HOUSING HELP? President Bush has threatened to veto the housing bills that the U.S. House of Representatives proposes. The package the Democrats (and some Republicans) offers has become a political hot potato in an election year that shows a record drop in housing prices. The housing bill debate reflects classic Republican/Democrat differences—less versus more government intervention.

President Bush said that the bill will "reward speculators and lenders." (Reuters, 5/708) Speaker of the House Rep. Nancy Pelosi (D–Calif.) disagreed, saying, "American families confronting foreclosure deserve better from the president than a veto threat. They deserve the House's bipartisan housing plan that will protect the American dream of home ownership." (Reuters, 5/7/08)

Bill Offers Mortgage Relief

Rep. Barney Frank (D–Mass.) crafted the package’s main bill, which:

• insures up to $300 billion in mortgage loans
• provides fixed-rate loans
• stipulates that borrowers have to qualify
• makes lenders cut debt to 85% of assessed value in exchange for guarantee on future payments
• insists that borrowers have to give 50% of any future profit from selling or refinancing to the Federal Housing Authority (FHA)
• will cost more than $2.7 billion over the next five years ($1.7 billion of which is paid by taxpayers)
• will help 500,000 borrowers

Companion Bill Offers State Assistance

Rep. Maxine Waters (D–Calif.) offers companion legislation to Frank’s bill, which:

• provides states with $15 billion in loans and grants
• allows states to purchase and rehabilitate foreclosed property
• prevents blight in neighborhoods marked by foreclosures
• overhauls the FHA
• tightens regulation of loan giants Fannie Mae and Freddie Mac
• authorizes state and local housing finance agencies to use tax-exempt bonds to refinance mortgages.

Putting this in perspective, remember that $15 billion is only half of what it cost the government to rescue investment bank Bear Stearns last March.

Copyright © 2009 Informify

Sources

"White House threatens veto of FHA-rescue bill" (CNNMoney.com)

"House set to pass sweeping housing rescue bill " (Reuters)

"Housing aid bills face vetoes by President Bush " (AP)

"Freddie Mac and Fannie Mae " (Marketplace)

"Bush faults Democrats on housing crisis, energy and taxes" (AP)

Question for Readers:

Do you think this bill will make taxpayers pay for those who really need help, or reward those who have been irresponsible?