Housing Bill Clears Senate, Faces More Hill Negotiations
Saturday, July 12, 2008
The Senate yesterday approved a huge package of legislation aimed at stabilizing the nation's faltering housing market, including an ambitious plan to extend a financial lifeline to hundreds of thousands of homeowners at risk of foreclosure.
After weeks of delay engineered by a handful of Republicans opposed to the bill, the Senate voted 63 to 5 to approve the legislation and send it back to the House. Twenty-one Republicans voted with a united Democratic caucus in support of the measure, a compromise hammered out by Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) and the panel's ranking Republican, Sen. Richard C. Shelby (Ala.).
The House approved a version of the legislation with bipartisan support in June. But House Financial Services Committee Chairman Barney Frank (D-Mass.) wants to make additional changes, forcing both chambers to vote on the bill again before sending it to the White House.
Dodd said the changes will amount to "some tweaks." "My hope is we can deal with them quickly," he said.
The centerpiece of the legislation would authorize the Federal Housing Administration to help 400,000 distressed borrowers trade exotic loans that have rapidly rising monthly payments for more affordable loans backed by the federal government. The FHA would insure the new loans if the current lenders agree to forgive a portion of each homeowner's debt.
The package includes a plan to modernize the FHA and create a strong new regulator for struggling mortgage giants Fannie Mae and Freddie Mac, a move supporters say would shore up confidence in the companies. There are also $14.5 billion in tax breaks, including a credit of up to $8,000 for first-time home buyers. Additionally, the bill would provide $3.9 billion in emergency funds for local governments to purchase vacant, foreclosed properties.
The White House opposes the emergency funding and has threatened a veto. But Frank and Dodd said they expect lawmakers will take the funding out of the bill and that the president will sign it.