Republicans Ask Buydown, Bigger Tax Break

Senate Republicans want to attach several housing amendments to an economic stimulus bill that would expand a homebuyer tax credit and create an interest rate buydown program that would reduce mortgage rates to 4%. "We must stabilize home values if we are going to reverse this deep and precipitous slide in our economy," said Sen. John McCain, R-Ariz. The mortgage rate buydown program would stimulate home sales and soak up excess inventory, according to Sen. John Ensign, R-Nev. It would also help 40 million creditworthy homeowners save $400 per month, the Nevada senator said. "This is like a permanent tax cut, which economists believe is the best stimulus for our economy." Republicans also are proposing to expand a $7,500 first-time homebuyer tax credit to $15,000 or 10% of the purchase price that would be available to all buyers. The tax credit could be used in one year or spread out over two years. To facilitate loan modifications, the Republicans want to shield servicers from investor lawsuits. The amendments also would change a one-time $1,000 fee for loan modifications to $60 a month over the life of the loan.