Democrats unveil new stimulus bill

Senate Democrats promised Thursday to follow up the just-enacted economic stimulus bill with steps to boost the slumping housing market and forestall home foreclosures.

The legislation would provide $4 billion in new community development grants to purchase and rehabilitate foreclosed properties, change bankruptcy law to allow judges to modify mortgages, and improve disclosure of subprime mortgage loans in hopes that borrowers won't be surprised by big payment increases.

It would also contain provisions stripped from the Senate's version of the stimulus bill to boost mortgage revenue bonds and add flexibility to help homeowners refinance subprime loans and to allow homebuilders and other money-losing businesses to reclaim taxes previously paid.

Majority Leader Harry Reid, D-Nev., promised to bring the measure to the floor when the Senate returns from a weeklong break and said the package could prevent a million homes from falling into foreclosure.

Reid said the bill "will keep struggling families in their homes by providing more funding for housing counselors, help homeowners refinance out of subprime loans ... and allow homeowners into bankruptcy to modify their mortgages."

Democrats had hoped some of the provisions would have made it into the just-passed stimulus bill that will provide rebates of $600 to $1,200 to most taxpayers. But House Democrats and the White House insisted that that measure be limited to tax cuts and a temporary hike in the loan limits for the purchasing of mortgages by the Federal Housing Administration, Fannie Mae and Freddie Mac .