At the White House, President Bush has signed into law a measure waiving taxes on some homeowners facing foreclosure.

President Bush: “The bill I sign today will help this effort by ensuring that refinancing a mortgage does not result in a higher tax bill. Under current law, if the value of your house declines and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as money that can be taxed. And of course, this makes a difficult situation even worse. When you’re worried about making your payments, higher taxes are the last
thing you need to worry about.”

The President’s housing plan has come under criticism because it covers only a small number of subprime borrowers — just seven percent, according to the Center for Responsible Lending. A subprime loan offers borrowers a mortgage, but at a disproportionately high rate they often can’t afford. The subprime market has fueled a record one million foreclosures this year, with an estimated two million expected in 2008. California has the second-highest rate of foreclosures in the country. In Ontario, California, a “tent city” housing the homeless has grown to 200 residents since opening in July. Homeless activist Jane Mercer says she expects the camp to grow amidst the subprime crunch.

Jane Mercer: “We are seeing a lot of families who are hitting the streets. We had a family just come in this morning — three children, you know, eight, ten, twelve years old — and they just lost their home.”

Nationally, foreclosure filings are up nearly 100 percent over one year ago.