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House, Senate versions would expand FHA. Bush eases veto threat.
By Kevin G. Hall
McClatchy Newspapers
Published on Tuesday, May 20, 2008
WASHINGTON: The Senate Banking Committee today is expected to pass a bipartisan measure that creates a $300 billion loan-guarantee program to refinance distressed mortgages and slow a rising national tide of foreclosures.
A late-hour compromise, reached Monday, is expected to smooth its passage through the full Senate floor and on to President Bush.
The legislation is intended to help stop the nationwide freefall in home prices and the resulting flood of foreclosures. In the first three months of 2008, foreclosure filings totaled more than 649,000 homes, 112 percent more than in the first quarter of 2007.
''We've taken the word partisan out of this,'' Sen. Christopher Dodd, D-Conn., the committee chairman, said.
The House of Representatives has passed virtually identical legislation, and after greeting the House bill with strong opposition, the White House late Monday struck a more conciliatory tone.
''We look forward to seeing the details of the bill as it goes through Senate markup — especially provisions to expand programs of the Federal Housing Administration. We want to ensure that FHA expansion is done in a responsible and effective way,'' White House spokesman Tony Fratto said.
Like the House measure, the Senate bill would be voluntary. If a mortgage lender or loan-servicing company agreed to write down the balance on a distressed mortgage by 15 percent — based on the current market value of the loan, not the original value — the federal government would step in and guarantee the newly refinanced loan via the FHA.
There was no immediate response to the compromise from the Mortgage Bankers Association or other lender groups.
The new $500 million price tag would be funded by quasi-government mortgage bundlers Freddie Mac and Fannie Mae. Like the House legislation, Dodd's bill provides a new regulatory framework for the entities.
President Bush has for months called on Congress to pass tighter regulations of the government-backed mortgage giants.
WASHINGTON: The Senate Banking Committee today is expected to pass a bipartisan measure that creates a $300 billion loan-guarantee program to refinance distressed mortgages and slow a rising national tide of foreclosures.
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