State, Congress Move to Assist Homeowners and Buyers
Realtors and builders say the arrival of spring has brought an upturn in sales. But it has also brought some more good news for millions of homeowners and would-be buyers:
* Congress has resurrected a plan to give first-time home buyers a $5,000 tax credit. Realty experts had feared that any hope of such a credit passing in 1992 died when President Bush vetoed a tax bill last month.
* The California Supreme Court has issued a ruling that could make the popular “Cal-Vet” loan program available to 300,000 more war veterans who live in the state.
* A respected nonprofit group has just published a handy “reverse-mortgage locator” to help equity-rich but cash-poor older homeowners find a lender willing to make the offbeat loans.
Various proposals to provide first-time buyers with some sort of tax credit have been bandied about Capitol Hill for several years.
But the idea picked up some steam last January, when President Bush called for a $5,000 credit for first-time buyers who purchase a home this year. Congress, anxious to support a “Mom-and-Apple-Pie” issue in an election year, eagerly endorsed the concept.
Unfortunately for the nation’s would-be buyers, the credit was first added and then later stripped from a wide-ranging tax bill that was eventually sent to Bush. For a variety of reasons, the President vetoed the bill.
Now the housing tax-credit proposal has been resurrected by two Democrats in the House of Representatives, Les AuCoin of Oregon and Jim Moody of Wisconsin. The proposal already has nearly two dozen co-sponsors, even though it was introduced just a few weeks ago.
Still, the bill’s chances of passing are “iffy.”
One factor that’s working in the proposal’s favor: It hasn’t been combined with other legislation that President Bush would find objectionable--at least, not yet.
So-called “stand-alone” bills typically have a better chance of passing than “omnibus” bills, which are often doomed from the start by a variety of special-interest groups.
The main obstacle: AuCoin and Moody haven’t come up with a way to replace the estimated $1.2 billion that the housing credit would cost the Treasury Department in each of the next five years.
By law, any bill that would reduce the Treasury’s revenue must be accompanied by a plan to either cut spending in other programs or raise taxes--neither of which is very attractive to politicians, especially in an election year.
“There are a lot of sensitive issues involved here,” said Steven Driesler, chief lobbyist for the influential National Assn. of Realtors.
“It’s not just a matter of helping people buy homes--I think everybody is in favor of that. The big question is, who’s going to pay for it?.”
In a decision that could make the “Cal-Vet” home loan program available to 300,000 more California war veterans, the state Supreme Court has struck down a restriction that has limited program benefits only to vets who were native Californians or residents when they entered the service.
In a unanimous ruling, the justices overturned a 50-year-old “residency requirement” that prevented veterans who moved to California only after their military stint was over from getting a low-rate Cal-Vet loan and other types of benefits.
About 900,000 veterans live in the state, but about 300,000 have been denied access to the program because they weren’t California residents when they served.
“We have claimed all along that the state has been discriminating against veterans from other states, and the state Supreme Court has agreed,” said Dan Stormer of Los Angeles, an attorney for a group of veterans who challenged the restriction.
Stormer successfully argued that denying some veterans access to the Cal-Vet program violated their constitutional right to equal protection under the law.
A spokesman for retired Adm. Benjamin T. Hacker, director of the California Department of Veterans Affairs, said lawyers for the department will soon ask the U.S. Supreme Court to overturn the state court’s decision.
Hacker and his staffers believe that the legislators who created the program a half-century ago designed it primarily for men and women who were drafted or signed up for the military and were state residents at the time.
They also worry that the Cal-Vet program could eventually run out of money if it’s opened up to thousands of more veterans who didn’t live in the state when they entered the armed forces.
Although the state Supreme Court has ruled in favor of the veterans and against the department, it stayed its decision until the U.S. Supreme Court decides whether to hear the case.
As a result, the Department of Veterans Affairs has begun taking applications from vets who are newly eligible for the program, but won’t begin processing them until they hear from the high court.
Reverse mortgages, those offbeat loans designed especially for equity-rich but cash-poor older homeowners, have just become a little easier to find.
That’s because the National Center for Home Equity Conversion is now offering a handy “reverse mortgage locator” that lists the names and phone numbers of several lenders who offer the loans in nearly every state, including California.
Reverse mortgages are basically home loans that work backward. Instead of getting a lump-sum loan that must be repaid through monthly installments, the homeowner gets a monthly stipend or line of credit based on the equity he has in his house.
The loans are especially popular with older people living on fixed incomes because the money usually doesn’t have to repaid until they sell their home or die.
Not many lenders make reverse mortgages, which is why the nonprofit group is publishing the new pamphlet.
You can get a copy by sending $1 and a stamped, self-addressed business-sized envelope to “NCHEC Locator,” 1210 E. College Drive, Suite 300, Marshall, Minn. 56258.
Letters and questions may be sent to Myers at the Real Estate section, Los Angeles Times, Times Mirror Square, Los Angeles 90053. Questions cannot be answered individually.
