US Senate seen backing housing bill, Bush to sign

By Kevin Drawbaugh

WASHINGTON, July 26 (Reuters) - The U.S. Senate was expected to approve a massive housing market rescue bill on Saturday and President George W. Bush was ready to sign it soon, amid questions about how much it will help.

With foreclosures rising, home sales sluggish and property values down, America is in its deepest housing slump since the Great Depression -- a crisis that will be eased, but far from ended by Congress' bill, said housing activists and scholars.

The 694-page legislation would set up a $300 billion fund under the Federal Housing Administration to help distressed homeowners get more affordable, government-backed mortgages and get out from under exotic mortgages they cannot afford.

The success of the fund will depend on lenders' willingness to accept losses on original loans to shift overstretched borrowers into new loans. An estimated 400,000 families could be helped by the program, which would take effect on Oct. 1.

"We have a housing market going into cardiac arrest. This bill is like CPR to stabilize the situation," said David Abromowitz, a senior fellow at the Center for American Progress, a think tank in Washington.

"This package should be enough life support to keep the situation from getting much worse and finally allow normal market forces to correct," he said.

But some activists were more skeptical about the potential impact of the legislation.

The National Community Reinvestment Coalition, an alliance of 600 community investment and development groups, said in a statement that the bill, while welcome, "will likely have little effect on the foreclosure crisis gripping the financial markets and economy."