Foreclosure-rescue legislation stalls in Senate
WASHINGTON - A foreclosure rescue plan that has broad bipartisan support stalled in the Senate yesterday amid a dispute over taxes.
Democrats and many Republicans were pushing for quick approval of the bill, which would let the government back $300 billion in new, cheaper mortgages for homeowners facing foreclosure.
The Senate inched closer to passage of the measure yesterday, endorsing its version over a similar bill already passed by the House. The 79-to-16 procedural vote reflected a desire among lawmakers in both parties to enact election-year aid for distressed borrowers in tough economic times.
But negotiations to complete the measure hit a snag over a bid by Senator John Ensign, a Nevada Republican, to add a $6 billion package of tax breaks for renewable energy producers. The incentives have bipartisan backing, but House Democrats oppose including them without balancing them with tax hikes to prevent increasing the deficit.
Senate Majority Leader Harry Reid, of Nevada, said he was determined to complete the housing measure - which also includes long-awaited overhauls of the Federal Housing Administration and Fannie Mae and Freddie Mac - but that it will have to wait until next month, after lawmakers return from a weeklong July 4th break.
Ensign said he'd slow the measure for days to secure a vote on the tax breaks, forcing Democrats to either swallow them or kill their own housing rescue plan. "I think it's a tough choice for them," Ensign said. "This is the right vehicle because it's going to be signed" by President Bush.
The mortgage aid plan would let the FHA insure home loans for an estimated 400,000 distressed borrowers who otherwise would be considered too financially risky to qualify for safe, fixed-rate mortgages. Mortgage holders would first have to agree to take a loss on the existing mortgages. They would have a powerful incentive to do so in many cases, given that a government-backed refinance could allow them to recover more money than they would in a costly foreclosure.
