By Sean Lengell
RISMEDIA, June 11, 2009-Treasury Secretary Timothy F. Geithner told a Senate panel Tuesday he won’t know for several months whether a key Obama administration program designed to help troubled homeowners avoid foreclosure will be successful.
“I don’t think we’re going to know until probably early fall whether we’ve got the incentives right and whether they’re going to prove powerful enough,” Geithner said while testifying before the Senate Appropriations financial services and general government subcommittee.
“But our judgment is that this is the best package of incentives, which offers the best return for the taxpayers’ resources we’re going to use to help address the housing crisis.”
The administration’s “Make Home Affordable” program is designed to help up to 9 million homeowners reduce their monthly mortgage payments to more affordable levels. The program, a key component of the administration’s efforts to stabilize the faltering housing markets, includes a provision to allow up to 5 million homeowners with a “solid payment history” on existing Fannie Mae or Freddie Mac loans an opportunity to refinance into more affordable monthly payments.
The administration said in May that only 55,000 homeowners were enrolled in the program.
“It is my feeling that the previous administration, and so far this administration, has failed to come up with an approach which could dramatically turn around this increasing number of mortgage foreclosures,” said subcommittee Chairman Richard J. Durbin of Illinois.
Geithner said that while the pace of decline in house prices has started to slow, “realistically, I think, you’re going to still see a very challenging period ahead for many homeowners.”
“Many more Americans are still at risk of losing their homes, and that’s why we just want these programs to work,” he said.
The secretary said the government “should’ve moved earlier to address this crisis,” which he said was at the center of the current recession.
“We were late as a country and behind the curve,” he said.
The secretary added that while the economy was beginning to show signs of recovery, “our country faces very substantial economic and financial challenges.”
The secretary was appearing before the panel to brief Congress of his department’s $13.4 billion budget request for fiscal 2010-a 5.3% increase compared with his department’s current budget.
A total of $332 million would be devoted to new Internal Revenue Service (IRS) enforcement efforts, including $128.1 million to add nearly 800 new IRS employees to combat offshore tax evasion and improve compliance with U.S. international tax laws by businesses and high-income individuals.
Another $130 million would go to bolster the security of IRS information technology, improve the efficiency of its business systems and upgrade its fraud detection capabilities.
IRS Commissioner Douglas Shulman, who also appeared before the subcommittee Tuesday, defended his announcement from last week that he is considering a plan to require income tax preparers to be licensed by the federal government as a way to root out fraud and raise compliance with increasingly complex tax laws.
More than 80% of American taxpayers use tax software or paid tax preparers to file their returns each year, which Shulman called a “transformational shift” in the way Americans pay their taxes.
“And because paying taxes is one of the largest financial transactions that individual Americans have each year, we need to make sure that the professionals who serve them are ethical, and that they ensure the right amount of tax is paid,” he said.
The commissioner said he hopes to deliver a proposal to the president on the issue by the end of the year.
Copyright © 2009, The Washington Times
Distributed by McClatchy-Tribune Information Services.
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