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Far-reaching housing assistance that could provide a boost to metro Detroit's struggling home market -- with tax credits for first-time buyers and an expansion of federal programs to protect owners from losing their homes -- cleared the House on Wednesday and appeared on a fast track toward approval.
With the White House's desire to prop up mortgage giants Fannie Mae and Freddie Mac serving as leverage, majority Democrats in Congress saw President George W. Bush withdraw his opposition despite his and many other Republicans' distaste for some parts of the legislation.
Many of the bill's provisions, however, could play a role in helping metro Detroiters and Michigan residents crippled by one of the worst home foreclosure rates in the nation.
Among them:
• A tax credit worth up to $7,500 for first-time homebuyers.
• An additional property tax deduction for people who own their homes but don't itemize on their taxes.
• An expansion of federal housing assistance that is projected to keep 400,000 families nationwide from losing their homes by enabling them to refinance their loans at lower, fixed rates.
• $3.9 billion in grant money to state and local governments to buy up and renovate foreclosed properties as a way to stem neighborhood deterioration.
And there's more -- a measure that mirrors a tax provision in an economic stimulus plan passed by Congress should be worth $30 million each to Detroit's automakers.
The biggest effect, however, could be in the housing market, a particularly sore subject in southeastern Michigan where a high jobless rate and layoffs have combined with the countrywide subprime mortgage meltdown to fuel foreclosures.
Realtors weigh in
Realtors in metro Detroit praised some of the bill's provisions, especially the tax credit, which they say could be a big help in moving some of the area's bloated housing inventory.
"Any type of tax credit would be huge," said Debbie Ronayne, a realty agent with Keller Williams in Plymouth. "As far as the" refinanced loans "for people who are upside down on their mortgages, that could help us avoid another huge wave of foreclosures.
"I see it helping this area. We were first, and we've been hit probably harder than any other state in the whole nation."
The legislation, which has its share of detractors, now heads to the Senate, where it could still face delays by Republican members.
Supporters say they hope it reaches Bush's desk before Congress adjourns in about a week. The House vote was 272-152, with many GOP members voting their displeasure not only with the bill but the administration's support.
Of Michigan's delegation, Rep. Joe Knollenberg of Bloomfield Township was the only Republican to support the bill.
Said Rep. Mike Rogers, a Brighton Republican, the bill "would establish an undetermined line of credit for Fannie Mae and Freddie Mac, and put American taxpayers on the hook for more than $25 billion."
Fannie Mae and Freddie Mac are private companies originally created by the government to boost the housing market. They guarantee and buy loans and package them to sell as securities, which fuels financial markets.
Help for Michiganders
Rep. Sander Levin, a Royal Oak Democrat who had been pushing for the legislation, praised it as much-needed help for struggling homeowners and would-be buyers in Michigan.
"The housing crisis is central to the economic turmoil we are now facing," Levin said.
He particularly noted the community development block grants to help buy and rehabilitate housing stock, citing figures from the Washington, D.C.-based Center for American Progress, a progressive think tank, that said it could be worth as much as $160 million in direct funding in Michigan.
Fix for bigger problems?
Bob MacKenzie, an agent for Real Estate One in St. Clair Shores, said the tax breaks in the bill would help relieve the housing swoon but did not think the refinancing provision would solve broader problems stemming from lax mortgage financing regulation.
Foreclosures in Macomb County are running at a rate of about 35% to 40% higher this year than last, according to MacKenzie's tallies of sheriff's sales. Many such foreclosures cause costly eyesores for the communities.
The average foreclosure costs a lender $50,000, and with 25,000 foreclosures in Wayne County alone last year, there's a lot of money being lost, he said.
"There is no budget for it. There is no money. It is huge, and the lenders haven't really figured out the solution yet," MacKenzie said. Dan Elsea, president of brokerage services for Real Estate One in Southfield, said the refinancing portion of the legislation is the most important provision.
"It will help the market by reducing inventory. When you reduce supply, you start to get home values rising again," he said. "We have 60,000 listings in metro Detroit. We would do fine with 40,000. There would still be a good selection for buyers."
The Bush administration voiced its distaste for those loans specifically but decided to go along with the legislation in order to help Fannie Mae and Freddie Mac.
The bill gives the Treasury Department authority to increase its line of credit to the troubled mortgage giants, as well as letting it buy stock in those companies if needed to improve confidence in their financial situation and stabilize markets.
In recent weeks, the government moved to prop up the government-chartered mortgage companies, which are said to back or own $5 trillion in loans, about half of all the outstanding loans in the nation.
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