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Senate passes watered down Foreclosure Prevention Act

Consumer, labor groups slam tax breaks for builders, banks

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The Senate passed legislation Thursday that would provide billions in tax cuts for home builders, banks and other businesses hit by losses in the housing downturn and a smaller amount of assistance for state and local governments and individual homeowners. Although the 84-12 vote to approve the Senate bill appears to lessen the threat of a veto by the Bush administration, the House of Representatives is considering competing legislation that would provide more help for individuals but no tax breaks for businesses. The bill approved by the Senate, the Foreclosure Prevention Act of 2008, was a compromise which did not include a controversial provision to allow bankruptcy judges to reduce the principal on troubled borrowers' mortgages. The Bush administration and the lending industry opposed giving bankruptcy judges the power to force "cram downs" of loan principal on lenders, saying it would raise the cost of borrowing for all homeowners. Maude Hurd, national...