Rep. Fossella: Proposal in Housing Bill Would Fail
to Help New York City Market

Fossella Urges House Leaders to Include Homebuyer’s Tax Credit
to Help More Middle-Income Americans

[Washington, DC] – Congressman Vito Fossella today declared that a key proposal in the House’s bill to revitalize the housing market and help struggling homeowners would actually shut-out millions of middle-income Americans in high cost areas.

Fossella said the proposal to offer first-time homebuyers a no-interest government loan would have limited success in revitalizing the housing market because millions of middle-income Americans in high-cost areas would not be able to claim the benefit. The measure is part of the Housing Assistance Tax Act of 2008, which was unveiled today by Congressman Charles Rangel.

Fossella said, “While the measure is dubbed a home buyer credit, it’s really a no-interest government loan that must be repaid to Washington over the course of 15 years. The proposal amounts to little more than the government lending a taxpayer his own money – with the requirement that the taxpayer return his money back to the government at a later date. The requirement that only first-time homebuyers are eligible for the loan and the income limitations will only serve to freeze out a significant percentage of the middle-income Americans who are equally deserving and equally in-need of assistance.”

The House proposal, which is restricted to first-time homebuyers and includes income limitations of $70,000 for individuals or $110,000 for joint filers, would provide a refundable tax credit that is equivalent to an interest-free loan equal to 10% of the purchase price of their home (up to $7,500). Taxpayers receiving this tax credit would be required to repay any amount received back to the government over the next 15 years in equal installments.

In a letter to Rangel today, Fossella proposed a more effective plan to help struggling homeowners avoid foreclosure and boost the housing market -- a temporary homebuyer’s tax credit of $10,000 on principle residence up to $729,750.

Fossella said, “A homebuyer’s tax credit would jumpstarting the ailing economy, prevent foreclosures and allow us to confront the mortgage crisis with aggressive action. In many communities, housing inventories continue to increase as home prices continue to decline – a recipe for long-term economic trouble unless we act to encourage homeownership. This measure represents a piece of the puzzle to solving the challenges in the housing market.”

Fossella said he must review all the provisions included in the housing bill and the legislative language before deciding how he will vote.
 

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