Bipartisan Support for Housing Bill Still Strong in Senate, Despite Growing Discontent

A wide-ranging housing and foreclosure assistance package now making its way through the Senate floor has surprisingly resilient support, as sources told Housing Wire Friday that despite growing questions over Congressional ties to special mortgages offered by Countrywide Financial Corp. (CFC) and the threat of a Presidential veto, the package remains broadly supported by most Republicans and Democrats. The White House on Thursday issued a veto threat on the package, expressing strong opposition to a $4 billion funding package that would help states and local government buy foreclosed properties, as well as opposing a plan that would see both Fannie Mae (FNM) and Freddie Mac (FRE) backstop a planned $300 billion expansion of the FHA-insured mortgage lending program. Various media reports have suggested in recent days that both the threat of veto, as well as questions about Democratic ties to Countrywide, have weakened support for the housing bill. The Senate’s own actions, however, are proving that bipartisan support for the housing proposal remains surprisingly strong. Senators Jim DeMint (R-SC) and Jim Bunning (R-KY) had put to the floor Thursday a motion to recommit the housing bill; the motion would have effectively killed the bill, by pushing it back to the Banking Committee chaired by Christopher J. Dodd (D-CT). Nine Senate Republicans had sent a letter to to Senate Majority leader Harry Reid (D-NV) earlier in the week, requesting that the bill be sent back to the committee until it was clear “what direct benefits that Countrywide and other financial institutions would receive.” Dodd is one of two senators currently in the middle of controversy over whether he received special treatment on his mortgages through a hush-hush VIP program Countrywide CEO Angelo Mozilo offered certain important customers. He has denied any wrongdoing. “As a member of the Banking Committee I also think we need to take a closer look at exactly who benefits form this bill and by how much,” Bunning said in a statement Thursday. Yet the Senate quashed the move by a massive 70-11 margin in a floor vote anyway. The attempt to recommit the bill wasn’t the only attempt made Thursday by Republicans to kill the housing proposal — the Senate also shot down two Republican-proposed amendments to the bill that also would have effectively killed it. One had sought to remove the $300 billion FHA expansion from the bill, while another proposed yanking the affordable housing fund that is the backbone for funding the proposed FHA expansion. The two measures failed by amazingly wide margins of 69-21 and 77-11, respectively — evidence of surprisingly strong bipartisan support for the election-year housing bill. The margins are large enough, as well, to suggest that Congress may overrule any veto by President Bush. The Senate and House versions of the housing bill share much in common, although House Financial Services Committee chairman Barney Frank (D-MA) has said that members of the House of Representatives will not accept the Senate version at face value. In particular, HW’s sources have said that Frank wants to see GSE high-cost lending limits set permanently at $729,500, and to allow both GSEs to portfolio the so-called jumbo-conforming loans. The Senate’s version sets permanent high-cost lending limits at $625,000; and currently, the GSEs must securitize any jumbo-conforming loans they underwrite. Congressional leaders have said they want to deliver the bill to the president before Congress breaks for the summer on July 4. Both Dodd and Frank have warned in recent days that the housing bill sits on relatively thin ice, however, and a delay by the Senate or the inability to negotiate on a final version between members of the House and Senate would put the bill at risk. Disclosure: The author held no positions in FNM or FRE when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.