After a year of debate, Congress appears close to passing a bill intended to stem the rising tide of home foreclosures and stabilize the shaky housing market.

But even if the bill wins final passage — far from a certainty — the most optimistic forecasts suggest it would help only about 400,000 of the estimated 3 million homeowners who will likely lose their homes in the next year.

One major hurdle to passage of the bill is a proposed $4 billion in community development grants to help agencies in hard hit areas to buy and refurbish foreclosed homes, renting them out or reselling them.

The debate over the provision has become something of a showdown. President Bush has threatened to veto the bill if it includes the community grants, while House supporters have vowed to keep it in the final bill, which is expected to come to a vote early next week.

Opponents say using tax dollars to buy foreclosed homes amounts to a bailout for lenders; proponents argue that the funds would create new jobs and help stem the slide in home price where foreclosure rates are highest.

The centerpiece of the proposed foreclosure relief effort is $300 billion in federal loan guarantees to help homeowners refinance into mortgages with better terms. But attorneys, housing counselors and others working with strapped homeowners say the proposal falls short because it leaves the decision to modify a loan up to the lender or loan servicing company.

That means the housing bill will have “little or no impact on the number of foreclosures,” according to O. Max Gardner III, a Shelby, N.C. bankruptcy attorney who works with homeowners who are trying to modify their mortgages.

“I just don’t think the bill addresses the core problem,” he said. “You have so many servicers representing so many different interests with each (mortgage pool) to some extent having different guidelines on loan modifications.”

“The crisis is not getting better, the crisis is getting more severe,” said Susan Keating, the president of the National Foundation for Credit Counseling, which works with local agencies helping cash-strapped families. “And the tentacles of the problems are much more far-reaching than any of us would have considered 18 months ago.”

While the initial rounds of mortgage defaults and foreclosures were concentrated on the lower end of the economic ladder, the problem is now hitting families with higher incomes. Gardner says he’s seeing a big increase in bankruptcy filings from wealthier clients.

Southern California home prices drop 29.3 percent in June from last year

SAN DIEGO (AP) — Southern California home prices plunged 29.3 percent in June compared to a year ago, a research firm said Wednesday.

DataQuick Information Systems said the median price for new and resale homes and condominiums stood at $355,000 last month in a six-county region, down from $502,000 in June 2007.

The median price fell 4.1 percent from $370,000 in May.

Driven by the sale of foreclosed homes, sales picked up from May to hit a 10-month high, but last month’s tally still marked the slowest June since DataQuick began keeping statistics in 1988.

The June average is 28,488 sales, with the peak reached in 2005 when 40,156 homes sold.

Florida foreclosures up 92 percent

Home foreclosures continue to multiply in South Florida and the rest of the nation, and analysts say the crisis likely won’t ease until next year at the earliest.

“Between falling home prices and the weak economy, there’s little hope for any improvement on the foreclosure front in 2008 and likely into 2009,” said Greg McBride, senior financial analyst with Bankrate.com in North Palm Beach.

In Palm Beach County, there were 1,936 people facing foreclosure in June, nearly double the 1,005 during June 2007, according to Realestat.com, a Plantation-based research firm.

Broward had 2,806 homeowners on the verge of foreclosure last month, up from 1,484 a year ago.

California had the most total filings for the 18th consecutive month, increasing 77 percent in June from a year earlier to 68,666. Florida was second at 40,351 filings, an increase of 92 percent, and Ohio was third at 13,194, an increase of 11 percent.

Foreclosure activity is the highest since the Great Depression of the 1930s, said Rick Sharga, RealtyTrac’s vice president of marketing.

WASHINGTON (AP) — The Senate voted resoundingly Thursday to push closer to passage a massive mortgage rescue plan to help hundreds of thousands of stressed U.S. homeowners, even as the bill faced new obstacles in the House.

By a vote of 84-12, the Senate cleared away the last procedural hurdle hindering the measure, putting the election-year aid package on track for approval as early as Thursday. It is far from complete, however, with House leaders planning to rewrite key portions and the White House still threatening a veto.