Bush Vow to Veto Housing Measure

WASHINGTON -- President Bush warned that he would veto legislation aimed at shoring up the housing market which is slated for a vote in the U.S. House of Representatives on Wednesday, Reuters reported.

"We are committed to a good housing bill that will help folks stay in their house as opposed to a housing bill that will reward speculators and lenders," Bush said after meeting with House Republicans. "I will veto the bill that's moving through the House today if it makes it to my desk."

The bill, championed by Rep. Barney Frank, D-Mass., is expected to be approved Wednesday or Thursday. It would expand access to federally insured mortgages to help troubled homeowners refinance their loans, The New York Times reported.

The administration, in a statement of opposition on Tuesday evening, called the bill “overly burdensome and prescriptive” and said it would “force” the Federal Housing Administration and taxpayers “to take on excessive risk,” the paper reported

The Bush administration has said it prefers a more limited expansion of federally insured mortgages, which it said could be accomplished by the Federal Housing Administration (FHA) without new legislation, the paper reported.

In an interview with the paper, Frank said that a veto would be a sign that the president was abandoning efforts to help homeowners.

The centerpiece of the package is a proposal to let the FHA insure up to $300 billion in new loans over four years if lenders agree to reduce the mortgage principal, CNNMoney.com reported.

To qualify, the lender would have to cut the debt to no more than 85% of a home's appraised value. If the FHA-refinanced loans went into default, the FHA would pay the lender the remaining principal owed, CNNMoney.com reported.

While 1.4 million loans are likely to be eligible for such a program, the Congressional Budget Office estimates such a measure would end up insuring 500,000 borrowers and estimates doing so could cost $2.7 billion over 5 years, of which $1.7 billion would be a cost to taxpayers, CNNMoney.com reported.

-- NYSSCPA.org News Staff

Posted on 5/7/08