The U.S. Senate voted 63 – 5 Friday to pass H.R. 3221, the Housing Stimulus Package. Included in the bill is language to permanently increase the Fannie Mae, Freddie Mac, and Federal Housing Administration (FHA) loan limits to $625,500 for high-cost areas and an $8,000 homebuyer tax credit. The Senate version now goes back to the House for what legislators hope will be a binding revision that can pass the House and Senate before the end of July. This "ping pong" effect arises because some Senate Republicans have lodged formal objections to the usual process of taking two differing versions of the bill to a House-Senate conference.
The House and Senate versions of the housing bill are now in very close alignment, with only a few issues to be resolved. Many of the issues revolve around the question of whether the bill will be "paid for." The major focus of the pay-for problem is the provision in the Senate package that would authorize $4 billion for grants to local governments where communities have been particularly hard-hit by foreclosures.
The grants would be made under the Community Block Development Grant program (CDBG). These CDBG provisions are not "paid for." House Blue Dogs (fiscally conservative Democrats) insist that it be paid for. House Republicans, including President Bush, oppose the CDBG provision altogether. President Bush has threatened to veto the bill, in part because of the CDBG provision. Accordingly, the House has the choice of deleting the grant provisions, or finding other offsetting spending cuts.
Speaker Pelosi (D-CA) also hopes to maintain the 2008 high cost limits of $729,000 (125% of an area’s median home price), while the Senate has agreed to limits up to $625,500 (110% of an area’s median home price) for both the GSEs and FHA. The Senate version also includes authorizations for FHA to refinance troubled mortgages – even those that are under water – as long as banks agree to take a loss. The program would allow the FHA to help as many as 400,000 homeowners.
Additional tax revenues are needed to close a gap on the tax package. A non-real estate provision has been identified and will likely be added in this final House package, as well. The tax provisions themselves are not likely to be modified in the House.
House Financial Services Committee Chairman Frank (D-MA), the architect of the housing and financial reforms, anticipates that the House can finish its work by today, July 18. If the bill does pass the House by then, the Senate should have adequate time to cast the final vote and send the package to the President for signature by the end of July.
REALTOR® response to the recent call-to-action was critical to the proposed loan limit increase and the Senate passage of this legislation.
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