GOP Leaders Critical of Housing Relief Legislation
STEVE INSKEEP, host:
If you're having trouble paying your mortgage or your house is worth less than what you owe, Democrats in Congress say they have some answers for you. Today, the House takes up several bills aimed at easing the foreclosure crisis. The main proposal would allow struggling homeowners to refinance their loans with government-backed mortgages. That's the way the Democrats describe it anyway. Many Republicans look at this and see a bail-out.
NPR's Brian Naylor has more.
BRIAN NAYLOR: The package of housing bills is largely the work of Massachusetts Democrat Barney Frank, who chairs the House Financial Services committee. At a news conference yesterday, Frank said his proposals will help the housing market straighten itself out.
Representative BARNEY FRANK (Democrat, Massachusetts): We've got a package of measures that work with the market that correct some problems that have been in the market, that give incentives to the market and - look, we're in a difficult a situation.
NAYLOR: The difficulties are well-known. Some one and a half million homes entered foreclosure last year, a number expected to go up this year. Housing prices have sharply declined across the country. New home construction is down. And that's helped trigger an overall economic slowdown, if not recession.
The bills the House of Representatives will consider today include one that would enable borrowers at risk of default to refinance their high rate loans with cheaper mortgages backed by the Federal Housing Administration. Democrats predict that as many as a million and a half homeowners will benefit from the plan. The Congressional Budget Office, Congress's nonpartisan referee on such matters, says the number is likely to be much lower - about half a million. Still, Frank says, it's worth the effort.
Representative FRANK: What the CBO says is for every foreclosure that is averted, it will cost the federal government over time about $5,000. Frankly, I think that's a pretty good deal when you look at the cost of foreclosure to the family, to the property values in the neighborhood, to the municipality that's losing property taxes.
NAYLOR: The package also makes permanent a provision in the stimulus bill approved by Congress that raises the ceiling for FHA-backed loans, and it provides tax credits of up to $7,500 to encourage first-time home buyers.
The bills were approved last week with bipartisan support in committee, but Republican leaders opposed them. They say the measures contain a $35 million slush fund for trial lawyers in the guise of offering legal services for people at risk of foreclosure. And they argue the measures will bail out speculators. Florida Republican Adam Putnam says there is a housing crisis but the Democrats don't address it.
Representative ADAM PUTNAM (Republican, Florida): You know, how do we best move forward to separate out the people who legitimately were misled by lenders or unscrupulous brokers from those who were trying to flip condos in south Florida?
NAYLOR: But the chairman of the Federal Reserve Board, Ben Bernanke, argued in his speech this week that Congress needs to act on the foreclosure crisis, saying that in his words doing what we can to avoid preventable foreclosures is in everybody's interest.
Congress is expected to combine the bills it's taking up today with a measure it's already approved - revamping Fannie Mae and Freddy Mac, which finance mortgages. That's something the White House wants. Democrats hope the administration will accept the whole package. Similar legislation is working its way through the Senate.
Brian Naylor, NPR News, the Capitol.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.