US Senate Continues With Housing Bill Despite Veto Threat
Thursday June 19th, 2008 / 23h09
By Michael R. Crittenden Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- U.S. Senate lawmakers on Thursday moved forward on consideration of a wide-ranging package of housing legislation, denying attempts to limit the bill and ignoring a White House veto threat. "It's irresponsible to say you're going veto this bill when the economy in such bad shape," Sen. Charles Schumer, D-N.Y., told reporters at a press conference held in response to the statement from the Office of Management and Budget. The White House said President George W. Bush's senior advisers would recommend he veto the bill because it doesn't include changes the Federal Housing Administration they have sought, and because it would provide nearly $4 billion in community block grants for the purchase and rehabilitation of foreclosed properties. "The federal government must not prolong necessary corrections in the housing market, bail out lenders or subsidize irresponsible borrowing and lending at the expense of hard-working people who have played by the rules," the OMB statement said. The statement went so far as to suggest that the administration would be forced to scale back its efforts to help homeowners through the FHA and raise premiums on all borrowers seeking an FHA guarantee if Congress enacted legislation without some of the FHA reforms the White House is seeking. A spokesman for presumptive Democratic presidential candidate Sen. Barack Obama, D-Ill., said "it's baffling why the White House would oppose a bill that would help so many American families at risk of losing their homes." In addition to the opposition from the White House, the large group of bipartisan supporters for the housing package had to fend off attempts by some Republicans to seriously curtail the legislation. Attempts to limit or eliminate various portions of the bill, including a centerpiece program to refinace up to $300 billion of troubled mortgages through the FHA, were defeated by a large margin. Proponents also were expected to defeat a procedural motion offered by some Republicans who attempted to tie embattled Countrywide Financial Corp. (CFC) to an effort to effectively quash the legislation. The Calabassas, Calif.-based lender has received attention in recent weeks after it was revealed it supplied preferential mortgages to certain public officials - including at least two Senate Democrats. Sen. Jim DeMint, R-S.C., and Sen. Jim Bunning, R-Ky., said the legislation should be returned to the Senate Banking Committee because legislation could potentially benefit Countrywide. "This legislation has been rewritten behind closed doors, is over 600 pages long, and we need to know what companies stand to gain from this bill before we vote on it," DeMint said. Schumer, however, accused the two of "subterfuge to prevent the bill from going forward." Sen. Richard Shelby of Alabama, the ranking Republican on the Banking panel and a supporter of the legislation, also downplayed their concerns. "There is no special treatment for any lender or homeowner in this bill," Shelby said, assuring his GOP colleagues "this is no bailout." The objections of the White House and some Republicans is unlikely to prevent the housing package from receiving sizable bipartisan support when it comes up for a final vote next week. A version of the legislation was passed out of the Senate Banking Committee on a 19-2 vote last month, and a more limited housing package was passed by the Senate in April by an 84-12 margin. The package combines a number of different housing-related measures, including long-sought reforms to the FHA, nearly $4 billion in block grants for local governments to deal with blight and other effects of foreclosures, and a regulatory overhaul of Fannie Mae (FNM), Freddie Mac (FRE), and the 12 Federal Home Loan Banks. The centerpiece of the legislation is a program offering up to $300 billion of FHA-insured mortgages to help refinance struggling borrowers into affordable loans. The program would rely on lenders voluntarily writing down the value of a distressed loan for the homeowner to qualify for the new FHA-backed loan, and in return borrowers would have to share future price appreciation with the federal government. "This is a cancer in our society," Senate Banking Chairman Christopher Dodd, D-Conn., said during debate, citing data that foreclosures around the country continue to set new records. Foreclosure tracking firm RealtyTrac Inc. said last week that one in every 483 U.S. households received a foreclosure filing in May, the highest monthly foreclosure rate ever reported by the firm. Other foreclosure-prevention and housing-related efforts include $150 million in additional funding for housing counseling, $10 billion in additional mortgage revenue bonds, and a housing trust fund to be funded by Fannie Mae and Freddie Mac. The legislation also includes a number of tax provisions, including a $1,000 property tax reduction for couples filing jointly who do not itemize their tax returns, and a refundable, repayable tax credit of up to $8,000 for first-time homebuyers. -By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273; michael.crittenden@dowjones.com
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