[Congressional Record Volume 141, Number 43 (Wednesday, March 8, 1995)]
[Extensions of Remarks]
[Pages E545-E546]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                       HELP FIRST TIME HOMEBUYERS

                                 ______


                        HON. WILLIAM F. GOODLING

                            of pennsylvania

                    in the house of representatives

                        Wednesday, March 8, 1995
  Mr. GOODLING. Mr. Speaker, today I am introducing the First Time 
Homebuyers Assistance Act which will make the American Dream of owning 
a home a reality for thousands of renters. Today's renters often pay as 
much for rent as homeowners pay for a monthly mortgage payment. It is 
not surprising that the 1994 Fannie Mae National Housing Survey found 
86 percent of renters believe they would be better off owning a home. 
And with interest rates on the rise again, buying a home isn't getting 
any easier.
  To many Americans, homeownership means financial psychological, and 
familial security particularly for minorities, younger Americans, 
 [[Page E546]] and those with lower incomes. It means a stronger 
economy, safer neighborhoods, and a better quality of life. Mr. 
Speaker, given such an optimistic view of homeownership, why do so many 
renters continue to rent? According to the Fannie Mae survey, an 
overwhelming 65 percent of renters rank the downpayment as their 
primary obstacle to owning a home.
  Several years ago, I visited a home builder in York, PA, located in 
my congressional district, who developed a unique and innovative 
arrangement in which moderately priced single-family homes are 
constructed for purchase with no downpayment. A local financial 
institution finances 80 percent of the loan, while the remaining 20 
percent, in the form of a second mortgage, is financed by the local 
builder. This creative financing plan makes the purchase of a home 
affordable for financially, hard-working people who want to buy a home, 
but cannot afford a downpayment.
  However, the Tax Code penalizes builders who finance the downpayment 
on behalf of the purchasers. Currently, the Tax Code limits a builder's 
ability to finance second mortgages because it assumes that buyers are 
paying the entire balance of their tax obligations in the year the 
property is purchased. The law also requires builders to pay taxes on 
the entire amount of the income received from a mortgage in the year 
the purchase is made. For a builder, it becomes almost impossible to 
pay these taxes, not having cash on hand to do so until the balance of 
the mortgage payment is received at a future date. In other words, the 
Tax Code prohibits a builder from using the installment method to 
calculate his tax liability. This situation places a builder in a 
financial bind and jeopardizes the future of this and similar housing 
programs.
  The First Time Homebuyers Assistance Act will enable a builder to use 
the installment method to calculate his tax liability under certain 
specific circumstances. The bill applies to any one family, owner-
occupied unit. The purchaser must be a first-time homebuyer who 
qualifies for 100 percent of the loan. Further, the legislation directs 
that a second mortgage on the property be no more than 20 percent of 
the sale price and applies only to single-family homes costing no more 
than 75 percent of the median home price for newly constructed one-
family residential real property in a given area.
  Mr. Speaker, I urge my colleagues to cosponsor this legislation which 
is specifically geared to helping those who need the most assistance in 
buying a home. With your support, the First Time Homebuyers Assistance 
Act can make the American Dream an American reality.


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