Washington moves 3 ways on housing

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 started 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.

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 they would also have to cut the size of monthly mortgage payments.

Frank's plan, announced 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 today.