Foreclosure Prevention – A Boon For Construction Business Interests

April 8th, 2008 | Tags: Foreclosure

The ostensible purpose of the bill was to help the struggling house owners threatened by foreclosures. In realty it will allow corporations that have been running at a loss to file returns comparing the loss with the previous years and by doing so avail of refunds that apply.

This will be a great tax relief for those who had feathered their nests warmly during the era of the housing boom. Their bread now seems to be buttered on both sides – during the boom and now during the collapse. This gift came about because of the magic handiwork of a group – the National Association of Homebuilders. The chief executive of the group, Jerry Howard, justified that tax breaks are very important to the developers. It will stop the small business units from going out of work. Large business houses will now not have to liquidate their assets. Others who will benefit from this bill are the big giants of Walls Street like Citigroup, Merrill Lynch and Morgan Stanley. The truth is that any company now showing signs of indigestion after having over eaten during the zooming years will be helped.

Tax breaks are always welcome except when it is free lunch for few giant bodies who always gallop along with government encouragement – one following another. For the last few years the story was all about the profits of big houses jumping from 30% to 50%. Now the sob story of losses is making the rounds. In all fairness this group should be made to reap the harvest they have sowed.

The National Association of Home Builders were chagrined beyond words when they found that the bill did not include any relief for them. They played their trump card – stop contributions to the presidential campaign. Since 1990 this body has contributed $20 million to the policy makers in Washington.

The bill will open up again the floodgates of borrowing by increasing FHA limits by allowing loans up to 110% of the value of the house, by government subsidizing purchase of foreclosed units, by stepping up counseling and preventing foreclosure on houses owned by military personnel. The Democrats are clamouring for more grants – but along these lines. It is a moot question – how can one counsel people who live beyond their means? The main point about bankruptcy prevention is carefully left out of the bill by the tacit consent of even some Democrats.