NEW YORK (CNNMoney.com) -- Congress is set Wednesday to take up several proposals to stabilize the housing market, a day after partisan differences over the best way to help homeowners came into sharper focus.
Two House committees will hold hearings on Wednesday to debate separate proposals - one to have the government insure troubled mortgages, the other to enact a series of tax changes aimed at the housing market.
Meanwhile, the Senate is expected to vote on a $15 billion package that includes a tax break for homebuilders and other businesses, plus a new tax credit and deduction for homeowners and home buyers.
Critics on the left and right say the Senate legislation - drawn up after 24 hours of bipartisan negotiation last week - does more for homebuilders and other businesses than it does for homeowners. Even if it passes in the Senate, the bill faces an uncertain fate in the House, which is expected to craft its own bill.
The Bush administration gave the Senate legislation the thumbs down on Tuesday. "The bill would likely do more harm than good by bailing out lenders and speculators and passing on costs to other Americans who play by the rules and honor their mortgage debt obligations," said White House spokesperson Dana Perino.
The Senate bill has also not generated much support in the House. Rep. Charles Rangel, D-N.Y., the chairman of the powerful House Ways and Means Committee, proposed his own set of measures that would offer tax-related housing assistance.
Further muddying the picture of what final measures Congress will settle on: House leaders have indicated they will pursue proposals to address other problems in the economy - a move that could complicate speedy approval of any foreclosure provisions.
Top congressional Democrats - House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid - sent a letter to Bush late Tuesday calling for consideration of measures to stem foreclosures but also expanding federal benefits for the unemployed, creating jobs by spending more on infrastructure projects and guaranteeing college education for war veterans.
"We believe that Congress and your administration must now turn their attention to Main Street and help families in crisis," Pelosi and Reid wrote.
The pressure is on for lawmakers and the administration to act swiftly to prevent a substantial number of foreclosures. Nationwide, 1.5 million subprime adjustable-rate mortgages will reset to higher interest rates this year, putting many of those homeowners at risk of falling behind on their payments and losing their homes.
Housing agency in center ring
The House's efforts on housing have so far been led by Financial Services Chairman Barney Frank, D-Mass. Frank is scheduled to hold hearings on Wednesday and Thursday to debate his proposal to let the Federal Housing Administration (FHA) insure $300 billion in troubled loans if lenders voluntarily write them down to at least 85% of the homes' appraised value.
The hearing will feature testimony from economists and key banking regulators, including Sheila Bair, head of the Federal Deposit Insurance Corp., and Randall Kroszner, a Federal Reserve governor.
Some political observers say that the FHA proposal may be a centerpiece of the House bill. But the Senate chose to exclude in its housing package a similar proposal from Senate Banking Chairman Christopher Dodd, D-Conn.
$11 billion tax relief proposal
Meanwhile, the first detailed indication of measures that could be in the House bill were proposed on Tuesday by Rangel, who will chair a hearing on the plan on Wednesday.
Rangel's $11 billion Housing Assistance Tax Act differs from the Senate package in many ways.
One of the biggest differences: Rangel left out of his bill a controversial business tax break that the Senate has proposed. The provision - an expansion of the so-called net operating loss carryback - would extend to four years from two the time company may apply its 2008 and 2009 losses to past tax bills. The tax break would benefit homebuilders who prospered during the housing boom and now are banking big losses.
But the Rangel bill and Senate package do overlap in two key areas.
Like the Senate, Rangel would allow 28.3 million homeowners who take the standard deduction on their federal tax return to also deduct their property taxes. Currently, only homeowners who itemize can take that deduction. But the deduction in Rangel's bill is capped at $350 for single filers and $700 for joint filers, below the $500 and $1,000 thresholds proposed by the Senate.
Rangel's proposal also includes a measure letting states issue an additional $10 billion in tax-free municipal bonds, the proceeds of which may be used to subsidize mortgage refinancing for subprime borrowers trying to get out of unaffordable loans. Under current law, state and local housing agencies are only allowed to issue tax-free bonds to help subsidize mortgages for first-time home buyers or those purchasing property in distressed areas.
Rangel has also included provisions that would offset the cost of his proposal. Chief among them is an idea the Bush administration supports: requiring stock brokers to report to the IRS the cost basis of investment when a client sells stock. That change is estimated to raise $8 billion.
Stimulus 2.0 on tap?
Looking beyond the mortgage crisis, Pelosi and Reid want to put together economic stimulus measures, some of which were cut from the first stimulus bill. That $170 billion package, enacted in February, omitted a plan to extend unemployment benefits and other provisions Democrats had advocated.
Whether such measures would be included in a housing package or passed separately isn't clear yet.
The stimulus issue is likely to come up when congressional leaders meet with Bush on Wednesday.
The president, however, is likely to urge them to let the first stimulus package take effect before deciding what to do next. Taxpayer rebates, the centerpiece of that legislation, will start going out in May.
"My only advice to [Congress] is, one, make sure you give the pro-growth package that was passed overwhelmingly a chance to work, see what the effects are," Bush said Monday.
Ted Barrett and Deirdre Walsh contributed to this report See Also
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