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Friday, May 02, 2008
Panel Sends Frank FHA Bill to House Floor
Administration of Mixed Minds
Yesterday, the House Financial Services Committee approved a proposal by committee chair Rep. Barney Frank (D-MA) to permit the Federal Housing Administration to guarantee up to $300 billion in refinanced mortgages. !0 Republicans voted with the majority in the 46-21 bipartisan vote. The bill would require lenders to restructure the loans with an FHA-approved lender. Only loans on principal residencies made on or before Dec. 31, 2007, would qualify for the restructuring. Frank said:
I don't think that we should panic and stop the decline of house prices in some parts of the country, but the speed in which it is happening hasn't helped, so I think this will help. It could help stabilize the market, put some liquidity back in the market and not interfere with the market, I think, but help restore a market, because we don't have one.
The Administration's position on the bill is hard to ascertain. Roy Bernardi, deputy secretary of the U.S. Department of Housing and Urban Development, wrote a letter this week to Frank and committee ranking member Spencer Bachus (R-AL) and later addressed the annual conference of directors of the Federal Home Loan Banks -- apparently expressing the views of the Bush administration -- warning that "Americans don't want to pay for the risky financial behavior of others," Bernardi said. "And they don't want to make the federal government the lender of last resort, with the private sector dumping bad loans on FHA (the Federal Housing Administration) and the taxpayers themselves."
Meanwhile, Treasury Secretary Hank Paulson seemed to approve the bill, saying that the adminstration had already proposed a plan similar to Frank's and indicating that he was open to the bill. "There are not huge differences."
The bill has not been scored by the JCT, but the committee adopted an amendment exempting it from the strictures of PAYGO. After the vote, Frank expressed his hope that Congress can clear that package for President Bush's signature before the July Fourth recess.
Posted by Dana Chasin
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