The Republic of T.

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Getting What You Pay For

Well, that didn’t take long. Ya gotta admire people who know how to get results, and get them fast. For that reason, I’ve got to take my hat off to the National Association of Home Builders, for pulling off something almost worthy of Wall Street: their own version of a federal bailout, of sorts.

And the beautiful part is, probably almost no one noticed. I didn’t until I read several headlines about the bipartisan agreement on the $15 billion Foreclosure Prevention Act. It’s been described as mortgage relief package, but it’s relief for builders and the mortgage industry (read banks) — not consumers.

The $15 billion Foreclosure Prevention Act of 2008, expected to be debated Thursday afternoon on the Senate floor, is drawing fire from critics who say it would do little to actually prevent foreclosures. The bill contains a $6 billion emergency tax break that would let companies use losses from 2008 and 2009 to offset profits earned over the previous four years, instead of the usual two-year timeframe.

That’s good news for big homebuilders such as KB Home and Pulte Homes Inc., which have been saddled with massive losses over the past year.

…Other big beneficiaries would be Wall Street banks such as Citigroup Inc., Merrill Lynch & Co. and Morgan Stanley. In fact, any company now struggling after years of healthy profits that pumped up their tax bills could benefit.

Good for them. Not so good for consumers.

As a result, housing advocates are feeling steamrolled because a bankruptcy provision aimed at helping homeowners in foreclosure was removed from the bill. The compromise bill also slashed in half the foreclosure prevention funds proposed in the original Democratic bill.

Without empowering bankruptcy judges to reduce mortgage interest and principal for struggling homeowners, “this bill amounts to dancing around a fire when Congress is supposed to be putting it out,” Wade Henderson, president of the Leadership Conference on Civil Rights, said in a statement.

“When the government can bail out Bear Stearns — a company that made a fortune in bad mortgages — it can surely ease the strains of ordinary American homeowners who aren’t as sophisticated as a Wall Street firm and help them keep their biggest asset.”

Stripping out the bankruptcy provision — which basically reduces foreclosure prevention to foreclosure postponement — is bound to please the president and secure his signature, since he was against it in the first place.

And the tax break for builders means they can start writing checks again. When the industry closed its pocketbook a month ago — after not getting what it wanted in a previous round of legislation — legislators apparently got the message.

The National Association of Home Builders, one of the top 10 corporate donors to politicians, has stopped contributing to congressional candidates after it failed to get what it wanted in recent anti-recession legislation.

The powerful lobby said Tuesday that it was taking the unprecedented action of halting its campaign-giving to protest Washington’s failure to address “the underlying economic issues that would help to stabilize the housing sector and keep the economy moving forward.” The group did not mention any specific initiatives.

The association had unsuccessfully pressed lawmakers to adopt a provision to reduce the tax liability of home builders by allowing them to offset their past profits with future losses. The lobby had also pushed to expand a program that allows states and localities to issue tax-exempt bonds that finance low-rate mortgages. Although both proposals were included in the economic stimulus package approved by the Senate Finance Committee late last month, neither was part of the final bill signed by President Bush yesterday.

Election experts said the lobby’s move illustrated how closely interest groups tie their donations to the decisions they hope lawmakers will take on their behalf — a connection that usually goes unspoken.

Looks like they got results. No wonder. It’s a pretty big pocketbook, and it belongs to one of the top PACs in Washington. NAHB’s Build Pack has already handed out over $1.6 million in the 2008 cycle so far, and it’s contributions are pretty evenly split between Democrats and Republicans. (OK, so Republicans get a little bit more. Still, it will be interesting to compare the Senate vote to the Build PAC contribution list.)

So, I gotta hand it to NAHB. They get what they pay for. Consumers? Well.

But somehow, not far from D.C., Maryland passed measures to help homeowners and tighten oversight of the mortgage industry.

Taken together, Maryland’s bills are among the most sweeping in the country as legislatures from California to Florida consider proposals to stem the escalating rate of foreclosures.

Components of Gov. Martin O’Malley’s legislation package cleared the Democratic-controlled General Assembly yesterday, and other bills advancing in it were widely expected to pass as soon as this morning. O’Malley (D) could sign some of the bills into law this afternoon, and the emergency measures would take effect immediately.

The bills include making the most egregious mortgage schemes subject to criminal prosecution, extending the foreclosure timetable from 15 to 150 days and prohibiting prepayment penalties and transactions in which homeowners are tricked into signing over their houses to third parties.

…O’Malley is expected to announce soon that he will lead a statewide campaign to inform homeowners facing foreclosure about how they can seek help and about new state programs available, said Thomas E. Perez, secretary of labor, licensing and regulation. The governor will appear in ads on TV, on radio, in newspapers and on the sides of buses, Perez said.

The campaign will reach out to people falling behind in payments with direct-mail postcards and visits from state officials, guiding them to state agencies and nonprofit organizations for help

That’s probably as far a step in the right direction as a state government can take, but it probably won’t go very far or help many who’ve lost their homes or have fallen behind and are facing foreclosure. That requires action on the federal level. And as we’ve seen, if that’s what you want, you’re going to have to pay for it.

It cost the NAHB $1.6 million, so far. How bit is your pocketbook?

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