WASHINGTON - Despite Housing Secretary Jack Kemp's objections, President Bush will probably sign the huge housing reauthorization bill that contains provisions beneficial to the tax-exempt bond market, housing lobbyists said yesterday.

Bush is no more likely to follow Kemp's recommendation for a veto this time than he has been on other occasions, said John T. McEvoy, executive director of the National Council of State Housing Agencies.

"I don't remember a housing bill for which the secretary didn't recommend a veto," McEvoy said. He noted that Bush signed last year's housing appropriations bill over Kemp's strong objections. The President has until Oct. 31 to decide to take action on the pending bill, which would reauthorize a number of federal housing programs.

But another lobbyist said even though he believes Bush will sign the bill, Kemp's opposition should not be dismissed completely.

"The last eight months or so Kemp has had a renaissance within the administration," said the lobbyist, who asked not to be identified. "His threats this year have to be deemed more serious."

Kemp told Office of Management and Budget Director Richard G. Darman in an Oct. 9 letter that the housing bill "makes several strongly objectionable and damaging changes" to current housing laws, and "violates nearly every principle that the administration has said is essential to its support of a housing bill."

Among his complaints, Kemp wrote that the bill "weakens the effectiveness" of the HOME housing affordability program by increasing the amount of federal aid for new construction instead of emphasizing rehabilitation of existing units.

But several housing lobbyists said Kemp's arguments are not strong enough to make Bush reject the measure. Unlike the urban aid tax bill, the housing bill presents no political problems for Bush if he signs it, said Reggie Todd, the chief executive officer of the National Community Development Association.

"He doesn't lose" by signing the housing bill, which is not controversial because it includes primarily technical corrections and programmatic improvements in the administration of these housing programs," Todd said.

Housing advocates said another reason they are optimistic about the bill's enactment is that it contains a kind of insurance policy that would prompt a presidential signature, even if Bush agreed with Kemp's objections.

As Congress was wrapping up work in the housing bill, they pointed out, it tacked on an unrelated measure that would make certain reforms to two government-sponsored enterprises, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. That measure is strongly supported by the Treasury and the OMB.

"The fact that the GSE provisions are attached to this bill makes it more important to the administration," Todd said.

Todd's group and four other organizations told the President in an Oct. 21 letter that he should sign the bill because it contains a number of urgently needed changes to the HOME program, designed to make it fulfill its potential as a housing production program."

Also signing the letter were the Association of Local Housing Finance Agencies, the National League of Cities, the National Association of Counties, and the U.S. Conference of Mayors.

For the municipal market, the housing bill would partially lift a ban on the use of private-activity bonds with the HOME housing affordability program. Under the bill, 25% of an issuer's total contribution to HOME may consist of private-activity housing bonds.

Within that amount, an issuer may count 50% of the value of its multifamily housing bonds for projects eligible to receive HOME funding. The issuer is also permitted to count 25% of the value of its mortgage revenue bond issuances that are sold for projects eligible for HOME funding.

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