The Senate is busy debating the Foreclosure Prevention Act of 2008. It's an important bill and one that has the potential to have a very large impact on the real estate market. It's worth taking a closer look at some of these provisions.

The bill covers these items:

• Increased FHA Loan Limits
• Assisting Communities Devastated by Foreclosures
• Providing Pre-Foreclosure Counseling for Families
• Enhancing Mortgage Disclosure
• Assisting Veterans In Danger of Foreclosure
• Property Tax Deduction
• Mortgage Revenue Bonds
• Help for Homebuilders
• Tax Credit for Purchase of Homes in Foreclosure

I'm going to talk about two provisions today that I believe could significantly help our market. One is the Tax Credit for Purchase of Homes in Foreclosure. This would provide a tax credit of $7,000 for buyers of homes in foreclosure or pre-foreclosure. The credit would be taken over two years. This could only be used on owner occupied homes, not on investment properties.

This could provide a significant incentive to buyers to get back in this market. It would also help to start providing a floor to price declines as the number of foreclosures on the market would likely decrease faster.

The down side to this is if you're a homeowner who is selling your home and you're not in foreclosure. You would definitely seem to be at a significant disadvantage!

The other provision that has the potential to make a huge difference is the Assisting Communities Devestated by Foreclosures provision. This would be available to communities hit hard by foreclosures and would provide Community Development Block Grant Funds to allow purchase of foreclosed homes. Those homes culd then be rehabilitated or redeveloped by the community. They could be used as workforce rental housing, or eventually resold. Perhaps partnerships could be established with organizations such as Habitat for Humanity.

What we don't know is which local communities would be eligible for this assistance. But, again, this could help enormously with bringing down inventory and stabilizing prices. I'm hoping that, at a minimum, Culpeper and Prince William Counties would be eligible.

The prospects for passage look good at the moment, at least in the Senate. And, I suspect in an election year the House will be even more interested in getting this one passed!

If you've got questions on some of the other provisions, let me know and I'll get you more information.