Bailout watch: The Republicans are coming

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News item: Republican Sen. Kit Bond of Missouri (pictured) today proposed a $10 billion-plus housing bailout plan that includes $15,000 tax credits for buyers of foreclosed homes and tax breaks for mortgage companies that have lost money recently.

Details of the Bond proposal:
-- State housing finance authorities would issue $10 billion in bonds to refinance distressed mortgages.
-- A $15,000 tax credit to buyers of homes ‘in or approaching’ foreclosure.
-- So-called NOL carryback tax provision to ‘help firms that suffered operating losses lower their tax burden.’

Folks, it appears the bailout auction is beginning. The Democrats are preparing a big bailout plan. The banks have been lobbying for what the New York Times called an ‘epic rescue’ plan. And now Republicans are joining the bidding at $10 billion.

SENATE FLOOR STATEMENT OF CHRISTOPHER S. BOND ON THE SECURITY AGAINST FORECLOSURE AND EDUCATION (SAFE) ACT March 7, 2008

* Mr. President, as I described last Friday, too many families in
Missouri and across the nation are feeling the pain of this housing crisis and they need our help now.

* We have 57,000 people in Missouri delinquent on their mortgages,
with 20% of Missouri sub-prime borrowers behind on their payments. These families, like many across America, can least afford higher housing costs as they are being hit with higher heating bills, higher healthcare costs, and more pain at the gas pump.

* That is why today I, in partnership with Senator Isakson,
Senator Coleman, and my Republican colleagues, am proudly introducing the Security Against Foreclosure and Education (SAFE) Act of 2008.
This bill focuses solely on the housing needs of our families and neighborhoods.

* A growing economy free of excess litigation and cumbersome
regulation will help the most people find the most good paying jobs.
The HOME Act we introduced last week included both housing relief provisions as well as tax relief for American families, litigation reform and capital markets reform.

* However, we do not want Congress to lose sight of the housing
crisis the American people are facing and the help they need.
Therefore, we are introducing this measure today to focus solely on the housing help our families and neighborhoods in need.
* Last week, I spoke about one person in need, suffering in the
current sub-prime mortgage meltdown. That was Willie Clay of Kansas City, Missouri, a Vietnam War Vet unable to meet rising variable mortgage payments.

* Today, I want to share the story of Katherine Gwinn of St.
Louis, Missouri. Ms. Gwinn’s story appeared in the St. Louis Post-Dispatch last year. She is a disabled 53-year-old living on Social Security and disability payments.

* Ms. Gwinn refinanced her home three times to get lower payments
and help pay off debt. Her sub-prime loan’s initial fixed rate expired after one year. Since then, they have gone up 40%, now taking most of
$916 monthly income.

* Ms. Gwinn said that the last time she refinanced, her mortgage
broker ‘fast-talked’ her into a sub-prime loan with provisions she did not understand. The result is that her variable rate payments are now at $566 dollars per month. Remember, Ms. Gwinn’s monthly income of social security and disability payments is only $916 per month.

* How many of us could pay for food, gas, medicine and heating
bills on the remaining $350 per month? That is why I believe so strongly that we need to help folks like Katherine Gwinn across the nation.

* First, the Republican SAFE Act will help folks like Katherine
Gwinn with $10 billion to refinance distressed sub-prime mortgages. Our proposal will authorize state housing financing agencies to issue $10 billion in tax-exempt bonds and use the proceeds to help homeowners refinance sub-prime mortgages.
* Secondly, in order to help families avoid foreclosure and keep
them in their homes, Republicans will expedite the delivery of $180 million approved by Congress in December to provide counseling help to families in distress. As I announced last week, the first block of these funds has just gone out and we will ensure that remaining funds are delivered as quickly as possible.

* Thirdly, Republicans support helping struggling neighborhoods by
providing $15,000 tax credits to purchase over the next year a home in or approaching foreclosure. This provision, from Senator Isakson, will help neighborhoods take down foreclosure signs and stop the slide in their property values. We also support the so-called NOL carryback tax provision to help firms that suffered operating losses lower their tax burden.

* Our proposal includes new loan disclosure requirements for
prominent and plain English explanation of key loan conditions.
Borrowers will see in big type, any teaser or introductory rate, their payment and when it expires. They will know they are agreeing to an adjustable rate, what that rate will be and how much the new payment will be. They will be notified of any prepayment penalty, and they will be reminded that there is no guarantee they can refinance their loan before the introductory rate expires.

* These are the very things that Katherine Gwinn and thousands of
borrowers did not understand when they agreed to their loans.
Hopefully, this will protect future families who want their share of the American Dream.

* We are also adding two new provisions to our measure. Language
from Senator Coleman will give returning war veterans more time to avoid home foreclosure. Currently, they have a three-month window from their return to work out any mortgage difficulties they may have.

* That may not be enough time for a vet newly returned from the
war zone and dealing with a host of family and financial problems. Our proposal will extend the returning war veteran protection against foreclosure to 6 months after arrival.

* We also have included provisions of the Federal Housing Act
reform bill that passed the Senate 93-1 last year. That bipartisan, near-unanimous reform bill deserves to become law.

* In contrast to the Democrats’ housing plans, Republicans will
avoid making home ownership more expensive, especially for low-income families, through harmful bankruptcy changes that increase the cost of borrowing or encourage costly litigation.

* We will oppose plowing billions of dollars into big government
programs that don’t help our neediest families now. We will also oppose adding more dollars to programs that are still flush with funds they were given in December.

* Together, our housing proposal will help families like Katherine
Gwinn and neighborhoods across this country get through this crisis and
I urge my colleagues’ support.