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Housing bills face Bush veto
May 9, 11:27 AM
Waterbury Republican American
May 9, 2008
Housing bills face Bush veto
BY JULIE HIRSCHFELD DAVIS
ASSOCIATED PRESS WRITER
WASHINGTON — The House on Thursday passed a massive homeowner rescue plan to provide cheaper, government- backed mortgages to half a million debt-ridden borrowers and bolster an economy crippled by the housing crisis.
Defying veto threats from President Bush, the House approved the measure by a vote of 266-154, with 39 Republicans — mostly from areas suffering worst from housing woes — supporting it. Connecticut’s only Republican representative, 4th District Rep. Christopher Shays, voted in favor of the bill, as did the rest of the state’s delegation.
It would let the Federal Housing Administration take on up to $300 billion in new mortgages so that financially strapped borrowers facing foreclosure could refinance.
“Connecticut’s numbers are really beginning to mirror the national numbers,” Rep. Chris Murphy, D-5th District, said during a conference call to discuss the legislation with the media Thursday afternoon. “In March we had more than 2,000 foreclosure filings, a 40 percent increase over last year. … Connecticut is susceptible to the same housing slide that the rest of the country has fallen into, and Congress has to do something about it. We can’t sit here and fiddle while the housing market burns.”
The plan by Rep. Barney Frank, D-Mass., is the centerpiece of a broader package of bills approved Thursday that Democrats say will prevent more foreclosures and help homeowners and communities deal with the fallout from the mortgage meltdown.
“We are in a recession, and the major cause of that is the subprime crisis,” said Frank, the Financial Services Committee chairman. “Diminishing the number of foreclosures is in the interest not simply of those who will avoid foreclosure, but people in their neighborhood, (in) the cities in which they are located, and the whole economy.” Proponents hope the package — which awaits action in the Senate — will serve as the basis for a broad bipartisan housing compromise that could satisfy both parties’ keen appetite for anxious constituents.
But Bush’s veto warnings, bolstered by staunch GOP opposition, are clouding its prospects.
“House Democrats passed bills that they know will never become law. Most Americans understand that we shouldn’t create a taxpayer-funded bailout for lenders and speculators,” said Tony Fratto, a White House spokesman.
The House also passed, 239188 a bill to send $15 billion to states to buy and fix up foreclosed property. Bush has also threatened to veto that measure, contending it rewards the very lenders who helped caused the housing chaos.
Republicans argued that both measures would reward lenders and irresponsible borrowers at the expense of homeowners and renters who made more prudent choices and are straining to cover their costs in a punishing economic climate.
“The vast majority of Americans who find themselves struggling with mortgage payments, struggling with high gas prices, struggling with high food crises are now going to assume responsibility for ill-advised financial decisions and misjudgments of other people,” said Rep. Spencer Bachus, RAla.
Under Frank’s plan, homeowners currently considered too risky to qualify could refinance into FHA-backed loans if their lenders agreed to take substantial losses on the original mortgages. Borrowers would have to show they could afford to make payments on the new loans. They would have to share with FHA at least half of their proceeds if they profited from selling or refinancing again.
The plan is projected to help roughly 500,000 borrowers at a cost of $2.7 billion over the next five years.
Republican backers said they were putting aside their philosophical objections to a government- based rescue due to the severity of the housing crisis that has hit their constituents.
Republican critics said it rewards lenders and investors who own the property, and could act as an incentive for them to foreclose rather than find ways to help struggling borrowers stay in their homes.
Democrats, seeking Republican broad support for Frank’s housing plan, also added a grabbag of measures Bush has sought.
Those included legislation to overhaul the FHA, to more tightly regulate government sponsored mortgage giants Fannie Mae and Freddie Mac, and authority for state and local housing finance agencies to use tax-exempt bonds to refinance distressed subprime mortgages.
They also attached a housing tax credit of up to $7,500 for first-time home-buyers, to be paid back over 15 years.
Murphy said the next step is for the Senate and House to conference on the two versions of the bill.
“This is a priority for the U.S. Congress right now,” he said. “We hope to have a final product in the coming weeks.”
Business Editor David Krechevsky contributed to this report.
