WASHINGTON - Senator John Kerry yesterday proposed $10 billion in special tax-exempt bonds to help troubled families refinance subprime loans, as both Democrats and Republicans in Congress grapple with the national mortgage crisis.
Kerry, Democrat of Massachusetts, and Senator Gordon Smith, Republican of Oregon, had offered a similar provision in January as an amendment to President Bush's economic stimulus package. The Senate Finance Committee passed the Kerry-Smith plan, but it was cut as Congress removed all items that weren't directly related to Bush's plan for taxpayer rebates to boost the economy.
Now, as the housing crisis and grim economic news have dominated the headlines, Kerry and Smith reintroduced the plan as part of the Senate's housing relief bill. Along with mortgage refinancing bonds, the Kerry-Smith plan would also offer financial aid to first-time home buyers.
The $10 billion in the bill is "not enough to cover" everyone who needs it, Kerry said, but it was "just what we could get" from the Senate. Kerry and Smith had asked for $15 billion.
If the provision is passed, as part of an amendment proposed by Senator Chris Dodd, Democrat of Connecticut, it would provide Massachusetts with $211 million targeted at mortgage relief.
"The goal is simple: We want to provide assistance to those that need it most," Kerry said.
The aid package would help more than 1,100 homeowners in Massachusetts and about 80,000 nationwide. The aid is aimed at lower-middle-class homeowners who want to move up to the middle class and who are "holding on to the American dream," Smith told reporters as he sat next to Kerry, both appearing confident their suggestions would pass.
The additions also include an extension of homeowner benefits for military personnel serving overseas. Currently, if soldiers are delinquent in their mortgages, lenders must wait three months after they return before beginning foreclosure proceedings; the Kerry-Smith plan would extend that waiting period to nine months and provide a year free of increased mortgage rates.
And there is a section of the plan that would grant $4 billion to communities hit hardest by the shaky housing market, allowing them to purchase foreclosed homes at a discount and redevelop them, offsetting losses in neighboring home values.
On Wednesday, Senate leaders of both parties held a joint news conference to announce progress on legislation to ease the financial crisis. However, when a reporter asked Kerry yesterday if the Senate plans to vote on the Dodd amendment soon, he sighed and laughed the question off.
"It's this Senate," he said, "not the Senate."