GSE Bill Snagged on Affordable Housing Bid

WASHINGTON - Republican lawmakers are balking at a new proposal on the much-debated bill to reform oversight of the secondary mortgage market, particularly a provision to collect as much as $700 million a year from Fannie Mae and Freddie Mac to fund affordable housing projects by credit unions, banks and community development corporations.

Alabama Rep. Spencer Bachus, the ranking Republican on the Housing Financial Services Committee, told new committee chairman Barney Frank of Massachusetts in a letter last week that he and many Republicans on the panel oppose the affordable housing bid because they see it as "a tax on lower and middle class homeowners to finance a government housing program."

Frank has said repeatedly he sees the fund as an important way to increase government funding for affordable housing and considers it a critical part of the bill. In a slight nod to the opponents, Frank has changed the funding formula in the draft version of the bill from a percentage of the net income of Fannie and Freddie to a sum based on the number of mortgages purchased by the two entities.

The third government sponsored housing enterprise that will be included in the new regulatory structure, the Federal Home Loan banks, already provide 10% of their annual earnings in affordable housing funds.