House OKs GOP bill killing refinance program

The Associated Press
Thursday, March 10, 2011; 5:11 PM

WASHINGTON -- Republicans pushed a bill through the House on Thursday killing assistance for people who want to refinance homes that are worth less than they paid for them.

The mostly party-line vote, 256-171, came despite a White House veto threat against the measure.

The bill killing the Federal Housing Administration Refinance Program stands scant chance of reaching President Barack Obama's desk because its fate in the Democratic-run Senate is dim. Even so, the measure and three similar bills to soon follow underscore the House GOP's desire to slash the size of government at a time when annual budget deficits have surged past $1.6 trillion.

"The people have sent us a message. They said don't spend us into financial oblivion," said Rep. Spencer Bachus, R-Ala., chairman of the House Financial Services Committee. He called the refinance program "a poster child" for programs that are too numerous and don't work.

Democrats said the program is helping people stay in their homes at a time when nearly 1 in 4 households with home mortgages are underwater - that is, with homes worth less than their purchased price. They accused Republicans of preferring to spend money on farm subsidies and to help the governments of Iraq and Afghanistan, not for domestic problems.

"It's part of the 'so be it' attitude," said Rep. Carolyn Maloney, D-N.Y. She described the GOP's attitude as, "You're on your own. We're not going to help you."

The White House threatened a veto on Tuesday, saying the program would help stabilize the housing market.

The refinance program started last year and has so far helped 63 underwater homeowners convert their mortgages into more affordable FHA-insured loans, according to Housing and Urban Development Department figures. It is backed with $8.1 billion from the $700 billion federal financial bailout of 2008 - money that would only be spent if one of the newly refinanced mortgages falls into default.

The House is likely to approve another measure on Friday erasing a $1 billion program supplying loans for homeowners who have lost their jobs or become seriously ill.

A third House bill would end the Home Affordable Modification Program, Obama's chief thrust against foreclosures. A fourth gives money to states and local governments to buy and refurbish abandoned and foreclosed properties.

© 2011 The Associated Press