Bush drops opposition to housing bill

Bush drops opposition to housing bill

Posted: Wednesday, July 23, 2008 9:01 pm
By: AP

By JULIE H. DAVIS Associated Press Writer WASHINGTON (AP) —President Bush dropped his opposition today to legislation aiming to calm the chaotic housing market despite his objections to a $3.9 billion provision. The House was expected to vote on the bill today, and it could become law as early as this week. Under the bill, the government would help struggling homeowners get new, cheaper loans and would be allowed to offer troubled mortgage giants Fannie Mae and Freddie Mac a cash infusion. The Bush administration and lawmakers in both parties teamed to negotiate the measure, which pairs Democrats’ top priorities — federal help for homeowners facing foreclosure and $3.9 billion for neighborhoods hit hardest by the housing crisis — with Republicans’ goal of reining in mortgage giants Fannie Mae and Freddie Mac while reassuring financial markets of their stability. Bush had objected to the $3.9 billion provision in the measure, saying that it was aimed at helping bankers and lenders, not homeowners who are in trouble. White House press secretary Dana Perino announced Bush’s switch in a telephone conference call with reporters. “We believe this is not the time for a prolonged veto fight but we are confident the president would prevail in one,” she said. It hands the Treasury Department the power to extend the government-sponsored mortgage companies an unlimited line of credit and buy an unspecified amount of their stock, if necessary, to prop up Fannie Mae and Freddie Mac, two companies chartered by Congress. The two companies back or own $5 trillion in U.S. mortgages — nearly half the nation’s total. “The positive aspects of the bill are needed now to increase confidence and stability in the housing and financial markets,” Perino said. “While we have concerns with other aspects of the bill, it is important that the new authorities are put in place promptly. And so President Bush will accept Secretary (Henry) Paulson’s recommendation to sign the bill.” She said she expected that the $3.9 billion provision would be included in the final legislation. “With Congress scheduled soon for yet another recess,” she said, “the risk of not having a bill until at best the middle of September — if they even were to act then — is not a risk worth taking in the current environment.” Congressional analysts estimated Tuesday that the rescue could cost $25 billion, but predicted there’s a better than even chance it won’t be needed at all. The bill would let hundreds of thousands of homeowners trapped in mortgages they can’t afford on homes that have plummeted in value 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. Published in The Messenger 7.23.08

Leave a Comment