House passes far-reaching housing legislation

WASHINGTON (MarketWatch) -- Despite veto threats, House lawmakers on Thursday passed far-reaching housing legislation in an effort to alleviate problems from a housing market turned sour. In a 266-154 vote, lawmakers approved legislation to modernize the Federal Housing Administration, expand the government's role in guaranteeing mortgages, permanently raise conforming loan limits, and improve regulation of Fannie Mae and Freddie Mac, among other actions. President Bush has threatened to veto the package, criticizing a provision that would see FHA backing as much as $300 billion in refinanced loans for homeowners facing foreclosure. The president claims that the FHA expansion would force taxpayers "to take on excessive risk." The president also opposes provisions such as permanent increases to loan limits for FHA and government sponsored enterprises. Late last week, the Congressional Budget Office estimated that the proposed FHA loan-guarantee program would insure about 500,000 loans from 2008 through 2013, with an implementation cost of about $2.7 billion during that time period. A prior estimate from Frank had looked for a potential refinancing of 1 million to 2 million loans. On Thursday, Treasury Secretary Henry Paulson said problems with the housing bill are "not insurmountable," and that he would work on legislation that the president could sign, according to a Reuters report. Earlier Thursday, the House approved a bill that would provide $15 billion for state and local governments to redevelop and buy owner-vacated foreclosed homes. The bill passed 239-to188 with "aye" votes from 11 Republicans. Despite passage, the bill's future is uncertain, given strong opposition from the White House. READ MORE