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Help For Renters?

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Posted On: 10/20/2010

QUESTION:

I keep seeing all these government programs to help homeowners pay their mortgages, particularly homeowners that have lost their jobs. Are there similar programs for renters who have lost their jobs? Why are homeowners more deserving than renters? Renters pay taxes too!

ANSWER:

Those who have lost their jobs are equally eligible for unemployment insurance, regardless of whether they rent or own. That said, the government has established a number of programs to help homeowners during the past few years - Hope for Homeowners, FHASecure and now Making Home Affordable. In addition, a special tax break has been extended to residential borrowers who cannot pay off their mortgage.

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While renters and homeowners may share a common desire to live indoors - and while taxpayers are included among both groups - in terms of tax policies they are different, something which is not unusual. For instance, tax money to pay for schools is collected from everyone, including those without children.

The government - and the public - want to stop foreclosures for a variety of reasons. Just a few foreclosures in the neighborhood can quickly lower property values for large numbers of nearby homes. That also reduces property taxes, meaning local governments must cut back public services.

Major beneficiaries of foreclosure prevention programs are lenders. It was in 2008 that the government set aside $700 billion for the TARP program to bailout major banks and brokers.

Why are homeowners more deserving? It's not really a question of fairness. The reason tax laws are so complex is precisely because one group has better lobbyists and more PAC money than another. To understand how the tax system works, just answer this question: Which major associations represent renters in Washington?

Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to peter@ctwfeatures.com.

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