House Passes Second Half of Housing Rescue Plan Despite Veto Threat
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Congress went back for a second helping Thursday afternoon.
After passing, 239 to 188, a bill sponsored by Rep. Maxine Waters (D-CA) that would allot $15 billion in loans and grants to states to buy up and rehabilitate foreclosed properties the whole House took on and passed a second, broader, piece of legislation that would authorize the Federal Housing Administration to insure a wider variety of home mortgages.
The second bill, introduced by Rep. Barney Frank (D-MA), was passed by a vote of 266 to 154. Every Democrat present voted for the bill but only 39 Republicans supported it and most of those were from states ranking high in numbers of foreclosures - Nevada, Michigan, Florida, and Pennsylvania.
The President has made it clear that he is opposed to both Waters' and Frank's plans and will probably veto both.
The latest bill would allow lenders to reduce their exposure to foreclosures if they agree to cut the outstanding balance of an existing loan, thus allowing homeowners to refinance into a new loan that would be FHA insured. The reductions taken by lenders are substantial and must be based on new appraisals that should reflect current home pricing levels.
The Bush Administration has opposed the legislation as a tax-funded bailout for lenders and speculators even though Frank included two measures near and dear to the president's heart - a revamp of the FHA and greater government control over Fannie Mae and Freddie Mac.
The Senate is currently wrestling with its version of the Frank bill but Republicans are shying away from supporting it because of the president's opposition. The House may be able to override a presidential veto, but it is unlikely that the Senate with its smaller Democratic majority will be able to do so.
Also on Thursday afternoon the Department of Housing and Urban Development announced a new plan to expand its FHA Secure program. FHA Secure in its current form has come under fire for failing to help more than a handful of distressed homeowners. The expanded program would permit FHA to charge premiums based on credit risk. At present all borrowers pay the same premium for insurance coverage.
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CNBC
May 8, 2008. 7:16 PM EST
Roundtable discussion of the housing rescue plan presented by Sen. Barney Frank.
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CNBC
May 8, 2008. 7:16 PM EST
The House passed a broad housing rescue plan to provide $300 billion in FHA refinanced mortgages, with Sen. Barney Frank, D-Mass.
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