House set to pass sweeping housing rescue bill

By Patrick Rucker

WASHINGTON (Reuters) - The House of Representatives is due on Wednesday to begin debating a housing rescue package that could see the government buy up $15 billion of abandoned homes and help an estimated half million homeowners facing foreclosure.

The sweeping bill would offer fresh spending, tax credits and a new government guarantee on many risky loans to bolster the national housing market.

Declining home values and rising foreclosures over the past 12 months have darkened the mood of U.S. consumers and pushed the economy toward recession. Recent reports show consumer confidence hit a five-year low in April, while home prices booked a record drop in February.

The Democratic plan combines a variety of new measures as well as some already-passed legislation in a bulky bill that is expected to garner significant Republican support.

"We will pass a bill," Rep. Barney Frank, chairman of the House Financial Services committee, which approved the bill last week, told reporters on Tuesday.

Significantly, nearly a third of Republicans on Frank's committee voted for his portions of the housing bill.

But late on Tuesday, the White House threatened to veto the housing plan and took particular aim at a provision that would deliver $15 billion of federal grants to cities and towns so that they could buy foreclosed homes in disrepair.

Such spending would wrongly benefit the mortgage investors who now own those empty homes, the White House said in a statement.