SEN. VOINOVICH SECURES ASSISTANCE FOR STRUGGLING HOMEOWNERS AND EMPLOYERS IN FORECLOSURE PREVENTION BILL

WASHINGTON, D.C. – July 25, 2008 – (RealEstateRama) — The U.S. Senate today took one final step toward passage of the Foreclosure Prevention Act of 2008 – a bipartisan legislative plan to help ease the housing crisis. U.S. Senator George V. Voinovich (R-OH) secured immediate relief and assistance for struggling Ohio homeowners and employers in the final version of the bill which will be passed tomorrow morning before heading to the president’s desk to be signed into law. . 

The Sen. Voinovich-authored provisions include:

• Simplifying mortgage documents to ensure Ohioans understand clearly the terms of their mortgage before signing them;
• Tackling reform of the Federal Housing Administration (FHA), which could allow Americans facing foreclosure or resetting interest rates to refinance without the usual burdens associated with a FHA loan by increasing and simplifying FHA’s loan limits;
• Providing funding for financial counseling programs;
• Increasing Community Development Block Grant funding targeted towards revitalizing residential areas; and
• Allowing companies in a loss position to use accumulated AMT and R&D credits early to make new investments that will create jobs in lieu of the bonus depreciation provision included in the recently-enacted stimulus bill.

Sen. Voinovich originally introduced the first four provisions in previous legislation and fought for them with committee leadership. The employer tax credits provision was introduced as an amendment to an earlier compromise bill by Sen. Voinovich and Sen. Debbie Stabenow (D-Mich.) and successfully included in this legislation.

“Americans have looked to Congress to take real action to help protect homeowners,” Sen. Voinovich said. “This bipartisan compromise is a solid step in the right direction and includes the types of immediate relief and assistance struggling homeowners have been waiting for.”

 Sen. Voinovich is particularly pleased about the inclusion of his employer tax credits provision. Companies in a loss position cannot take advantage of the bonus depreciation provision included in the recently-enacted stimulus bill because they do not have any taxable income against which to take the deductions. Ironically, these are the companies who are struggling the most and who are in greatest need of relief. This will create jobs and, in turn, help people pay their mortgages.

“A good-paying job is the first step in ensuring Americans can achieve the dream of homeownership and sustain that dream throughout their lives,” Sen. Voinovich said. “This amendment is crucial because Ohio is experiencing a foreclosure crisis that has nothing to do with speculators. Ohio has a foreclosure crisis despite the fact that house prices never went up there. Ohio families have been losing their homes because Ohio manufacturing workers have been losing their jobs.”

To date, Sen. Voinovich has authored three pieces of legislation focused on helping to ease the current crisis and on providing additional tools for neighborhoods to revitalize and restore abandoned properties.

Sen. Voinovich originally proposed improved disclosure for mortgage documents and additional resources for rehabilitating foreclosed properties and for housing counseling in his Protecting American Homeowners Act of 2008, which was introduced last week. The reform of FHA was originally proposed by Sen. Voinovich in his FHA Modernization Act, which has been passed by both chambers. The differences between the House and Senate FHA reform bills are currently being worked out in conference.  

Additionally, Sen. Voinovich’s Mortgage Cancellation Relief Act was passed by the Senate and the House and has been signed into law by the president. Sen. Voinovich was moved to draft this bill after hearing stories about how homeowners were working out deals with their lenders, and the lenders were forgiving part of the mortgages to make payments more affordable. He was then shocked to learn the IRS was taxing that loan forgiveness as income.

This additional tax liability actually penalizes those who are trying to work out their financial problems in a responsible manner. Altering this tax penalty encourages homeowners and lenders to work together voluntarily so that payments are manageable and foreclosure can be avoided. Sen. Voinovich is working on extending this law for two additional years.