That's the raw possibilities. Now for critique... this one from BankRate.com' article - A Wacky Housing Bill.

Author, Holden Lewis, presents the scenario that persons selling their owner occupied home may be at a disadvantage against bank owned and builder properties.

The bill may apply credits to those who purchase unoccupied homes. His contention is that if tax credits are given to the purchasers of empty houses we will, in essence, reward the bank that wrote bad loans or the builder who glutted the market. Lost in the shuffle is the homeowner who has managed to keep up payments. If people receive an $8K tax benefit to buy the neighbor's empty house the owner occupied home will most likely have to be reduced by the same amount in order to compete.

His statement is this, "If Congress wants to reduce foreclosures, why are they giving lenders an incentive to foreclose? That's what that tax credit is. If empty houses have a price advantage, lenders will create more empty houses. How difficult is it to understand that?"

Other issues that the bill may contain include extras, this from BlownMortgages such as:

• rescue refinancing for strapped homeowners 30-year fixed loan at 85% LTV of current loan.

• more money for financial counseling.

• stricter lender guidelines.

Now that some of the basics are finishing the political debate stage I expect the public to chime in. What's your opinion of these points?