Pres. Bush Drops Oppisition To Housing Bill

Pres. Bush Drops Oppisition To Housing Bill

President Bush drops opposition to housing bill By JULIE HIRSCHFELD DAVIS, Associated Press Writer
55 minutes ago

WASHINGTON - President Bush dropped his opposition Wednesday to a broad housing package aimed at bolstering the sagging economy, despite his objections to including $3.9 billion for neighborhoods hit hardest by foreclosures. The House was expected to vote on the bill Wednesday, 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 devastated neighborhoods — 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 neighborhood grants, which would be for buying and fixing up foreclosed properties, saying that they were 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 was a dramatic split for Bush and congressional Republicans, many of whom are angrily opposed to the housing legislation, which they call a handout for irresponsible homeowners and unscrupulous lenders.

At a closed-door meeting Wednesday morning, House Republicans denounced the plan, although it's clear they don't have enough votes to prevent it from becoming law.

Rep. John Boehner, R-Ohio, the minority leader, told colleagues that he would "vote against this bailout bill, and that taxpayers deserve a lot better than this," according to a senior GOP aide.

The measure 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."

With Congress just 10 days away from leaving Washington for a five-week summer break, she added, the possibility of waiting until mid-September for the housing measure "is not a risk worth taking in the current environment."

At the Treasury Department, Paulson told reporters that he urged Bush to sign the bill despite its inclusion of the "wasteful" $3.9 billion in grants. He said its enactment would be "a very important message that we are sending to investors around the world" that would play a key role in "turning the corner" on the housing crisis.

Congressional analysts estimated Tuesday that mortgage giant 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.

The plan also creates a new regulator with tighter controls for Fannie Mae and Freddie Mac and modernizes the FHA.

It includes about $15 billion in housing tax breaks, including a credit of up to $7,500 for first-time home buyers for people who bought homes between April 9, 2008, and July 1, 2009. It also allows people who don't itemize their taxes to claim a $500-$1,000 deduction on their 2008 property taxes. That chiefly benefits homeowners who have paid off their homes and can't claim a deduction for mortgage interest.

And it increases the statutory limit on the national debt by $800 billion, to $10.6 trillion.

The White House, which initially denounced the FHA rescue as too burdensome on the government and risky for taxpayers, dropped most of its objections to the measure in recent weeks in search of a swift deal. The urgent request by Paulson to throw Fannie Mae and Freddie Mac a federal lifeline acted as a powerful locomotive for a deal.

The bill sets a cap of $625,000 on the loans that Fannie Mae and Freddie Mac may buy and the FHA may insure. It lets them buy and back mortgages up to 15 percent above the median home price in certain areas.

Lawmakers abandoned efforts to place conditions on any Fannie and Freddie rescue, but the bill hands the new regulator approval power over the pay packages of executives at the companies regardless of whether the government moves to financially reinforce them.

It also counts any federal infusion for the mortgage giants under the debt limit, essentially capping how much the government could spend to stabilize the companies without further approval from Congress. As of Tuesday, the national debt that counts toward the limit stood at about $9.5 trillion, roughly $360 billion below the statutory ceiling.




mixed feelings

While GREAT for the homeowner, not so much for the investors. Not to mention the national debt goes up by $800 billion, to $10.6 trillion!!!!

I am all for helping the people!!! Its not really their fault. I just don't think raising our debt and bailing out those irresposible, greedy banks out, is the right thing to do....

It will also bail of Freddy and Fannie to a degree...

I am happy for the people.

just my 2 cents


Don't Wish the Past, Create the Future! - DH

Housing Bill

It's tempting to jump on the get-the-greedy-lenders bandwagon, but I haven't seen any criticism of the regulators, and Congress, for requiring the lenders to make easy loans to unqualified borrowers that wouldn't have even been considered several years ago. There were severe monetary penalties for lenders who didn't go along with the program. That leaves the borrowers, who were offered a loan that they couldn't refuse, in a market that couldn't continue upward forever. The outcome was certain, only the extent was unknown.

Since we are in a society that is being taught there are no personal consequences for bad decisions, and tempting loans were being dangled in front of them, it is understandable that many got loans that couldn't be paid when the teaser rates went away. But that is not to say that they should be bailed out at taxpayer (or taxpayers' children's) expense. Those who should know say that the market should be allowed to shake itself out and recover on its own, and that these bailouts will just prolong the inevitable. I guess we'll find out.


Grace is not always grace

Great article sistreat and thanx for sharing! Smiling

Over the past twenty years I have twice had the experience of having my home NOT appreciate over was tough but I weathered through the selling (due to relocation/personal changes) without reaping an appreciation of the property. Taught me that I need to read Dean's book when I get it in a day or so to understand "cycles." Would have LOVED a bailout!

That being said, to have an Upside Down loan (owing more than its worth) AND coupled with a variable loan artificially low to get me in would be almost TOO HARD to bear...I cannot imagine the feeling that some are going through in that situation...

I like the idea of a one-time "personal" bail-out but don't understand why systematically the loaning agencies get bailed out as well at such a HUGE cost to our national debt...that does NOT sound right in my book...

PS) And unfortunately, I've had experiences when a person receives a hand-out/bail-out (i.e. "grace") that they neither appreciate the gesture NOR learn from the experience...thoughts?


"All great social and intellectual movements begin with a group of interested friends." CS Lewis

And we know that for those who love God, that is, for those who are called according to his purpose, all things are working together for good.
Romans 8:28 - International Standard Version (©2008)


Wib wrote:

PS) And unfortunately, I've had experiences when a person receives a hand-out/bail-out (i.e. "grace") that they neither appreciate the gesture NOR learn from the experience...thoughts?

There are a lot of people in this category, I think.


"Obstacles can slow you down, but they can only stop you with your permission." Dean Graziosi (BARM pg 101)

"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future." Jeremiah 29:11

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