Bush wants temporary tax relief for subprime ills

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WASHINGTON, Oct 3 (Reuters) Legislation being considered by the U.S. Congress to provide tax relief to people facing foreclosure on their homes should be temporary, the White House said on Wednesday.

''The administration strongly believes this relief should be temporary to assist homeowners during the current mortgage market transition period and to avoid distorting consumer and lender decisions on new mortgage loans,'' the White House said in a statement.

The U.S. House of Representatives is scheduled to vote on Thursday on a bill giving tax relief on the unpaid portion of mortgage debt to homeowners who are facing foreclosure.

The legislation would no longer classify debt that was forgiven in a foreclosure as income. The bill also would extend a current tax deduction for mortgage insurance.

The measure is in response to a subprime mortgage crisis that has left a growing number of home buyers unable to pay rising interest costs on their loans.

In its statement, the White House's Office of Management and Budget said the U.S. tax code already protects people who are insolvent. ''Therefore, the most financially-stressed mortgage borrowers are already protected under current law.'' The White House said it wanted to work with Congress to ''narrow the scope'' of the pending legislation and ''ensure that it addresses current difficulties without the potential for influencing future behavior.'' The administration also said it was unnecessary to pay for the tax relief with revenue increases.

Similar legislation is pending in the Senate.


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