Multi-billion Dollar Mortgage Relief Bill Underway

Washington, DC (AHN) - A compromise agreement was approved by Republican and Democratic Senate leaders to provide relief to Americans suffering from foreclosures and other mortgage woes through a multibillion-dollar package.

Under the measures, $10 billion federal tax-exempt bonds would be issued to provide mortgages for low- and moderate-income earners purchasing homes for the first time and to refinance existing subprime mortgages. The bill includes refinancing current loans, which are not covered by existing regulations.

It would also authorize $4 billion block grants for communities reeling from high foreclosure rates to purchase and rehabilitate vacant or abandoned units. The grant aims to prevent the vacant houses from deteriorating and in the process dragging property values in the neighborhood.

Homeowners stressed by financial concerns may seek credit counseling under a $100 million fund. Purchasers of foreclosed houses would be entitled to a tax credit up to $7,000. Taxpayers, in addition, may claim a $1,000 deduction for property taxes even if they do not use the itemized deduction scheme. Developers and other business affected by the housing crisis may charge their losses for 2008 and 2009 income tax returns against taxes paid for the four previous years, up from only two years under existing regulations.

Meanwhile, the United Kingdom is likewise adapting measures to ease the credit squeeze that has slowed down its economy by reducing mortgage and corporate lending interest rates.

The Bank of England policy makers will gather next week to find ways to ease credit conditions following the refusal by lenders to pass on two-interest rate cuts since December.

According to the British Central Bank, existing consumer debts tipped at $2.8 trillion (1.4 trillion pound), while personal loans and overdrafts peaked to $4 billion (2 billion pound), breaking 1993 records.