Senate to Take Up Measures to Aid Homeowners

Senate leaders unveiled a package of initiatives yesterday aimed at easing the nation's housing crisis, including an $8,000 tax credit for some first-time home buyers, a new tax deduction for some homeowners and a plan to rescue more than 400,000 borrowers at risk of foreclosure.

Parts of the package, many of which have already been approved by either the House or the Senate, were still being finalized late yesterday. Majority Leader Harry M. Reid (D-Nev.) said he would open Senate debate on the bill as soon as today.

It was unclear whether the package would gain support from House leaders or White House officials, who have objected to key provisions.

The legislation also contains tax breaks worth more than $14 billion over 10 years to homeowners, developers of low-income housing and taxpayers in New Orleans and other areas devastated by Hurricane Katrina. In addition, it would set up a fund for low-income rental housing, the first significant federal commitment in decades.

The centerpiece of the package is a plan to authorize the Federal Housing Administration to help at-risk borrowers trade exotic mortgages with escalating monthly payments for more affordable loans backed by the federal government. Under a deal struck between Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) and Richard C. Shelby (Ala.), the panel's ranking Republican, part of the low-income-housing money would be diverted to cover the cost of the FHA program. Senate Republicans had refused to support further government intervention in the housing market unless taxpayers were protected.

"We think we've got a good piece of legislation," Shelby said. "The sooner we get this bill to the president, the better."