Bush, Congress At Odds Over Housing Crisis Fix

Published: May 8, 2008

WASHINGTON - President Bush and Congress are clashing over how to address the housing crisis, clouding the prospects of an election-year rescue package.

Bush said Wednesday that he would veto Democrats' broad housing aid plan, saying it would not help struggling homeowners.

"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 at the White House after meeting with House Republican leaders.

The measure, aimed at preventing foreclosures, would have the government step in to insure up to $300 billion in new mortgages for distressed homeowners. A House vote is expected by today.

The bill by Rep. Barney Frank, D-Mass., would relax standards at the Federal Housing Administration so it could back more affordable, fixed-rate loans for borrowers too financially strapped to qualify.

Those homeowners could refinance into new loans if their lenders agreed to take substantial losses on the original mortgages. Borrowers would have to show they could afford to make payments on the new loans. They would have to share with FHA at least half of their proceeds if they profited from selling or refinancing again.

Despite growing GOP support for the plan, especially among Republicans from areas hardest hit by the housing crisis, it could fall victim to an election year fight over which party is doing more to help homeowners in need.

"Democrats have a plan to stabilize the housing market and the economy as a whole; President Bush has a plan to sit on his hands for nine more months," Rep. Steny H. Hoyer of Maryland, the majority leader, said in a statement.

The White House calls the plan a burdensome bailout that would open taxpayers to too much risk.

Treasury Secretary Henry Paulson on Wednesday called the plan too broad. Paulson said the administration would continue negotiating with Congress to come up with an acceptable bill, but he did not offer any details of what kind of mortgage relief the administration would support.

"Housing is an important area, and there are certain things that we need to get done there from Congress," Paulson said. "We are working to get a housing bill that the president can sign."