GOP Housing Plan Would Expand Tax Credits, Tackle Mortgage Fraud
Wednesday, March 25, 2009
House Republican leaders plan to unveil a housing package today that would increase the tax credits available for home buyers and would direct law enforcement to crack down on mortgage fraud.
Under the proposal, borrowers refinancing their mortgage would be eligible for $5,000 to help cover closing costs or to reduce their principal balance. The plan also revives a $15,000 home buyer tax credit proposal that Republicans pushed last year. This time, the proposal would require the borrower to have at least a 5 percent down payment. Both programs would expire in July 2010.
"We want to make sure responsible homeowners are able to purchase homes and stay in their homes," said House Minority Whip Eric Cantor (R-Va.), who will introduce the legislation. "If you can get a $15,000 tax credit, that is a tremendous incentive to get qualified buyers back into the game."
Brendan Daly, a spokesman for House Speaker Nancy Pelosi (D-Calif.), said he had not seen the proposal but that Democrats are committed to strengthening the housing market. "We have already seen a boost in home sales due to the $8,000 tax credit for first-time home buyers in the economic recovery package signed into law last month by President Obama," Daly said.
The Republican proposal also calls for providing additional resources to law enforcement agencies, including the FBI, to investigate and prosecute mortgage fraud. According to a recent study by the Mortgage Asset Research Institute, mortgage fraud jumped by 26 percent last year compared with 2007 even though fewer loans were issued nationally.
Republicans have not attached a price tag to their proposal and it is unclear whether they could gather enough support from Democrats to move the measure ahead.
The proposal also comes as lenders implement a two-part Obama administration plan to revive the housing market. It includes a program allowing borrowers with little home equity to refinance and a $75 billion program to give lenders incentives to lower payments for troubled homeowners.