Responsible Homeowner's Act: An Aggressive Move by GOP

The GOP is making another attempt to bring about a broader based housing stimulus package, according to an article in today's Washington Post. The new proposal is called "Responsible Homeowner's Act."

House Republican leaders plan to propose a new housing package today that would increase the tax credits for homebuyers to $15,000 for primary residences. This proposal revives a $15,000 tax credit proposal that Republicans unsuccessfully promoted last year. This time the proposal also includes a requirement that the downpayment be at least 5%. The current watered-down version of the tax credit is only available to first-time homebuyers and is only $8,000.

Both existing home sales and new home sales were up for February, month over month, but most buying activity, at least in new homes, occurred in the $150,000 to $199,999 price range according to the Department of Commerce. This suggests that the first-time homebuyer tax credit, along with lower rates, was effective in stimulating that segment of buyers to make a move. So although we're seeing some movement in the first-time buyer market, across all price points, the low rates have had only a moderate impact on demand for home sales. More is needed.

Undoubtedly, a $15,000 tax credit that is not a loan, and is available to all homebuyers, would be much more effective and should, along with the current low interest rates on 30-year fixed loans, get many buyers off the fence.

There are more goodies in the new GOP housing proposal. Borrowers refinancing their mortgage would be eligible for $5,000 to help cover closing costs or to reduce their principal balance. Refinances pump more money into the economy assuming a lower payment for the borrower.

Both of these programs would expire in July 2010.

House Minority Whip Eric Cantor (R-Va.), who will introduce the legislation, says, "If you can get a $15,000 tax credit, that is a tremendous incentive to get qualified buyers back into the game."

The Washington Post reports, "The Republican proposal also calls for providing additional resources to law enforcement agencies, including the FBI, to investigate and prosecute mortgage fraud." According to the Mortgage Asset Research Institute, mortgage fraud was up 26% last year over 2007 even though the number of loans for 2008 were far fewer.

I'm contacting my representatives now. You might want to contact your people in Washington as well. Can the GOP actually get a bill through our "non-partisan" Congress? Maybe with our help.