Senate OKs homebuyer tax credit

The Senate voted Wednesday night to give a tax break of up to $15,000 to homebuyers in hopes of revitalizing the housing industry, a victory for Republicans eager to leave their mark on a mammoth economic-stimulus bill at the heart of President Obama’s recovery plan.

The tax break was approved without dissent and came on a day in which House lawmakers moved separately to revamp a program that was intended to help hundreds of thousands of borrowers avoid losing their homes, but which has had fewer than 500 applicants and helped only about two dozen so far.

Democrats readily agreed to the proposal, although it may be changed or even deleted as the massive economic-stimulus measure makes its way through Congress over the next 10 days or so.

During the presidential campaign, Mr. Obama said banks that receive federal bailout money should be required to halt foreclosures for 90 days, but that hasn’t happened.

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Congress last year created the Hope for Homeowners program, which was supposed to allow 400,000 troubled homeowners swap risky loans for traditional 30-year fixed-rate loans with lower rates. But only 25 loans have been approved since the program started in October out of 451 applications, despite more than 66,000 calls to the Federal Housing Administration about it from consumers and lenders.

Under the bill approved by the House Financial Services Committee, several restrictions on the program would be lifted in hopes of allowing more people to qualify.

Meg Burns, the federal housing official in charge of the program, testified this week that tight restrictions on who can qualify and high fees have led to the disappointing results. The bill approved Wednesday would reduce those fees and lift some of those restrictions.

Treasury Secretary Timothy Geithner also is expected to announce next week a new approach for aiding borrowers and rescuing the flailing financial industry. The Obama administration wants to spend up to $100 billion in financial-bailout money to help borrowers stay in their homes.

The government’s efforts to stem the foreclosure crisis thus far have relied on voluntary cooperation of the lending industry. The plans have not stopped a dramatic surge in foreclosures that is likely to worsen as workers lose their jobs amid a deepening recession.

“We will have to do more — substantially more — to fix this crisis,” Mr. Geithner said Wednesday.