House To Vote On $300B Housing Legislation

Washington, D.C. (AHN) - House lawmakers are expected to vote Wednesday on $300 billion housing legislation to establish a new regulator for Fannie Mae and Freddie Mac. The bill gives the Treasury Department new authority to strengthen the nation's two largest mortgage companies.

House Financial Services Committee Chairman Barney Frank (D-MA) said on Tuesday that Democrats and Republicans reached an agreement on a housing measure and were ready to vote.

Treasury Secretary Henry Paulson urged lawmakers earlier the same day to pass a housing measure this week, saying in a speech at the New York Public Library that immediate, short-term is "vital to emerging from the housing correction."

The housing bill modernizes the Federal Housing Administration and provides $300 billion to help homeowners avoid foreclosure through fixed-rate mortgages. It sets aside $4 billion for state and local governments to buy up or refurbish foreclosed properties, a provision that has caused the White House to repeatedly threaten a veto. The measure will also let Fannie Mae and Freddie Mac purchase mortgages worth $625,000 in high-cost areas.

"No one agrees with everything in the bill, but I don't think that there's anything in this bill that makes the people who are for most of it gag," Frank said, according to the Hill.

The White House unveiled early last week a plan to rescue the two mortgage companies after shares plummeted to their lowest levels in 17 years, leading to fears of a government bailout. The plan involves Congress giving temporary authority for the Treasury Department to extend credit to Fannie Mae and Freddie Mac, as well as to buy stock from the two companies.

Congressional Budget Office Director Peter Orszag said in a letter to lawmakers on Tuesday that the mortgage rescue package will likely cost the government $25 billion. But Orszag was also quick to say that there is "a significant chance - probably better than 50 percent" that the the cost "could be zero" and that the government will not need to use its new authorities.