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Frank and Dodd Propose New Mortgage Rescue Plans
House Financial Services Committee Chairman Barney Frank (D-Mass.) on March 13 announced a plan to let the Federal Housing Administration insure and guarantee refinanced mortgages that have been significantly written down by mortgage holders and lenders. Frank wants the FHA to provide up to $300 billion in new guarantees to get borrowers into viable mortgages. He says this could help to refinance between 1 and 2 million home loans and help these families stay in their homes. In exchange for accepting a writedown of principal, lenders or mortgage holders would receive a payment from the proceeds of a new FHA loan if the borrower "can reasonably be expected to pay" the restructured mortgage.
In announcing the new proposal, Frank cautioned that the bill text could change before introduction.
Senate Banking Committee Chairman Chris Dodd (D-Conn.) also unveiled his own legislative plan to help strapped home borrowers. Under the "HOPE for Homeowners Act of 2008," new mortgages that are offered by FHA-approved lenders will refinance abusive loans at a significant discount for home owners facing difficulty meeting their mortgage payments.
“This is the worst housing crisis of our lifetime, and we’re in a recession as a result of it,” said Dodd. “Property values decline sharply when a home in the neighborhood is foreclosed upon. In order to stabilize neighborhoods, we must take actions to prevent foreclosures. This proposal will help provide much-needed relief for people on the brink of foreclosure, keeping families in their houses and neighborhoods financially stable.”
NAHB has been in contact with Frank, Dodd and their respective committee members and continues to monitor the situation closely. For more information, contact Scott Meyer at 800-368-5242, x8144.
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Push for FHA Reform Continues
NAHB lobbyists this week held several meetings with key lawmakers and Capitol Hill staffers to help move FHA modernization forward. In addition, NAHB grassroots were actively involved, reaching out to members of Congress to urge them to get the job done. While both Senate Banking Committee Chairman Chris Dodd (D-Conn.) and House Financial Services Committee Chairman Barney Frank (D-Mass.) reported progress, ultimately House and Senate negotiators failed to approve a final bill before Congress adjourned for a two-week recess. NAHB believes important groundwork has been laid to move this legislation forward shortly after Congress returns from its break. For more information, contact Scott Meyer at 800-368-5242, x8144.
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NAHB Forcefully Responds After Freddie Says It Won't Raise Capital
After Freddie Mac CEO Richard Syron told investors and stock analysts in New York that Freddie Mac will place the interests of its shareholders first by refusing to raise more capital to help the troubled housing market, NAHB issued a hard-hitting response. In a press statement, NAHB CEO Jerry Howard said: “With the housing market in the midst of its worst downturn in decades … it is painfully obvious that he (Syron) has strayed light years away from Freddie Mac’s vitally important congressionally mandated mission of ensuring an adequate flow of credit for housing and home buyers. He added that this underscores the need for Congress to act now to enact comprehensive GSE reform. The statement was also widely distributed on Capitol Hill. For more information, contact Dave Ledford at 800-368-5242, x8265.
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Treasury Unveils Plan to to Shore Up Financial System
The Treasury Department on March 13 released a report by the President’s Working Group on Financial Markets on what went wrong in the collapse of the subprime mortgage market last year and what actions are needed to prevent a recurrence. Commenting on the report, Treasury Secretary Henry Paulson signaled a need for greater transparency and other reforms to prevent the kind of sudden downturn that has struck credit markets in recent months. The changes include tougher disclosure requirements for banks and Wall Street firms, a nationwide licensing system for mortgage brokers and new rules for credit rating agencies. For more information, contact Dave Ledford at 800-368-5242, x8265.
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House and Senate Adopt Budget Proposals
The House and Senate this week both adopted budget blueprints for fiscal year 2009. The House plan was approved by a narrow 212-207 margin. it would increase spending on domestic programs such as education, health care, veterans benefits and new energy technology. The added spending would be offset by allowing the Bush tax cuts to expire in 2010 as scheduled.
The Senate budget resolution passed largely along party lines on a 51-to-44 vote. A controversial amendment calling for a one-year moratorium on earmarks went down in defeat, falling 31 votes short of the 60 needed to clear a procedural hurdle. In a bit of presidential posturing, the three candidates -- Sens. John McCain (R-Ariz.), Hillary Clinton (D-N.Y.) and Barack Obama (D-Ill.) -- all voted against earmarks. On a near unanimous 99-to-1 vote, the Senate extended parts of the Bush tax cuts that focus on the middle class, such as the $1,000 child tax credit. A proposal offered by Sen. Lindsey Graham (R-S.C.) to extend lower rates on capital gains and dividends was defeated. Sen. McCain voted for the Graham proposal while Sens. Clinton and Obama opposed it.
The House and Senate budgets must be reconciled for a final vote later this year. Both budget resolutions are non-binding and represent no specific plan for taxes or spending. Rather, they serve as a framework for future action on taxing and spending policies. For more information, contact Jenna Hamilton at 800-368-5242. x8407.
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Builders Encouraged to Meet with Lawmakers During Break
With Congress taking a two-week break for the Easter holiday, builders are encouraged to set up meetings with their representatives and senators in their home districts and urge their lawmakers to take immediate action to shore up home prices, which will stabilize housing and the financial markets. Specifically, builders should call on their federal lawmakers to create a temporary home buyer tax credit to boost sales, enact FHA and GSE reform, expand the mortgage revenue bond program and allow businesses to carry back net operating losses for five years. For more information on these issues, and for help in setting up an appointment with your lawmaker in your home district, contact Molly Murray at 800-368-5242, x8282.
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