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U.S. House Passes Anti-Foreclosure Bill Facing Bush Veto Threat
By Alison Vekshin
May 9 (Bloomberg) -- The U.S. House of Representatives
passed legislation to let a federal agency insure up to $300
billion in mortgages to help homeowners avert foreclosure, a day
after the White House threatened to veto the measure.
The House voted 266-154 yesterday to approve the housing
package offered by Massachusetts Democrat Barney Frank. The plan
would allow the Federal Housing Administration to insure
refinanced mortgages after loan holders agree to cut principal
to make payments affordable.
``We're in a recession and a major cause of that recession
is the subprime crisis,'' Frank, chairman of the House Financial
Services Committee, said on the House floor before the vote.
``We do not see any alternatives to this bill.''
Democrats in Congress are at odds with Republican lawmakers
and the Bush administration over efforts to stem foreclosures
amid the worst housing slump in a quarter century. The White
House favors a voluntary, industry-led program to modify loan
terms and this week issued a veto threat against Frank's bill.
Republicans oppose using government funds, saying that
would reward lenders and investors who acted recklessly and is
unfair to homeowners who are keeping up with mortgage payments. Democrats including Frank say government funding is needed to
preserve neighborhoods and help homeowners who were steered into
loans they couldn't afford.
A vast majority of Americans ``are now going to assume
responsibility for ill-advised financial decisions and
misjudgments of other people,'' said Representative Spencer
Bachus of Alabama, the top Republican on the House Financial
Services Committee, on the House floor before yesterday's vote.
Bernanke Support
Frank's FHA proposal would cost $2.7 billion and help about
500,000 homeowners, according to a Congressional Budget Office
estimate. Federal Reserve Chairman Ben S. Bernanke indicated
support for the plan during a May 5 speech without explicitly
endorsing it.
The Democrats' housing package also would expand the FHA's
role in insuring mortgages and strengthen oversight of Fannie
Mae and Freddie Mac, the government-chartered companies that are
the biggest sources of money for U.S. mortgages. It includes a
provision that would shield loan-servicing companies that modify
mortgages from investor lawsuits.
Frank said the bill does ``to some extent'' represent a
bailout for borrowers who made mistakes and got in over their
heads.
``Some people make bad job choices -- we give them
unemployment compensation,'' Frank said yesterday in a Bloomberg
Television interview after the vote. ``We are in an
interconnected economy.''
The legislation didn't get the two-thirds majority vote
necessary to override a presidential veto, he said.
Dodd Legislation
Frank's counterpart in the Senate, Banking Committee
Chairman Christopher Dodd, said he is working with colleagues on
the panel to pass similar legislation.
``The passage of this bipartisan measure sends a clear
signal to Americans -- and the White House -- that Congress is
committed to helping people keep their homes and stabilize the
markets,'' Dodd, a Connecticut Democrat, said yesterday in a
statement.
The House yesterday also approved a bill that would create
a $15 billion loan-and-grant program to help states buy and
rehabilitate foreclosed homes. Democrats said the measure is
necessary to keep neighborhood homes from falling in value and
to prevent the blight and crime that vacant homes attract.
To contact the reporter on this story:
Alison Vekshin in Washington at
avekshin@bloomberg.net.
