Senate advances mortgage aid bill

Vote near for $300 billion act

By Sean Lengell (Contact) | Wednesday, June 25, 2008

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The Senate cleared a major hurdle Tuesday toward passing a broad $300 billion mortgage aid package designed to help ease the nationwide housing crisis, despite opposition from the White House, which says the measure could lead to unfair "bailouts" for lenders and subsidies for homeowners.

The bill's centerpiece would allow struggling homeowners to refinance their mortgages at lower rates, with the loans backed by the government. The package also would provide first-time home buyers with up to $8,000 in tax credits.

The House also Tuesday defied a White House veto threat and easily passed a Medicare bill that calls for increased compensation to physicians who treat patients using the government health insurance program.

The Senate voted 83-9 to speed up debate on the housing bill, which was heading for a final vote late Tuesday or early Wednesday.

The measure's overall bipartisan support reflects an election-year urgency in Congress to pass reforms designed to help homeowners struggling to pay their mortgages and would-be home buyers who can't afford to enter the market.

Democrats who drafted the bill say it could help at least 400,000 families keep their homes.

"With Americans holding the bleakest view on record of our economic future, there is no doubt that the effects of the housing crisis are reverberating throughout our economy," said Sen. Christopher J. Dodd, Connecticut Democrat, a chief architect of the bill.

Participating homeowners would be required to share a portion of any profits they made from selling or refinancing their properties with the government.

The measure calls for the establishment of an independent regulator to oversee Fannie Mae and Freddie Mac, the government-sponsored companies that finance mortgages.

The bill also would provide $4 billion in state grants for rehabilitating foreclosed properties, and create a trust fund, financed by annual contributions from Fannie Mae and Freddie Mac, to be used for the construction of affordable rental housing.

The Bush administration says it would veto the bill in part because the government-backed loans would amount to an unfair subsidy and "would be an inefficient use of resources."

Sen. Jim DeMint, South Carolina Republican, also called the measure an unwise bailout to mortgage companies that engaged in risky loans.

"This bill forces millions of Americans who have played by the rules and paid their mortgages on time to pay for the mistakes of a few bad actors in the lending industry," he said.

While the bill is expected to pass the Senate, it's uncertain how the measure will fare in the House, as many Republicans and some Democrats on both sides of their party's ideological spectrum have concerns.

On the Medicare bill, the House voted 355-59 to cancel a 10.6 percent reduction in payments to doctors who treat Medicare patients. The rate drop is scheduled to start July.

The measure now goes to the Senate, which has until the end of the week to resolve the issue, as Congress is scheduled to be on recess next week.

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