The House passed legislation, 266 to 154, on Thursday designed to curtail foreclosures, despite repeated objections from Republicans who claimed the proposal would unfairly bail out lenders and speculators and put taxpayers at risk.
The bill would expand the Federal Housing Administration to allow it to insure loans worth more than the value of a home once investors agree to a significant haircut.
House Financial Services Committee Chairman Barney Frank, who championed the bill, rebutted Republican attacks that called the plan a bailout, saying the measure is necessary and would cost little but have a significant impact. The Massachusetts Democrat pointed to the Federal Reserve Board's action in putting up $30 billion to prevent the failure of Bear Stearns and contrasted that with an estimate by the Congressional Budget Office that his bill would cost $2.4 billion while restoring confidence in the housing market.
"For the administration that engineered a $30 billion bailout for the investors and others who did business with Bear Stearns to say that this … is unacceptable as a bailout is as intellectually and morally and economically inconsistent a policy as we have seen," he said.
The House also approved a measure, 322 to 94, to change the tax code in ways that would help stem the housing crisis, including an expansion of mortgage revenue bond authority to allow their use to refinance subprime loans. The measure would shield servicers from investor suits over mortgage restructuring. The package also included previously passed measures to modernize the FHA and reform the government-sponsored enterprises.
The House approved a separate measure, 239 to 188, sponsored by Rep. Maxine Waters, D-Calif., that would appropriate $15 billion for loans and grants to state and regional housing authorities to buy and rehabilitate foreclosed properties.
