White House: Time is Running Out on Housing Bill

A housing bill frozen in the Senate is “running out of time,” White House spokesperson Tony Fratto said in a press conference Tuesday. Softening the administration’s stance on proposed housing relief legislation set to be at the top of Congress’ list after the July 4 break, Fratto said that President Bush wants to see a housing bill “as soon as possible.” “The Senate put off a lot of work,” he said. “They’ve been in session for a long time and some very critical pieces of legislation got put off for yet another recess, and now this last session is getting pretty close to the August recess.” Senators Chris Dodd (D-CT) and Richard Shelby (R-AL) rolled out the housing bill to the Senate floor on June 18 amid strong bipartisan support, but what HW’s sources have characterized as “standard-fare pork barrelling” has threatened to derail the bill since that time. In particular, Sen. John Ensign (R-NV) recently delayed Senate progress towards a final vote on the proposal, forcing the issue over a non-housing-related amendment tied to renewable energy tax cuts. Ensign’s technical delay tactics came despite a vote to invoke cloture that was approved by sweeping 83-9 margin. The Senate proposal would create a $300 billion initiative within the Federal Housing Administration to ostensibly prevent foreclosures by refinancing loans into FHA-endorsed product; the cost of the program would be covered by contributions to an affordable housing fund by both Fannie Mae (FNM) and Freddie Mac (FRE). The package also contains provisions that would establish a new regulator for the GSEs, and allocate nearly $4 billion in supplemental Community Development Block Grant Funds to be used to buy vacant and foreclosed properties in hard-hit neighborhoods. It also includes an FHA modernization bill that the industry has long pushed for, as well as $150 million in additional funding for housing counseling. Asked if progress was being made towards a final version of the bill, Fratto would only say that “discussions continue, certainly.” “Members of the Senate know I think pretty clearly where the President is on this and what our position has been on various elements of housing legislation,” he said. President Bush has objected to the proposed $4 billion in in block grant funds, arguing that the funds merely bail out lenders, a position Fratto re-emphasized on Tuesday. “That’s … funding that actually goes to those holding these foreclosed loans, and that’s the original lenders, and we prefer not to be subsidizing lenders,” Fratto said. “We’d rather try to focus on ways we can help homeowners who want to stay in their homes.” The Senate is set to consider the housing pacakage when it returns on July 7th — the housing package, H.R. 3221, is scheduled for debate beginning at 3pm Eastern on that day. Disclosure: The author held no positions in FNM or FRE when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.