Home bill met with skepticism

The United States Senate may soon undertake sweeping measures to combat foreclosures and boost the housing industry, but opinions are divided in Newport-Mesa about whether the intervention will make a difference.

The bill, known as the Foreclosure Prevention Act of 2008 and spearheaded by Sens. Chris Dodd of Connecticut and Richard Shelby of Alabama, would take a number of steps to stimulate the housing market, including providing a $7,000 tax credit to buyers of foreclosed homes, spreading out $4 billion for local governments to purchase and redevelop foreclosed properties, giving counseling agencies $100 million to assist families who are facing foreclosure, and allotting $10 billion to refinance sub-prime loans, mortgages for first-time home buyers and multifamily rentals.

In drafting the legislation, Dodd and Shelby called for Democrats and Republicans to work together to fix America’s housing problem. Some, though, would prefer the government stay out altogether and let the industry work through its own troubles.

“The government coming in to try to bail out an industry normally doesn’t work,” said Dennis Hensling, the vice president of the United American Mortgage Corp., a lending company that works with a number of Newport-Mesa Realtors. “Typically, business can figure out how to make it work where it’s viable for everybody.”

Hensling added that although the number of foreclosures had gone up recently in many parts of Newport-Mesa, the repossessed homes still represented only a tiny portion of overall sales. The slowdown, he believed, was more part of a typical business cycle than a crisis.

Larry Weichman, the president of Weichman Associates in Costa Mesa, questioned the need for the $7,000 tax incentive for people who bought foreclosed homes.

His office, he said, had already gotten steady business from shoppers looking for repossessed properties.

“Around here, at least, we’re seeing a lot of people buying the bank repos,” Weichman said. “Most everything under $500,000 in Costa Mesa is getting multiple offers. So some of those incentives are not really going to affect our market. A lot of our market is taking off again in a lower price range.”

Still, Weichman applauded the bill’s efforts to intervene as the housing market sagged nationwide.

“It’s better than doing nothing,” he said. “If they don’t do anything, we’re going to have a real financial problem.”

Newport Beach Revenue Manager Glen Everroad said the bill would likely have minimal impact on his city, which has had far fewer foreclosures lately than many inland cities.

In Newport Beach, he said, most homeowners were able to fix their problems before their houses actually went into foreclosure.

“If we’re in Lancaster or Palmdale, that’s an entirely different story,” he said.

Select provisions of Foreclosure Prevention Act of 2008:

 $7,000 tax credit for buyers of foreclosed homes

 $10 billion in federal tax-exempt bonds to refinance sub-prime loans, mortgages for first-time home buyers and multifamily rentals

 $100 million in counseling funds for homeowners facing foreclosure

 $4 billion to help local governments purchase and redevelop foreclosed homes

MICHAEL MILLER may be reached at (714) 966-4617 or at michael.miller@latimes.com.