Upon return from the Independence Day recess, the Senate invoked cloture on a motion to resume debate on the housing and mortgage stimulus package (H.R. 3221). The measure, which intends to reduce the number of new foreclosures and provide tax incentives to help stimulate the housing sector, had been under consideration in the chamber for two weeks prior to the break but was put on hold because of a stalemate between Senate Majority Leader Harry Reid (D-Nev.) and Senator John Ensign (R-Nev.).

The American Housing Rescue and Foreclosure Prevention Act would create a program within the Federal Housing Administration (FHA) which would allow the agency to guarantee $300 billion in loans to help homeowners avoid foreclosures. Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Charles Grassley (R-Iowa) worked out a tax title to the bill which includes $14 billion in tax incentives, such as a repayable tax credit of up to $8,000 for first-time home buyers and a provision to allow taxpayers who do not itemize their deductions to deduct property taxes of up to $500 for individuals or $1,000 for joint filers.

The bill also includes incentives to homeowners, including allowing taxpayers to elect an extended four-year net operating loss carryback period for losses arising in 2008 or 2009. It would suspend in 2008 and 2009 limitations on net operating loss carrybacks for purposes of the alternative minimum tax (AMT), as well as provide funding for debt counseling and Community Development Block grants for communities hit hard by the foreclosure crisis.

Unfortunately, the Senate chose to use the electronic payment reporting requirement as an offset. According to Sens. Baucus and Grassley, the provision would raise $9.8 billion in new revenues over 10 years and would exempt reporting of transactions for $10,000 or less in cases in which a third-party settlement organization handles fewer than 200 transactions.

The cloture vote addressed six House amendments tagged to H.R. 3221. Sen. Ensign did not participate in the vote because his proposed energy amendment which would add $8.3 billion in tax extensions for clean energy was not one of the amendments addressed in the July 7 cloture vote. While Ensign argues that his amendment is nearly identical to the one the Senate approved 88-8 as part of the chamber's first housing stimulus bill in April, Reid and other Democrats have said the amendment is unrelated to the housing bill and is not paid for as part of the pay-go budgetary rules.

Reid hopes the chamber can complete work on the bill by the end of the week.