Consolidation Loans News
WASHINGTON (AP) — Democrats’ plans to help hundreds of thousands of homeowners struggling with rising subprime mortgage rates and plummeting house values could be sidetracked by President Bush’s threatened veto and the backing of many congressional Republicans.
Opponents of the plan say more prudent homebuyers and renters shouldn’t be called upon to bail out borrowers who gambled on ever-rising housing prices and lost.
“The American people don’t want to make their neighbor’s payment when they’re having trouble making their own,” said Rep. Randy Neugebauer, R-Texas.
With the White House staunchly opposed to the plan, and Senate Republicans appearing increasingly reluctant to sign on, the bill’s leading champion, Representative Barney Frank of Massachusetts, conceded that its future was in doubt. “I don’t know what it means for the final situation,” Mr. Frank said after the vote. “I can’t predict it.”
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What remains unclear is whether the Bush administration will negotiate with Congress on efforts to help homeowners refinance into more stable and affordable loans, or if, in an election year, it ultimately wants to deny Democrats any credit if the plan were to work.
Under the Democrats’ plan, lenders could limit their losses from potential foreclosures by agreeing to reduce the principal balances of loans at risk of default. The borrowers, many with expensive adjustable-rate loans, could then apply to refinance with a more stable, 30-year fixed-rate mortgage insured by the federal government.
WASHINGTON (Reuters) - The biggest housing market rescue plan yet seen from the U.S. government has won House of Representatives approval, but faces resistance in the Senate, a White House veto threat, and questions about whether it will work.
Defying the Bush administration and their own leaders, dozens of House Republicans joined Democrats on Thursday to support the plan, reflecting a desire to be seen helping homeowners ahead of November’s elections.
The plan goes next to the more closely divided Senate, where the same election-year calculus will determine whether Democrats can gather enough votes to proceed with the bill.
“It’s politically dangerous to oppose this (bill),” said Douglas Elmendorf, an economist at the Brookings Institution think tank. “There are a lot of negative forces still at work in the economy… The idea that we’re maybe out of the woods is a mistake.”
Bush said the bill would “reward speculators and lenders,” while Republicans loyal to him threw delaying tactics at the legislation on the House floor and criticized it as a bailout.
Even if Republicans change their tune later and cut a deal on the bill in the Senate, some Wall Street analysts said the sweeping House bill is riddled with uncertainties.
“I’m really skeptical,” said Rod Dubitsky, a senior strategist in the asset-backed securities group at financial group Credit Suisse. “The Frank plan, and any FHA solution, depends on a number of moving parts.”
Brian Gardner, vice president at investment firm Keefe Bruyette & Woods, said housing markets have stabilized somewhat recently, but mostly due to moves by the Federal Reserve, not the prospect of House legislation.
