The House passed a bill aimed at shoring up the mortgage industry and preventing foreclosures after the president dropped his veto threat.

The bill passed by a vote of 272-152. The American Housing Rescue & Foreclosure Prevention Act, H.R. 3221, puts a new independent regulator in charge of Fannie Mae, Freddie Mac and the Federal Home Loan Banks, replacing the Office of Federal Housing Enterprise Oversight. The bill provides resources to allow cities and states to buy up and rehabilitate foreclosed properties. It also expands home ownership opportunities and helps returning soldiers avoid foreclosure.

In addition, the legislation offers mortgage-refinancing assistance to keep an estimated 400,000 families from losing their homes. It expands the Federal Housing Administration program so many borrowers who are in danger of losing their homes can refinance into lower-cost, government-issued mortgages. The bill creates a new fund to boost the nation's stock of affordable rental housing in both rural and urban areas for low- and very low-income individuals and families.

Further, the bill includes a number of tax breaks to encourage home buying. It provides $15 billion in tax benefits, including tax credits to first-time homebuyers, a real property tax deduction for non-itemizers, an additional $11 billion in mortgage revenue bonds for states and improved access to low-income housing.

The bill gives first-time homebuyers a refundable tax credit that works like an interest-free loan of up to $7,500 (to be paid back over 15 years) to spur home buying and stabilize the market. The credit will begin to phase out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return).

It provides taxpayers that claim the standard deduction with up to an additional $500 ($1,000 for a joint return) standard deduction for property taxes in 2008.  A temporary increase in mortgage revenue bond authority allows for the issuance of an additional $11 billion of tax-exempt bonds to refinance subprime loans, to provide loans to first-time homebuyers and to finance the construction of low-income rental housing.

A temporary increase in the low-income housing tax credit and simplification of the credit aims to put builders to work on creating new options for affordable housing.

The cost of the bill (except for the Fannie Mae/Freddie Mac provisions) is offset with a tax compliance provision from the president's budget that requires credit card companies to report more information to the IRS about credit card transactions and by a delay in the effective date of a tax benefit for multinational companies that has not yet taken effect.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access