WASHINGTON The Senate on Thursday passed a bipartisan package of tax breaks and other steps designed to help businesses and homeowners weather the housing crisis.
The measure passed by an impressive 84-12 vote, but even its supporters acknowledge it's tilted too much in favor of businesses such as homebuilders and does little to help borrowers at risk of losing their homes.
The plan combines large tax breaks for homebuilders and a $7,000 tax credit for people who buy foreclosed properties, as well as $4 billion in grants for communities to buy and fix up abandoned homes.
The measure, titled the Foreclosure Prevention Act, will be significantly redrawn by House critics, who say it favors businesses such as homebuilders instead of borrowers.
"Quite candidly, what we've done does not quite live up to the title," said Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee and the measure's top sponsor. "We have more work to do. We do not do enough in preventing more foreclosures in the country."
Democrats failed to win approval of ideas such as giving people threatened with losing their homes the right to seek more favorable loan terms from their lenders in bankruptcy courts. At the same time, a proposal to have the government back up refinanced loans for people facing foreclosure has yet to win GOP support.
The White House opposes the plan but has not issued an explicit veto threat. It says parts of the legislation would make the problem worse by depressing some home values and that the measure inappropriately uses taxpayer money to bail out lenders saddled with foreclosed houses.
The House is likely to reject key portions of the Senate measure, including $25 billion over three years in tax breaks for money-losing businesses such as homebuilders.
A plan adopted Wednesday by a key House panel dropped that idea, as well as the tax credit for purchasers of foreclosed homes.
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, said the tax credit was "like paying a dog to eat a bone," and called the business tax break "a mistake."
Senate Majority Leader Harry Reid, D-Nev., acknowledged that changes will be needed in upcoming talks with the House and the White House.
The bill also offers $150 billion for pre-foreclosure counseling and stronger loan disclosure requirements.