This is part two of the presidential candidates' answers to a number of questions put to them by the National Association of Home Builders. Part one of the five-day series ran yesterday.

Question: A cornerstone of federal housing policy is the nation's very favorable tax system. From time to time, however, some in Congress and elsewhere have suggested restructuring the tax code and eliminating the deductibility of mortgage interest and property taxes. Where do you stand on this issue?

SEN. KERRY: I strongly support the deductibility of mortgage interest and property taxes. Many middle-income families have been able to afford their first home in part because they are able to deduct mortgage interest and property taxes. Owning a home can lead to a better quality of life and provide families with greater financial security.

PRESIDENT BUSH: Home ownership has always been at the heart of the American Dream and central to the health of the U.S. economy and the wealth of families. It also yields a variety of strong social benefits. I support tax incentives that enable more Americans to achieve the goal of home ownership.

Question: While the housing market has performed very well in recent years, it is becoming increasingly difficult for many first-time buyers and working families to buy or rent homes in the communities where they work. How do you view today's housing affordability problem, and what specifically would your Administration pursue to help close the gap between those who can afford a home and those who can't?

BUSH: My Administration has made increasing home ownership a priority and is working to give more Americans the opportunity to achieve the dream of owning a home. With the national rate of home ownership reaching record levels, we have already made this dream a reality for millions of Americans. And the Department of Housing and Urban Development will continue to reduce barriers to home ownership in the years ahead.

The availability of affordable housing is an enormous barrier for low and moderate-income home buyers. To address this need, I have proposed a five-year Single-Family Affordable Housing Tax Credit. The tax credit is for up to 50 percent of the costs of constructing or rehabilitating affordable homes, provided they are sold to home buyers with incomes of not more than 80 percent of area median income. Tax credits awarded in the first five years will result in an additional 200,000 affordable single-family homes becoming available through construction or rehabilitation.

I signed into law the American Dream Downpayment initiative, which authorizes $200 million a year to assist an estimated 40,000 low-income families with downpayment funds. In this year's budget, I proposed the Zero Downpayment Initiative which would eliminate the statutory requirement of a minimum 3% downpayment for Federal Housing Administration (FHA)-insured single-family mortgages for first-time home buyers. Preliminary projections indicate that the new FHA mortgage product would generate about 150,000 home buyers in the first year alone. In March of this year, HUD launched the America's Affordable Communities Initiative to remove regulatory barriers to affordable housing.

KERRY: Today, too many low and moderate-income families living in urban and rural areas across our nation have not been able to share in the dream and benefits of home ownership due to the lack of available housing or the high cost of the housing that is available. I have made a number of proposals in the past to increase home ownership. For example, I have previously introduced legislation, the First Time Homebuyer Affordability Act, which would allow families to borrow up to $10,000 from their IRAs (or from their parents' IRAs) for a downpayment on their first home without paying any taxes. I have also introduced legislation to encourage the construction and rehabilitation of for-sale homes that will both create new opportunities for low-income home buyers and help revitalize distressed communities. Finally, I have strongly supported efforts to increase FHA loan limits to help more families become first-time home buyers.

Question: In many cases, federal environmental laws and mandates are developed with little regard to potential economic consequences. How do you feel about this, and do you believe consideration should be given to the potential costs and economic risks of environmental protection?

KERRY: I believe that formulation of environmental policy must consider a range of interests, including both environmental protection and economic impacts. A Kerry-Edwards Administration will work with all interested stakeholders in developing environmental policy.

BUSH: HUD has launched the Americans' Affordable Communities Initiative to reduce the burden of federal, state and local regulation on the home builders industry. And my Administration will continue to develop innovative, market-based solutions that strengthen and improve environmental protections. Federal environmental policies must be integrated with efforts to grow our economy and create jobs, because the greatest environmental progress will come about through new technologies that are created and nurtured by a robust private market. The government and the private sector have already combined efforts to protect the environment and promote growth, and we will continue to do so.

My Administration has also worked to reduce the regulatory burden on businesses to reduce excessive costs that can hinder the ability to do business. Regulatory reform is part of my six-point plan to strengthen the economy.

Published: September 14, 2004

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