Homebuilders Win Big in Senate Bill

April 3, 2008— -- Senate Democrats and Republicans have agreed on a plan to resurrect a dismal housing market. But, before a vote can even be taken, many are questioning if it will work and if the plan unfairly helps some of the big companies whom they blame for the housing mess.

One of the biggest provisions — costing taxpayers an estimated $6 billion — would allow builders and others in the housing business to count their losses this year and in 2009 against the big profits they made as far back as 2004.

"I can't really imagine what Congress thought putting that in there. It's basically a handout to the builders and the mortgage industry," said Dean Baker, co-director of the Center for Economic and Policy Research, a liberal-leaning think tank. "To my mind, those are two of the big villains in this story and why you would be looking to give them a tax break at this point, I just can't really understand. That part is of no help."

And what about those millions of homeowners struggling to pay their mortgages? Well, there's not too much in the package for them.

"It's very hard to see how it provides any help at all," Baker said. "I think you would be probably very frustrated if you expected to get any help out of Congress."

Lawmakers did include $4 billion worth of grants for cities and towns to buy and maintain foreclosed properties. They can either rent them out or sell the homes. The idea is to avoid having neighborhoods filled with boarded-up houses.

Having such homes on your block can dramatically lower the value of your property.

To encourage Americans to buy these vacant homes or newly-built, but vacant homes, Congress is also proposing a $7,000 tax break for such buyers.

While this would create an incentive to buy such homes, some people fear that it would lower the value of all other types of properties, actually causing more problems.

To directly help homeowners facing foreclosure, $100 million would be allocated for counselors to seek out families at risk and review their finances.