White House threatens veto of foreclosure rescue
WASHINGTON (AP) - June 19, 2008 Administration officials said they oppose the inclusion of $4
billion in the measure to help states buy and rehabilitate
foreclosed properties, and a plan to have government-sponsored
mortgage giants Fannie Mae and Freddie Mac pay for the rescue.
They announced those and other objections as two GOP senators
said they would try to block the package until a committee can
investigate how much Countrywide Financial Corp. and other lenders
stand to gain from it.
House and Senate Republicans are voicing reservations about the
bill in light of allegations that Senate Banking Committee Chairman
Christopher J. Dodd, D-Conn., one of its architects, and Senate
Budget Committee Chairman Kent Conrad, D-N.D., got cut-rate home
loans through a VIP program at Countrywide, a leading subprime
lender at the center of the mortgage meltdown.
Both said they neither sought nor knew about the special
treatment.
"This bill has come together in such a way as to raise
questions all over this country that we need to answer before we
move ahead," said Sen. Jim DeMint, R-S.C.
The Senate rejected, 70-11, the move by DeMint and Sen. Jim
Bunning, R-Ky., to send the housing package back to Dodd's panel,
which would have essentially killed the measure.
The election-year bill, which could help hundreds of thousands
of struggling homeowners, appeared to be drawing wide bipartisan
backing.
The Senate overwhelmingly defeated two amendments by Sen. Kit
Bond, R-Mo., that would have derailed the measure. Both failed on
margins large enough to override a promised veto, suggesting the
plan could survive a showdown with President Bush.
Dodd and Sen. Richard C. Shelby of Alabama, the senior Banking
Republican, said the veto threat was "disappointing," given that
their compromise plan includes several elements Bush has demanded,
and said they hoped the White House would reconsider.
Michael Ortiz, a spokesman for Democratic presidential candidate
Barack Obama, 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 on the same day hundreds of mortgage fraud
arrests were announced."
One of Bond's proposals, which failed on a 69-21 vote, would
have killed the foreclosure rescue. The other, defeated 77-11,
would have essentially doomed an affordable housing fund financed
by Fannie and Freddie, leaving it - and the mortgage aid plan -
without a source of money.
Democrats and many Republicans consider the measure a political
imperative amid rising foreclosures and growing public anxiety
about the sagging economy.
Its centerpiece is a foreclosure rescue program in which the
Federal Housing Administration would provide $300 billion in new,
cheaper mortgages for distressed homeowners who otherwise would be
considered too financially risky to qualify for government-insured,
fixed-rate loans.
Borrowers would be eligible if their mortgage holders were
willing to take a substantial loss and allow them to refinance, and
would ultimately have to share with the government a portion of any
profits they made from selling or refinancing their properties.
The measure is designed to help hundreds of thousands of
borrowers in danger of losing their homes, but it also would
benefit mortgage holders by allowing them to avoid costly
foreclosures and reclaim some of what they're owed by people facing
financial ruin.
The bill would tighten controls on Fannie Mae and Freddie Mac -
which provide huge amounts of cash flow to the mortgage market by
buying home loans from banks - creating a new regulator for the
firms.
It also would provide a $14.5 billion array of housing and other
tax breaks, including a credit of up to $8,000 for first-time
homebuyers who buy a home in the next year, and boosts in
low-income tax credits and mortgage revenue bonds.
A group of 28 House Republicans wrote to Speaker Nancy Pelosi,
D-Calif., on Thursday demanding an investigation - with open
hearings - on the Countrywide allegations.
"At a time when millions of Americans are struggling to repay
their mortgage debts while coping with $4/per gallon gasoline and
soaring foods prices, they will be outraged to learn that some
members of Congress may have personally profited from their
official positions through secret sweetheart deals on their
mortgages," said the letter, signed by House leaders.
They called the revelations "extremely troubling" in light of
upcoming votes on the housing package.
Rep. Barney Frank, D-Mass., the House Financial Services
chairman, said his panel won't look into the Countrywide case,
given the panel's already full schedule and a pending Senate Ethics
Committee probe of the matter.
He defended Dodd in a statement, saying, "At no point in any of
our joint efforts has Senator Dodd shown even the slightest
indication that he was in any way influenced by considerations
other than what was best for the economy and the American people."
Still, Frank and other Democrats have serious concerns about the
Senate housing measure that could frustrate leaders' desire to send
it to Bush before Congress breaks for a weeklong July 4 vacation.