House OK's housing rescue bill
Measure seen on track to pass Senate muster
WASHINGTON - Rescue legislation sailed through the House yesterday aimed at helping 400,000 strapped homeowners avoid foreclosure and to prevent troubled mortgage giants
The 272-to-152 vote reflected a congressional push to send election-year help to struggling borrowers and to reassure jittery financial markets about the health of two pillars of the mortgage market.
Hours before the vote, President Bush dropped his opposition to the measure, which is now on track to pass the Senate and become law within days.
The White House swallowed its distaste for $3.9 billion in grants the bill would provide for devastated neighborhoods. The Bush administration gains the power to throw a lifeline to Fannie Mae and Freddie Mac as part of the measure that also is designed to rein in the government-sponsored mortgage firms.
The administration and lawmakers in both parties teamed to negotiate the measure, which accomplishes several Democratic priorities, including federal help for homeowners, a permanent affordable housing fund financed by Fannie and Freddie and the $3.9 billion for hard-hit neighborhoods. The grants are for buying and fixing up foreclosed properties.
"It is the product of a very significant set of compromises," said Representative Barney Frank, a Massachusetts Democrat and the chairman of the Financial Services Committee. "We are dealing with the consequences of bad decisions and inaction and malfeasance from years before. Obviously, it requires a joint effort."
In a statement on the bill, the White House said parts of it "are too important to the stability of our nation's housing market, financial system, and the broader economy not to be enacted immediately."
Bush had objected to the neighborhood grants, saying they would help bankers and lenders, not homeowners who are in trouble.
The measure hands the Treasury Department the power to extend the government-sponsored mortgage companies an unlimited line of credit and to buy an unspecified amount of their stock, if necessary, to prop up Fannie Mae and Freddie Mac, two companies chartered by Congress.
Senator Richard C. Shelby of Alabama, the senior Banking Committee Republican, said Bush's turnabout reflected political reality. "They looked at the Hill, they counted some votes, and they see there's pretty broad support for this," Shelby said. He and Senator Christopher J. Dodd, a Connecticut Democrat, the committee chairman, said they would push for swift approval of the measure without any changes.
The bill would let hundreds of thousands of homeowners trapped in mortgages they can't afford on homes that have plummeted in value try to escape foreclosure by refinancing into more affordable, fixed-rate loans backed by the Federal Housing Administration. Lenders would have to agree to take a substantial loss on the existing loans, and in return, they would walk away with at least some payoff and avoid the often-costly foreclosure process. 