House Pass tax break worth up to $7,500 for first-time home buyers who purchase between April 9 of this year and July 1, 2009.

House lawmakers Thursday approved a sweeping housing bill that includes a controversial plan to expand FHA loan guarantee programs to help as many as 2 million troubled borrowers refinance into more affordable loans.

But the 266-154 vote to approve the package of bills, dubbed the American Housing Rescue and Foreclosure Prevention Act, fell short of the margin that would be needed to override President Bush's threat to veto the bill.

The Bush administration opposes the expansion of Federal Housing Administration loan guarantees put forward in March by Rep. Barney Frank, D-Mass., as a "bailout" of lenders and speculators.

Frank has maintained that the program would not constitute a bailout because it would mostly be financed by insurance premiums borrowers pay to the FHA, and only owner-occupied homes would be eligible for government-backed refinance loans.

In addition, lenders would have to accept a maximum 85 percent of a property's current appraised value as payment on an existing loan to participate, and borrowers would have to pay the government an exit fee to prevent them from flipping their home at a profit if housing prices rebound.

Backers of the FHA expansion plan sought to win bipartisan support by wrapping compromises on other issues Congress has been deadlocked on for years into the bill.

Those issues include so-called FHA modernization legislation sought by the Bush administration permitting the FHA to expand the use of risk-based pricing. Risk-based pricing would allow borrowers who might not have qualified for an FHA loan before to get one, although they would pay higher premiums.

The House incorporated the language of a previously approved FHA modernization bill into the Act, HR 1852, which would increase the maximum amount for loans eligible for FHA backing in high-cost areas to up to 175 percent of the $417,000 conforming loan limit, or 125 percent of an area's median home price, whichever is less.

The legislation passed by the House Thursday would also provide for strengthened oversight of Fannie Mae and Freddie Mac, which was sought by the Bush administration as a prerequisite for permanent increase in the $417,000 conforming loan limit for mortgages eligible for purchase and guarantee by the government-sponsored enterprises, or GSEs.

A temporary increase in the conforming loan limit -- up to $729,750 in high cost areas -- is scheduled to expire at the end of the year. Some Democrats are pushing for a permanent increase in the conforming loan limit, but the legislation approved by the House Thursday incorporates the language of a previously approved GSE reform bill, HR 1427, which would limit Fannie and Freddie to securitizing mortgages of up to $625,500.

The House also threw in a first-time home-buyer tax credit of up to $7,500 for individuals who earn less than $70,000 a year, or up to $140,000 for married couples, that's supported by the industry.

"The tax credit is the most effective way to halt the downward spiral in the housing market and stabilize home prices and financial markets," said NAHB President Sandy Dunn, president of the National Association of Home Builders, in a statement. "This will get consumers off the fence, stimulate home buying and reduce excess supply in housing markets."

The House bill -- technically an amendment to The Foreclosure Prevention Act of 2008, a tax relief bill passed by the Senate April 10 -- also includes language that's intended to protect loan servicers who engage in workouts with troubled borrowers from lawsuits by investors in mortgage-backed securities. The Senate's bill was, in turn, an amendment to a bill originally put forward in the House, HR 3221.

Differences in the House and Senate legislation must eventually be worked out in a conference committee, with President Bush's threatened veto expected to be used as a negotiating tool.

The Mortgage Bankers Association was among industry groups welcoming aspects of the House bill Thursday.

FHA modernization has "long been one of MBA's top legislative priorities," the group said, and the new, independent regulator the bill would create for Fannie and Freddie "is crucial given the current state of the market," MBA Chairman Kieran P. Quinn said in a statement.

Quinn said the proposed expansion of FHA loan guarantee programs "has the potential to help a significant number of borrowers avoid foreclosure" but must include "appropriate safeguards" to help those borrowers most deserving while keeping the program voluntary for lenders.

While Frank has said the plan could help as many as 2 million troubled borrowers stay in their homes, the Congressional Budget Office estimates that limited participation by lenders could keep the actual number of refinances closer to 500,000 loans, with program losses of about $2.7 billion.

In another 239-188 vote, the House passed a separate bill, HR 5818, The Neighborhood Stabilization Act, which authorizes $15 billion in federal grants and loans for state and local governments to purchase, rehabilitate, and resell or rent foreclosed homes.

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"Real estate prices are plummeting!" "Foreclosures are at an all time high!" "Prices predicted to decline another 20 to 30 percent!" These are the headlines that we face daily. It's no wonder that there's a crisis in consumer confidence. The truth of the matter is that the sky is not falling. In fact, contrary to what the press is reporting, real estate prices are stabilizing, and in a wide number of areas they are actually showing signs of improving.

The S&P/Case-Shiller Index is the gold (scare) standard these days for those who report on the housing market. News agencies began using this index about two years ago rather than the indices provided by OFHEO (the Office of Federal Housing Enterprise Oversight) and NAR. These same news sources often fail to report the numbers provided by companies such as Realogy.

If each of these resources came to the same conclusion about the market, there would be no issue. The challenge is that NAR, OFHEO and Realogy all reach the same conclusion: Prices are down nationally less than 1 percent and, in many areas, prices are actually increasing.

In contrast, the most recent numbers from the S&P/Case-Shiller Index (reported on April 29, 2008) reach a very different conclusion:

"Data through February 2008 … show declines in the prices of existing single-family homes across the United States … The 10-City Composite posted a new record-low annual decline of 13.6 percent and the 20-City Composite recorded an annual decline of 12.7 percent."

According to David M. Blitzer, chairman of the Index Committee at Standard & Poor's, "There is no sign of a bottom in the numbers. Prices of single-family homes continue to drop across the nation. All 20 metro areas were in the red for February-over-January reading. In addition, 19 of 20 MSAs (Metropolitan Statistical Areas) are reporting negative annual returns. The monthly data show that every one of the MSAs has now declined every month since September 2007, marking six consecutive months."

Now compare these numbers to those reported on April 22, 2008, by OFHEO. The OFHEO "Monthly Price Change Estimates for the U.S. and Census Divisions from January 2008 to February 2008" drew the following conclusions:

1. Overall U.S. prices were UP 0.6 percent.

2. Regions reporting increases include the Pacific (0.3 percent), West North Central (1.3 percent), West South Central (0.7 percent), East North Central (1.6 percent), East South Central (1.2 percent), New England (2.2 percent), and Middle Atlantic (0.1 percent.)

3. Only two regions reported declines: (Mountain -0.6 percent) and South Atlantic (-0.2 percent).

In other words, a whopping 77 percent of the areas in the U.S. reported a price increase between January 2008 and February 2008! The S&P/Case-Shiller Index, in contrast, concludes that 95 percent of the MSAs reported negative returns. Of course, there's no mystery as to which of these two reports has been in the press.

What accounts for this difference? Both the S&P/Case-Shiller Index and the OFHEO index use "repeat valuations." In other words, to be included in the calculations, a property must sell twice. The difference in the two sets of sales prices is the basis for each index. OFHEO's sales-price data include only homes that have conforming mortgages. The Case-Shiller Index covers property sales with both conforming and jumbo mortgages.

Andrew Leventis (June 2007) attributes part of the difference to the fact that OFHEO "does not lend additional weight to more expensive homes; each pair of home valuations is given equal weight in the index estimation, regardless of the price level of the home." In contrast, Case-Shiller applies a "weighting" formula before it calculates it data. The challenge with making decisions about how to "weight" certain factors introduces human judgment into the equation and dramatically increases the probability for creating errors.

NAR and Realogy, using a different approach from OFHEO and S&P/Case-Shiller, arrive at essentially the same conclusion as OFHEO, i.e. that the average price of homes in the U.S. was down less than 1 percent. Their approach is to total up all the sales, divide by the number of units, and then calculate the arithmetic average (mean) as well as the median. In stark contrast to the S&P/Case-Shiller approach, the technique that NAR and Realogy use includes all properties and is much more objective.

From a scientific point of view, when two sets of data produce conflicting results, you look to other sources and/or methodologies to see which data set is supported. In this case, the NAR and Realogy data supports the OFHEO data. It's the S&P/Case-Shiller index that lacks corroboration from other sources.

Unfortunately, the press almost universally quotes the S&P/Case-Shiller Index, and it may be the least accurate housing-price index. Next week's column explains why.

Bernice Ross, national speaker and CEO of Realestatecoach.com, is the author of "Waging War on Real Estate's Discounters" and "Who's the Best Person to Sell My House?" Both are available online. She can be reached at bernice@realestatecoach.com or visit her blog at www.LuxuryClues.com.

Ross will speak at Real Estate Connect in San Francisco, July 23-25, 2008. Register today.

One of the main reasons people want to move is to get more room. If this applies to you, you will want to make your home seem bigger, for your own use and so it will be easier to put on the market. Here are a number of inexpensive tips that you can use to make your home seem larger. This can be to your advantage when you are selling a smaller house.

1. Lighting -- Especially in a small home, the lighting is surprisingly important. The impression of openness is assisted by bright lighting, because of our lifelong conditioning to think of bright sunny spaces as being connected with outdoor living. Aim lights on the walls so they will appear to be brighter. You might want to have controls to dim or increase the intensity of the lights in each room to fit your mood.

2. Colors -- Choose colors that give a warm feeling such as red, yellow, brown and orange. These colors can make a room seem larger and more open. To give a particular room added depth, you might want to try the approach of using light colors on three walls of the room and a coordinated darker color on the fourth wall.

3. Minimum Furniture -- Any rooms in the house that have too much furniture will look smaller. The more crowded a room is, the smaller it will seem. Make sure that your furniture is not crowded together when you want to make a room look larger. Avoid placing bulky armchairs and sofas in small spaces. To maximize the utilization of space, try to use dual purpose furniture. An example would be an end table with an integral magazine rack takes up less room than two specialized pieces.

4. Be Mindful of Your Choices in Decorator Items Too -- The accessories you use in decorating have an impact on how large or small it appears. Use light colored curtains, which allow the light to come in during the daytime. Choose light colored furniture, or at least as a minimum use light colored covers for the furniture, since using light colors will usually give a more relaxed feel to the room.

5. Storage Plan -- Efficient storage is an important consideration in small spaces. The more clutter you have in your home, the smaller it will look. This is not just something for making your home more attractive to buyers, but a good aspect of having a control of your own life too. Come up with storage systems that fit your family's needs and lifestyle. When you clean up the clutter, your house will seem more appealing to guests and homebuyers.

6. Mirrors Can Be a Space Doubler -- Use wall and door mirrors in carefully planned locations to give depth to a room. This is one of the most direct real estate tips ever. Mirrors can serve as attractive in and of themselves, and they serve a secondary purpose of making small rooms seem large.

These suggestions are among the most effective ways to improve the value of your home, even compared with much more costly choices.  Wit their high ratio of benefit to expenditure, if you try them first you might not even need to go to the high-priced work you might have otherwise considered.

Content presented by the Colorado home specialists at Automated Homefinder.