Congressman David Dreier

As a result, the lack of buyers has caused the supply of unsold homes to continue to increase, not only causing blight in neighborhoods across the United States, but also placing severe downward pressure on home values.

Falling home prices are particularly detrimental to working American families, many of whom rely on their home as a financial investment to build long-term wealth. As home prices fall, homeowners are faced with the reality of declining equity in their homes and many are finding their mortgage debt to be greater than the value of their home, creating a condition called negative equity.

As values decline and more homeowners find themselves in the position of having negative equity in their homes, the foreclosure rate increases. This situation in turn feeds off itself: as more homes enter foreclosure, home values continue to decline, leading to yet more defaults and further declines in value.

Therefore, we cannot hope to address the broader challenges facing the economy if we do not first address the needs of the housing market. This can be achieved in a very effective way by offering tax credits as an incentive to bring responsible borrowers into the housing market.

The bill would create these incentives by offering a new tax credit for 2009 and 2010 for every home purchase made with a down payment of at least 5%. Those who make a down payment of 5, 10 or 15 percent will get a tax credit of $2000, $5000 or $10,000 respectively.

By utilizing the tax code in this way, the legislation not only provides a tax incentive for homeownership, but also addresses the oversupply of homes that is creating such strain on the broader U.S. economy.

Unlike the credit enacted in 2008, which was offered only to first time homebuyers, the credit offered in the Economic Recovery Through Responsible Homeownership Act would be available to anyone who is able to meet the down payment criteria set forth in the bill, ensuring that all working families, not just first-time buyers, are able to achieve the dream of home ownership.

Much attention has been paid to the role of irresponsible participants in our housing markets; there is little doubt that many individuals took advantage of the system and artificially drove-up home prices. To address these concerns, the legislation mandates that anyone who exercises the tax credit and then sells their home before a period of three years will be required to repay the credit in full. In this way, the plan ensures that responsible Americans, and not speculators, are able to take advantage of the plan