Housing bill not perfect, but helpful

In certain neighborhoods such as North Shoreview San Mateo, vacant houses dot the streets. In addition, many of the homes for sale have owners who are nearing foreclosure and negotiating with the bank to determine how much the lender can stand to lose. One owner bought a house for $750,000 and is looking for bids at around $500,000. Another has a negative amortization loan and is facing the loss of their $54,000 down payment to get out of the loan.

This is just one neighborhood in one city. It is not to the scale of other areas in the Bay Area and around this country but there must be plenty of other stories here in San Mateo County.

Some say the people deserve to be in this situation because they made poor decisions and that may or may not be true. What is true is that they are victims of predatory lenders.

In addressing the fallout of this near criminal action, the federal government is moving forward with a plan to help. In addition, the bill moving through Congress will place more regulations on Freddie and Fannie Mac in exchange for billions in federal assistance. This is not a gift, the failure of either organization would cause the housing market to grind to a halt. Wall Street and the banking industry as a whole are gun shy on loans right now and the market is largely leaning on Freddie and Fannie. While spending billions of public money may seem less than palatable, it is about time there is some regulations on these two organizations.

Other parts of the bill are a result of compromise but should find a way to help the average person. Capping the loans for Fannie and Freddie and the Federal Housing Administration can insure to $625,000 after the $729,750 temporary cap will help low- and moderate-income families find more in the market to meet their needs because the former $417,000 cap just didn’t work here. It would have been nice if the $7,500 tax credit for first-time homebuyers would have been a tax rebate instead of a loan that had to be paid back within 15 years. However, that also will be helpful for people in this area. The bill will also provide much-needed assistance to those facing foreclosure by providing more of an ability to refinance.

This bill is not perfect. But it is a step in the right direction and an important compromise that actually might keep people in their homes and provide responsible opportunities for those seeking to buy a house. It is just too bad it had to take a major economic crisis and millions losing their homes or facing foreclosure for this oversight and assistance to occur.