Yesterday afternoon, the Senate cleared the way to pass a $14.9 b. housing stimulus bill, H.R.3221, next Tuesday, that won't stimulate housing much.  They did that by killling Senator Durbin's (D-IL) amendment to give bankruptcy judges the power to rewrite first mortgages.  That was a deal-breaker for the mortgage lending industry.  It was also the only thing that might have helped those facing foreclosure, albeit as the cost of raising future mortgage interest rates for the increased risk that future mortgages might be written down.

The real beneficiaries of this bill are the housing industry. Homebuilders and other firms that support housing, including the mortgage lenders who brought this crisis on us, will get to "carry back" their 2008 and 2009 losses to the prior four years.  If they paid tax over the past four years, this amounts to instant cash for them, and a lot of it: $1 b. by the end of Septemer, $16.7 b. in fiscal year 2009, and $7.9 b. in fiscal year 2010.

Those facing foreclosure get no instant cash.  They get a measly $100 m. of additional counselors to talk to.  Those counselors have been woefully unable to stem the tide of at least 2 m. foreclosures so far.  Last night, the Senate voted down Senator Murray's (D-WA) amendment to add another $100 m. for counseling.

The bill also contains a $10 b. increase in the cap on state revenue bonds so states can buy up foreclosed homes.  Another $4 b. would go to state and local authorities to renovate abandoned and foreclosed homes.

A tax credit of up to $7,000 would go to new homebuyers of foreclosed homes or homes that have just been built.  This was Senator Isakson's (R-GA) proposal, S.2566, the centerpiece of the Republican's part of this bill.

Finally, non-itemizers would get to deduct their property taxes for this year up to $500 for singles and $1,000 for couples, but only if those taxes are not increased during the rest of this year.  Republicans hope to extend this and make it permanent in the future.

Details were posted by the Senate Finance Committee late Wednesday. 

You might ask why the Senate is doing this? Well, they don't have a lot of money with the deficit rising so fast, and that's as much as they think President Bush will sign.  Many Senators in both parties want to help homeowners facing foreclosure, but they can't muster the votes to put them ahead of the housing industry.  Homeowners facing foreclosure don't get to as many senatorial fundraisers as those in the housing industry do.