Federal Housing Relief on Three Different Paths

WASHINGTON — The White House, Senate and House all moved Wednesday to address the nation's worsening housing crisis.

But with each setting out in a different direction, it remained unclear how or when they might reach agreement on a strategy to help struggling homeowners, lenders and builders.

The White House kicked off a full day of action by announcing an expansion of a federal mortgage insurance program aimed at helping distressed borrowers keep their homes.

Under the plan, a Federal Housing Administration program called FHASecure would relax its rules, allowing an additional 100,000 homeowners to reduce their mortgage payments if they are late on payments, have poor credit histories or owe their lenders more than their homes are worth.

Lenders would have to reduce the value of such mortgages in exchange for shifting the default risk to the federal program. An expansion of the program would not need congressional approval, and could bring the total number of borrowers covered to about 500,000 by year's end.

"This is not a silver bullet that will solve all the problems in housing, but it will help some additional people stay in their homes, and that's something the president wants to see," White House press secretary Dana Perino said at a briefing.

On Capitol Hill, Democrats said much more aggressive action is needed as more than 2 million families face foreclosure this year.

In the House, two powerful committees worked on separate bills.

House Financial Services Committee Chairman Barney Frank held a hearing on his plan to provide up to $300 billion in government guarantees for refinanced mortgages for struggling borrowers. Lenders would reduce their risks, but also would have to cut the size of monthly mortgage payments to make them more affordable.

Frank's plan, unveiled last month, is similar to the new FHASecure program but would be much larger. He says his approach could help up to 2 million homeowners, about four times as many as FHASecure.

Separately, the House Ways and Means Committee voted 35-5 in favor of Chairman Charlie Rangel's $11.1 billion package of tax incentives for homeowners, first-time home buyers and developers of low-income housing. The bill's key provision offers a refundable $7,500 tax credit for people who buy their first home in the next year.

The credit phases out for people earning more than $70,000, or $140,000 for married couples. Recipients of the credit must repay the government, without interest, over 15 years.

The House's Democratic leadership likely will combine the legislation by Frank, D-Mass., and Rangel, D-N.Y., into a single package for a House floor vote.

The two House bills are considerably different from the Senate's bipartisan legislation, which offers more than $25 billion in tax breaks over three years to home builders, bankers and other money-losing businesses.

The Senate debated its bill throughout the day Wednesday, and final passage was expected Thursday.

But its ultimate prospects were left in doubt after Perino unexpectedly criticized it at a White House briefing Tuesday as "not a bill that we could support."

Referring to a provision crafted by Sen. Johnny Isakson, R-Ga., that would create a tax credit of up to $7,000 over two years for people who buy foreclosed homes, Perino said, "We have serious concerns that these elements and others would do little to help homeowners avoid foreclosure or reduce housing inventories."

Another "carryback" provision would give businesses four years, instead of the current two, to apply losses in 2008 and 2009 to past tax bills. That would allow builders to offset profits made during the housing boom with losses incurred during the recent slump.

The Democratic-led House signaled it has no intention of including either the carryback provision or the Isakson tax credits in its housing bill. "This bill focuses relief on those homeowners in distress, not those who caused the distress," Rep. Lloyd Doggett, D-Texas, a Ways and Means Committee member, said in a statement.

Assuming the House does combine the Rangel and Frank legislation, it then would send the package to the House floor for a vote.

If it were to pass there as expected, the House and Senate would have to appoint negotiators to work out the considerable differences between their two versions. The White House also would play a role in those negotiations.