WASHINGTON – The Senate is working to quickly pass a grab bag of measures aimed at helping homeowners and businesses weather the housing crisis as a key House panel hears from experts on a broader government rescue plan for struggling borrowers.
Large tax breaks for homebuilders and credits for people who buy foreclosed properties, as well as $4 billion in grants for communities with the highest foreclosure rates to buy and rehabilitate foreclosed properties, were centerpieces of the bipartisan measure set for a Senate vote Wednesday.
Proponents call the plan an important first step to addressing the nation's economic woes, but some lawmakers in both parties are cool to the bill, which they argue would do little to help people staring at foreclosures or bolster the shaky housing market. Its diverse critics include President Bush and House Speaker Nancy Pelosi, D-Calif., who wants a measure more targeted to helping homeowners.
Rep. Charles Rangel, D-N.Y., chairman of the House Ways and Means Committee, scheduled a vote in his panel Wednesday on a rival plan that instead would steer tax breaks toward first-time home-buyers and investors in low-income rental housing. That bill likely will be paired with a broader housing rescue package being drafted by Rep. Barney Frank, D-Mass., the House Financial Services Committee chairman, expected to see a vote in May.
Frank was to hear from regulators and economists Wednesday on his plan to have the Federal Housing Administration insure up to $300 billion in restructured loans for homeowners facing foreclosure.
The measure would insert the government squarely into the middle of the mortgage mess, with taxpayer dollars at risk should homeowners default on the new loans. It would require lenders to write down large losses on distressed mortgages and help only those borrowers who could show that they were able to make payments on new loans.
The plan already is under fire from Republicans who characterize it as a massive government bailout.
House Minority Leader John Boehner, R-Ohio, said Congress should "work to help the innocent victims of the housing crisis, without providing a taxpayer-funded bailout to speculators, scam artists or recklessly irresponsible borrowers."
The housing tax measure, too, is coming under GOP criticism. Rep. Vito Fossella, R-N.Y., said a plan to give first-time homebuyers a 10 percent credit — up to $7,500 — on the purchase of a new home would exclude people in high-cost areas because it was targeted toward lower earners. Those making $70,000 (or $110,000 for a couple) would receive smaller credits, and recipients would have to pay back the credit over 15 years.
The proposal, Fossella said, "will only serve to freeze out a significant percentage of the middle-income Americans who are equally deserving and equally in need of assistance."
State and local officials as well as interest groups were to testify Thursday on Frank's housing rescue plan, and his panel could be ready to consider the measure as early as next week.