House OK's help for homeowners

$300b would back mortgages

American Superconductor's wire is used in this underground cable system, which can carry as much power as the overhead lines at left.

WASHINGTON — The US House of Representatives approved legislation to let the government insure up to $300 billion in mortgages to help homeowners avert foreclosure, overcoming objections the measure would bail out irresponsible lenders and borrowers at taxpayer expense.

The House voted 266 to 154 for the housing package offered by Massachusetts Democrat Barney Frank. The measure would have the Federal Housing Administration insure refinanced mortgages after loan holders agree to reduce principal.

‘‘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 yesterday on the House floor. ‘‘We do not see any alternatives to this bill to try to work on that.’’

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 Wednesday issued a veto threat against Frank’s bill.

Republicans oppose using government funds, saying that would reward lenders and investors who acted recklessly and would be 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.

Frank’s FHA proposal would cost $2.7 billion and help about 500,000 owners, according to the Congressional Budget Office.