It's Capitol Hill's biggest real estate issue at the moment and it's either headed for final action in the next three weeks, or it could go down in flames for the year.

Senate and House negotiators have been working for weeks to put together a massive mortgage crisis relief bill.

But there are huge points of controversy sitting unresolved. And after June, Congress will only have a few legislative working days until the Fall national political conventions, followed by the elections. They've got to wrap this up soon.

Chief House Democratic leader Barney Frank, chairman of the Financial Services Committee, says he is "optimistic" that the Senate and the House can deliver compromise legislation for President Bush' signature by July 4.

But lobbyists for housing and mortgage groups aren't so sure .

At a Maryland home builders meeting last week, David Crowe, staff vice president on housing policy for the National Association of Home Builders, rated the chances of getting a final bill -- notwithstanding all the official optimism -- at eight out of ten.

Among the key issues still pending:

• Funding for a special $300 billion FHA program aimed at borrowers who are delinquent and also may be underwater on their loans. In a compromise last month, Senate Democrats and Republicans agreed to tap Fannie Mae and Freddie Mac's operating revenues to pay for losses expected to be generated by the special FHA program. But that hasn't gone over well with House Democrats and top executives of Fannie and Freddie.

• Permanent statutory mortgage limits for FHA, Fannie and Freddie. Some House negotiators are pushing for continuing the current, temporary $729,750 limits permitted for high-cost markets under the economic stimulus legislation due to expire in December. But Senate Republicans insist the limits be lower -- closer to $550,000 -- and are in a position to block any bill they disagree with.

• Tax credits for first-time home buyers -- or for buyers of foreclosed properties -- are also controversial. The White House opposes tax credits, but bills in both the Senate and House carry some form of incentive to help sell unsold inventories. Home builders favor a $7,500 credit for all first-time purchasers between April of this year and April 2009.

What's the outlook? David Crowe's odds look pretty much on target.

In the middle of a severe housing downturn, plus an election year, you'd think Democrats and Republicans could set aside partisan differences for a day or two and pass a compromise housing and mortgage relief bill.

The odds are good that they eventually will, but there's still a 20 percent chance that they'll totally blow it.

Published: June 9, 2008

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consumer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.