November 5th, 2009
04:29 PM ET

Financial Dispatch: Congress approves extension of jobless benefits

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Andrew Torgan
CNN Financial News Producer

Unemployed Americans are set to get up to 20 additional weeks of jobless benefits, while new homebuyers are poised to see the $8,000 tax credit extended into mid-next year.

The House approved the measures by a 403-12 vote this afternoon, one day after the Senate passed the legislation. The bill now moves to the White House for President Obama's signature.

The legislation would extend jobless benefits in all states by 14 weeks. Those that live in states with unemployment higher than 8.5% would receive an additional six weeks. The proposal would be funded by extending a longstanding federal unemployment tax on employers through June 30, 2011.

The measure would apply to those whose benefits run out by Dec. 31, which is nearly two million people, according to Senate estimates. Those whose checks have already stopped would be able to reapply for another round.

The House, which passed its own benefits extension in September, giving an additional 13 weeks in high-unemployment states, approved the Senate's version.

The Senate had been bickering over the details since September, and that cost more than 200,000 people their benefits. Some 7,000 unemployed Americans run out of benefits each day, according to the National Employment Law Project.

The legislation also would extend the $8,000 homebuyer tax credit to contracts signed by April 30 and closed by June 30. The controversial credit, which many say has boosted home sales in recent months, was set to expire after Nov. 30.

The bill also creates a $6,500 credit for those who buy a home after living in their current house at least five years. That measure would apply to contracts signed by April 30 and closed by June 30. The current credit defines a first-time homebuyer as someone who has not owned a residence within the past three years.

News of the unemployment benefits extension comes as the number of Americans filing first-time claims for jobless benefits fell by 20,000 to a seasonally adjusted 512,000 last week - the lowest level in 10 months.

And the number of people who continue to claim benefits for one week or more fell by 68,000 to 5.75 million – the eighth decline in nine weeks.

Still, companies are reluctant to hire and economists expect the unemployment rate will tick up to 9.9 percent when October's figure is reported Friday.

And the House passed a bill Wednesday to move up the effective date for credit card reforms to Dec. 1, from February and August 2010.

In May, President Obama signed into law a credit card reform act to crack down on the way issuers raise fees and interest rates. The reforms were scheduled to roll out in three parts over 12 months.

"Just in time for the holidays, Congress can lock in a ban on interest rate hikes on existing balances, and the tricks that have kept far too many consumers trapped in a never-ending cycle of debt," said bill co-sponsor Rep. Carolyn Maloney, D-N.Y., in a statement issued late last month.

House Financial Services Committee Chairman Barney Frank, D-Mass., was the other sponsor of the bill.

The Senate will also have to vote to pass the measure expediting the changes in order for it to go to President Obama for his signature.

Finally, in an effort to give troubled borrowers yet another way to avoid foreclosure, Fannie Mae says it will allow eligible homeowners to rent their own homes.

The Deed for Lease program lets homeowners transfer the deed back to their lender and then sign a lease to remain in the home. The effort is aimed at borrowers with mortgages owned or guaranteed by Fannie Mae who do not qualify for or cannot sustain a loan modification. Borrowers must live in the home as their primary residence and must be released from any subordinate liens.

The program aims to reduce the number of foreclosed properties being abandoned because they often fall into disrepair and hurt the surrounding homes' values. Also, it keeps a roof over troubled borrowers' heads and a steady stream of income coming from the property.

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Filed under: Andrew Torgan • Economy • Finance
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