Mortgage bailout nears final passage
A landmark housing bill crafted to aid hundreds of thousands homeowners facing foreclosure and to buttress the mortgage market cleared a final procedural hurdle Friday and is expected to get final congressional approval Saturday.
“It addresses the root of the broader economic crisis - record-high foreclosures - by helping Americans keep their homes and keep their home equity,” said Senate Majority Leader Harry Reid, Nevada Democrat.
The measure, which President Bush backed Wednesday when dropping his veto threat, includes a $300 billion aid package to allow homeowners trapped in subprime loans they can’t afford to refinance their mortgage at lower rates. The new loans, which would help an estimated 400,000 homeowners keep their properties, would be backed by the government.
The legislation gives the Treasury Department power to extend a line of credit to Fannie Mae and Freddie Mac - government-sponsored companies that either guarantee or own almost half the nation’s mortgages.
Many Capitol Hill Republicans were frustrated with the president for supporting the Democratic-crafted bill, which they considered a bailout for unscrupulous lenders at taxpayers expense. Thirteen Republican senators defied Mr. Bush and voted against the bill Friday. In the House two days earlier, 149 Republicans - three-quarters of the chamber’s GOP membership - also voted no on the bill, which passed by a vote of 272-152.
Senate Democratic leaders had hoped to finish the bill Friday, but Sen. Jim DeMint, South Carolina Republican, held up a final vote until Saturday, demanding that Democrats allow a vote on barring Fannie Mae and Freddie Mac from lobbying and making political contributions.
Mr. DeMint added that the bill was in danger of “crossing that line I think between freedom and socialism, where we actual get so involved in the private sector.”
“This is a huge, unprecedented bill - putting on the line $300 billion that can be used for mortgage companies to unload bad loans onto the taxpayers, making the federal government the owners of mortgages in real estate for the first time,” he said.
The Senate voted 80-13 Friday to allow a final vote Saturday. The House easily passed the measure Wednesday, hours after Mr. Bush withdrew a threatened veto and promised to sign the bill if it reached his desk.
Mr. Bush used the veto threat to ensure Fannie Mae and Freddie Mac had a Treasury credit lifeline, saying it was vital for bolstering investor confidence in the two mortgage giants.
Fannie Mae and Freddie Mac stock prices have plummeted in recent weeks over worries about how they will cope with billions of dollars of losses on mortgage loans.
The package calls for the establishment of an independent regulator to oversee Fannie Mae and Freddie Mac, provides first-time home buyers with $7,500 in tax credits, overhauls the Federal Housing Administration and allows lenders who agree to take a substantial loss on their mortgages to reclaim at least some money and avoid a costly foreclosure.
Mr. Bush also opposed the legislation because it included a $3.9 billion provision to award local government grants to buy and refurbish foreclosed properties, a program he said was unnecessary and too expensive.
On Friday, senators punted on the ongoing energy debate, as a measure aimed at curbing excessive oil market speculation died in the chamber after it failed a procedural vote that would have moved it forward.
The bill failed to get the 60 votes needed to overcome a filibuster. The 50-43 vote was largely along party lines, with Maine Sens. Susan Collins and Olympia J. Snowe the only two Republicans to support the bill.