Trouble Ahead As Senate Passes Housing Bill

The Senate is celebrating a bipartisan breakthrough with passage of a major housing bill, but the legislation faces major hurdles with the White House and a House majority that is promoting a much more aggressive stance on helping struggling homeowners.

On a 84-12 vote, the Senate embraced a bill that contains billions in tax breaks for the ailing home builder industry, tax credits for people who buy foreclosed homes and about $100 million in foreclosure prevention counseling. The Senate bill has come under fire by consumer advocates for being too friendly to the homebuilders and mortgage bankers and doing very little to actually help people facing foreclosure.

The White House, meanwhile, has signaled its opposition to the $4 billion in community development block grant funds in the bill, saying the government didn’t need to get involved in bailing out foreclosed homes.

And the debate is only just beginning in the House, where the Financial Services Committee is pushing $300 billion in federally backed mortgage insurance and the Ways and Means Committee has approved a bill that would provide interest free loans of $7,500 in the form of a tax credit to first time, middle income home buyers.

The more aggressive, expensive ideas emanating from the House could be a nonstarter with a reticent White House and a closely divided Senate. 

A handful of Senate conservatives, most notably the no. 2 Republican Jon Kyl of Arizona, opposed the Senate bill. The three presidential candidates _ John McCain, Hillary Clinton and Barack Obama did not show up for the vote.