In a tax-Peter-to-pay-Paul move, the House voted last week to permanently remove what is called the “phantom income” tax penalty that haunts financially distressed homeowners whose debt is partially forgiven by a lender after a foreclosure or a “short sale” to avoid foreclosure.The measure, sponsored by Rep. Charles Rangel, D-N.Y., also would extend the deductibility of mortgage insurance premiums through 2014 - an important benefit for many borrowers who pay either private mortgage insurance or Federal Housing Administration premiums on their loans.

When President Bush announced plans late in August to help borrowers who were struggling to keep up with their adjustable-rate mortgages, local housing advocates and lenders waited eagerly for details of exactly how the initiative would work.

Now that the Federal Housing Administration has disclosed those details, the jury is still out. “I think there’s a subset of borrowers this will help,” said Brian Chapelle, a partner in Potomac Partners in Washington, a consulting firm to the mortgage industry. “Whether it’s the 240,000 people the Bush administration said it would help, we’ll have to see.”