Who Will Benefit from the Housing Relief Bill?
July 28, 2008 by Miranda Marquit
Filed under Finance
The big news from the weekend is that the Senate passed the housing relief bill that has been wending its way through Congress for the past few weeks. And President Bush has promised to sign the bill into law, meaning that soon some folks will see some relief.
But the bill does more than simply bail out the participants in the mortgage market mess. Others may benefit as well. Here’s who will benefit from the housing relief bill:
- Fannie Mae and Freddie Mac. These two government sponsored enterprises (GSEs) are getting the ultimate bail out. The housing relief bill authorizes the government to extend even more credit to the mortgage lenders, as well as to buy equity in the companies and make emergency loans. Happily, the bill also institutes a regulation of GSEs — something that has been sorely lacking and one of the reasons that Fannie and Freddie have capitalization that would bring any truly private company down.
- First-time Homebuyers. The bill offers a tax benefit of the lesser of 10% of the home’s purchase price or $7,500 to first-time homebuyers. Nice for first-time buyers. But where was this incentive last year, when I was buying a home?
- Homeowners facing foreclosure. Some homeowners facing foreclosure (an estimated 400,000) will be able to refinance their loans through the FHA. I think, though, that this is likely to merely delay the inevitable. Not to mention that 400,000 is just a drop in the bucket compared with the estimated more than 2 million foreclosures through 2009.
- US Creditors. Congress is raising the cap it has on the national debt
by $800 million. This brings the new national debt ceiling to $10.6 trillion. Aside from the fact that even having a national debt ceiling is a farcical exercise in futility, this move is one to be concerned about. This increases our interest payments to creditors, and could possibly devalue the dollar further — not to mention contribute to inflation.
- IRS. The Internal Revenue Service is also likely to get a boost. Tucked into this several-hundred page document is an amendment that requires electronic payment processors (like PayPal) and credit card processors, to report business transactions. For the IRS, this means increased revenue, ostensibly meant to offset the money spent on the housing bail out. This means that yet another third party is going to need to store your tax-ID number. Additionally, this also creates a situation that would allow the IRS to look through your transactions and decide what may be “too many” for your industry or collect any number of privacy-invading data.
What do you think of the housing the relief bill?
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Check out what others are saying about this post...[...] Quarter 2. The company insists that it will not need the bailout approved in the recently passed housing relief bill. Despite all that Fannie execs can say with regard to avoiding the need for taxpayer money, [...]
[...] with the new rules offered to Fannie Mae and Freddie Mac, giving them more flexibility, when the housing relief bill was passed a few weeks ago, have not been enough to save them. And now the government plans to put [...]
[...] The government has finally had enough with Fannie Mae (FNM) and Freddie Mac (FRE). The two companies have always had questionable capitalization — ever since they first were named private “government sponsored enterprises” decades ago. And now the capitalization has become downright ridiculous. The very reason that Fannie and Freddie could be questionable in their capitalization is about to come to pass — everyone assumed that if something went wrong the government would bail the companies out. (The government certainly made an effort, though, with the housing relief bill.) [...]