Senate Hammers Out Housing Relief Bill

Senators are working behind closed doors Wednesday to come up with a bipartisan deal to provide some relief for homeowners and lenders, though some of the provisions that would change bankruptcy laws to help borrowers have been excised, at least for now.

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Senate leaders have reached agreement on bipartisan legislation aimed at easing the housing crisis. The measure includes help for homeowners facing foreclosure, mortgage counseling, and tax credits for homebuyers. The Senate is expected to debate the proposal for the rest pf the week.

NPR's Bryan Naylor reports.

BRYAN NAYLOR: The bipartisan housing measure was unveiled this evening after senators and their staff worked behind closed doors throughout the day and previous night to iron out its details. The chairman of the banking committee, Chris Dodd of Connecticut, was the measure's Democratic author.

Senator CHRIS DODD (Democrat, Connecticut): This is not a complete product, obviously. A lot more that'll need to be done in the coming weeks and months as we work with our federal agencies, with the administration, our colleagues in both the House and the Senate. But it's a major step in the right direction to begin to offer that level of confidence the people are looking forward.

NAYLOR: The package is based on elements from an earlier Democratic housing bill, which was blocked by Republicans in late February. It includes foreclosure help, mortgage counseling, and homeowner tax credits. There are also tax breaks for homebuilders and other businesses hurt by the housing crisis.

At a hearing of the Congressional Joint Economic Committee today, Federal Reserve Board Chairman Ben Bernanke said policymakers were fighting against the wind, and that a recession is possible.

He said while the Fed had done all it could to address the housing crisis by lowering interest rates, he urged Congress to act including strengthening government housing agencies and Fannie Mae and Freddie Mac.

Mr. BEN BERNANKE (Chairman, Federal Reserve): I do think Congress needs to be looking at housing because I think it is the center of the situation, the center of the problem at this point. I do think that strengthening the FHA, strengthening GSCs to do their mission. Those are all constructive things and I hope Congress will address housing issues going forward.

NAYLOR: Bernanke denied that the Fed had bailed out Bear Sterns, the investment bank that was teetering on the edge of bankruptcy before the Fed arranged its sale to JPMorgan with some $30 billion in tax fair guarantees. But that deal was clearly on the minds of senators who returned to Washington after a two-week recess, determined that struggling homeowners should also get some assistance.

Republican Norm Coleman of Minnesota said he heard about housing woes from many of his constituents.

Senator NORM COLEMAN (Republican, Minnesota): People concerned about their homes, concerned about their neighborhoods, concerned about their jobs, all being impacted by the subprime crisis, the devaluation of homes, the impact on neighborhoods. So we listened, we heard, and we actually had something unusual, I think, we have a bipartisan agreement to move forward.

NAYLOR: How much help the Senate housing bill will provide homeowners facing foreclosure is unclear, but lawmakers feel the need to do something. Many spoke on the Senate floor today about the dire situations in their states like Michigan Democrat Debbie Stabenow.

Senator DEBBIE STABENOW (Democrat, Michigan): We really are in a crisis in America, and few states are being hurt as much as my home state of Michigan, which currently ranks sixth in the nation in mortgage foreclosures. Families who are seeing their life's dream, their home being lost as a result of this crisis.

NAYLOR: Senators are likely to spend the rest of the week attempting to add to the bipartisan measure. One amendment sure to come up will be to restore a provision stripped from the original Democratic bill that would allow bankruptcy court judges to lower mortgage payments for some homeowners facing foreclosure.

Senate Majority Leader Harry Reid says he hopes the Senate will quickly approve the bipartisan bill.

Bryan Naylor, NPR News, the Capitol.

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