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THE SPIRITED philosophy that infuses much of the big new housing law just signed by President Bush should invigorate federal housing programs, improving their performance for the nation and benefiting low-income people.

Over the years, public housing policy had slipped into an sterile mix of complex red tape, soggy bureaucracy and, during the Reagan tenure, political favoritism or worse.

Gradually, the people public housing was supposed to benefit most with a little hope, opportunity and decent shelter -- those, in other words, at the bottom of the income ladder -- received less and less attention.

Basically, Washington's housing efforts became unimaginative, often wasting taxpayer resources.

This year brought stirring change, in part because of the ideas and energy of Jack Kemp, the former Buffalo-area congressman who now serves as secretary of the Department of Housing and Urban Development.

Among other innovations, the bill, which authorizes more than $50 billion over two years, includes more than $1 billion to help low-income people buy their own homes and apartments, a long-time Kemp objective.

Help with ending dependency

The bill emphasizes partnerships between various levels of government and private groups in order to employ diverse approaches to fulfill housing needs. It stresses rehabilitation of existing housing over new construction -- with state and local governments required to put up more money if they prefer new construction.

Together, these strategies nourish greater innovation, conservation of existing resources and fuller opportunities for low-income people to choose their own shelter and win rewards for breaking out of dependency.

Underlining this philosophy, Bush, signing the bill, said: "We want public housing to become a springboard for independence, not a bottomless pit for dependency."

For that to work fully remains a tall order, but at least the philosophy points in a direction worth taking.

Protections in sale of mortgages

So too is the direction of a couple of other provisions tucked into this omnibus legislation: more stringent regulation for borrowers of Federal Housing Administration-backed loans, and broader protection for home owners from foul-ups in the sale of their mortgages by one financial institution to another.

Pressed in Congress by Rep. John LaFalce, D-Town of Tonawanda, the latter provision requires financial institutions to inform potential borrowers that their mortgages might be sold. Firms must inform borrowers if their mortgages are actually sold, and late payment fees must be waived during 60 days immediately after the transfer, when borrowers could be confused by the changes.

This safeguards consumer interests. So too, indirectly, do the tighter regulations that include higher upfront closing costs that will be required for home-buyers to secure FHA home loans.

No one wants such an excellent program to collapse, victimized by losses similar to those that destabilized the savings and loan industry. The toughened rules for potential home-buyers will help prevent that.

With its new directions, this bill emerged from a long, rigorous battle in Congress and between Congress and the administration. But if the self-help philosophy works, the victory will have been well worth the fight.

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