For companies hit by the housing slump, the bill extends a tax break to let companies credit losses from the past two years against taxes paid over prior profitable years.
For 2008 and 2009, the net operating loss carry-back tax rule would extend to four years from the present two years.
The Laborers' International Union of North America criticized the carry-back measure, labeling it a "handout for corporate home builders who helped cause the housing crash." Another piece of the bill would give all U.S. home owners who pay property taxes a standard deduction of $500 for single filers and $1,000 for joint filers.
At present, only taxpayers who itemize may deduct state and local property taxes.
Beefing Up FHA
The bill seeks to expand the role of the FHA, a government agency that insures mortgages, by raising the limit on the size of mortgages it can back.
The FHA loan limit would rise to 110 percent of an area's median home price, with a cap of $550,000 and a 3-1/2 percent downpayment required from the borrower, under the bill.
An economic stimulus package earlier this year temporarily raised the FHA loan limit to $729,500 from about $362,000 for the rest of 2008.
The Senate's limit would be permanent.
Dodd said he would hold committee hearings, possibly starting this month, on another, more ambitious FHA plan.
He and Massachusetts Rep. Barney Frank have proposed permitting the FHA to offer hundreds of billions of dollars in new guarantees to help refinance distressed mortgages that banks and mortgage holders agree to significantly write down.
In another provision of the Senate bill, $4 billion in federal grant money would go to communities to buy and fix up or redevelop homes that have been foreclosed upon and are sitting vacant, dragging down home values in a neighborhood.
To help families avoid foreclosure, the bill would devote $100 million in federal money to debt counseling; require lenders to give special treatment on mortgage matters to military veterans returning from service; and require more timely and more clearly worded mortgage paperwork.
The Bush administration called the bill "a first step." White House spokesman Tony Fratto said, "We have serious concerns about some of the elements ...like the funding to purchase foreclosed properties and the tax credit provision." The House in mid-November adopted a bill aimed at cracking down on mortgage brokers to prevent some of the abuses that helped inflate the home price bubble that is now deflating.
The White House last month voiced support for some of the proposals in the House bill.
The administration has also asked for voluntary support from banks to help distressed mortgage borrowers work out their debts.