Republican's Housing Plan... What do you all think?
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Republican's Housing Plan... What do you all think?
GOP Housing Plan is About Fairness
by Eric Cantor
In this era of ubiquitous bailouts, the public discussion seems to overlook the nine out of 10 of homeowners who are paying their mortgages on time. While the proposals put forth by the Obama administration throw enormous sums of good taxpayer money at those who have engaged in irresponsible or even fraudulent behavior, unfairly left out in the cold are the vast majority of Americans who have behaved responsibly. As House Republicans roll out our alternative housing plan today, we do not make that same mistake.
We believe our plan is the most effective way to stimulate home-buying and arrest the free fall in home values that has erased roughly $20 trillion in housing wealth since the market peaked in mid-2007. What distinguishes our program is the emphasis on fairness.
Unlike the administration’s plan, we do not offer help to borrowers who inaccurately represented their income or assets on their original mortgage. Likewise, there is no assistance for lenders who followed improper lending standards and made loans to people who could not afford them.
Instead, the GOP plan gives incentives to all responsible Americans who want to buy a new home or refinance at a lower rate. This includes homeowners who find themselves temporarily unemployed; “neighborhood investors” who would purchase and rent out homes in areas with a high number of foreclosures; growing families who want to trade up to a larger home; empty-nesters seeking to downsize; and families who wish to relocate to a new area.
Republicans are determined to break the deflationary habit of prospective homebuyers and private capital merely waiting on the sidelines for things to get worse. The scaled-down $8,000 tax credit for first-time homebuyers in the recent stimulus bill doesn’t go far enough to tip the balance in favor of buying.
To spur home purchases across the board, we propose:
• A $15,000 home-buyers tax credit for all purchases of primary residences provided that the buyer pays 5 percent down. Boosted by historically low mortgage rates, this tax credit provides the right incentives to get all kinds of capable homebuyers back into the game – not just first-timers. The credit covers purchases made before July 1, 2010.
We also believe we can put a dent in the housing inventory glut by encouraging neighborhood investors. Current law provides incentives only for the purchase of owner-occupied homes. To encourage neighborhood investors to buy and rent out these homes rather than leaving them empty eyesores that further drag down home values in the area, House Republicans propose:
• An equalizing of the treatment of a home purchased for occupancy with a home purchased for rental purposes (defined as being rented to the same tenant for at least 181 days out of the year). The same exclusion from taxes for any future appreciation in the home value applies. This covers purchases made before July 1, 2010.
On the refinancing side, House Republicans plan to help keep people in their homes by proposing the following:
• A $5,000 refinancing tax credit to help families handle the cost of mortgage refinancing, buy down points or reduce their principal balance. Refinancing would be covered through July 1, 2010.
• Incentives for lenders to keep owners in their homes by refinancing mortgages and lowering monthly payments. If the homeowner agrees to share a portion of future home appreciation with the lender, both lender and borrower will be exempted from taxes on eventual profits. Nor will the borrower incur any tax liability as a result of the refinancing. This applies to refinancing through July 1, 2010.
The latter incentive instills a sense of shared sacrifice between borrower and lender. That’s a far cry from the administration’s plan for the government to step in foot the bill to modify the mortgages.
The housing crisis remains at the vortex of the current economic storm. We have to focus our efforts on stabilizing home prices and repairing the disparity between sellers and buyers.
These alternative solutions are House Republicans’ best way to reconcile two critical demands - taking swift and bold action in the face of a national crisis, and instead of rewarding bad or irresponsible behavior, rewarding the great majority of responsible homeowners.
President Obama says he values bipartisanship. By putting forward these constructive solutions to our nation’s most urgent problem, we are holding the door open for him.
It’s now up to him to walk through it.
I like the $15,000 home-buyers tax credit. I think it is a more reasonable incentive than the Obama plan offers. I also like the "5% down" aspect, because it means that the buyer will have something to lose if they fail. It was the implementation of the "no money down" policy in the CRA that contributed to the housing bubble and eventual crash, and we can't repeat that failure.
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The incentive for neighborhood's to purchase homes and rent them out sounds good, but I'm not sure it would work. It would solve the problem of getting homes off the market, and would pay off the lenders who are holding the bag. But who would be willing to take on the responsibility of renting it, repairs, accounting, and all the other time consuming aspects of being a landlord? If each person only has a small stake in the home, why would they want to take on these responsibilities? I see this as being just like a government run program, in the sense that it will end up being inefficient and open to corruption. Just look at how poorly government housing projects are maintained, compared to privately owned homes. When the all the "people" own it, nobody wants to invest more time than the other guy.
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I really like the refinancing plan, that proposes that the home owner share future appreciation with lenders, in return for lower monthly payments. When you combine that with the government not taxing those future profits, I think it is a much better solution than Obama has offered.
Grim17-
Number of posts : 430
Age : 59
Location : Phoenix, Arizona
Registration date : 2009-01-17
Re: Republican's Housing Plan... What do you all think?
I read the article. I found it interesting. Really the only thing I see that would work to stabilize prices and possibly bring prices back up is to only have well qualified buyers allowed to get loans. Not only that, but one would have to put down at least 15% of the homes value. I would not want to see any tax credits, until the buyer had proven himself credit worthy. Then issue tax credits for home improvements. Something that would make the home increase in value. Only those who are financially stable enough should be able to take out loans. There has to be strict guide lines to lend for houses. This I feel is the only way.
Theophilus-
Number of posts : 914
Location : Beautiful Northern California.
Humor : I miss the humor in what people say at times.
Registration date : 2009-01-15
Grim17-
Number of posts : 430
Age : 59
Location : Phoenix, Arizona
Registration date : 2009-01-17
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