Senators near housing deal
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(AP) - Key senators said they are close to a bipartisan deal on a homeowner rescue package that could help a half million strapped borrowers get government-backed mortgages.
Sen. Christopher J. Dodd, D-Conn., the Banking Committee Chairman, postponed a meeting Thursday to vote on the plan in anticipation of reaching a compromise with Sen. Richard C. Shelby of Alabama, the panel's senior Republican.
The measure also tightens regulation of Fannie Mae and Freddie Mac, the government-sponsored companies that finance mortgages.
Staff aides to both senators, who have been negotiating for weeks in search of an elusive deal, worked overnight Wednesday and were still haggling over details of the bill Thursday. One major sticking point was how to insulate taxpayers from risk should homeowners who got government help default on their new mortgages, said Senate aides, who described the talks on condition of anonymity because the agreement wasn't final.
President Bush, who has threatened to veto a similar House-passed bill, cites exposing taxpayers to potential losses as a top concern. The White House calls the plan a burdensome bailout.
It would allow the Federal Housing Administration to back up to $300 billion in new loans for homeowners facing foreclosure, who would otherwise be considered to financially risky to get a fixed-rate, government-insured loan. Borrowers would have to show they could afford the new loans, while mortgage holders would have to agree to take a substantial loss on the existing loan in exchange for avoiding a costly foreclosure. The FHA would share at least half of any proceeds if the homeowner refinanced again or profited from selling the home.
Senate Republicans have proposed using Fannie Mae and Freddie Mac to cover at least part of the cost of the plan, which congressional analysts place at $1.7 billion over the next five years.
"We're still talking, real close," Shelby told CNBC.
"We're very, very close," Dodd told Fox Business News.
The apparent progress comes as Rep. Barney Frank, D-Mass., the Financial Services chairman who wrote the House bill, signaled that his hopes for a broad housing agreement with the White House were fading.
"I won't tell you I'm optimistic, but I think there's a reasonable chance," Frank told reporters after addressing a Realtors conference. "We're still trying to keep working together."
Frank told the Realtors they should encourage Senate Republicans to back the homeowner rescue plan, and said Bush's opposition was no excuse for inaction.
"The Constitution says the president gets to veto the bill after we pass it, not that he gets to threaten to veto it so we can all duck a tough issue," Frank said.