WASHINGTON — The Bush administration announced a mortgage industry coalition Wednesday aimed at helping homeowners avoid being trapped in a rising tide of foreclosures.
Treasury Secretary Henry M. Paulson Jr. said the initiative would boost financial companies' efforts to help an estimated 2 million homeowners whose introductory mortgages with low rates are resetting at much higher rates, just as the housing industry suffers through its steepest downturn in 16 years.
The House pursued its own plan for helping homeowners, passing a bill to create a trust fund to finance construction and rehabilitation of affordable housing. The measure would provide $800 million to $1 billion a year with the goal of creating 1.5 million affordable housing units over the next decade by funding grants to housing providers.
The trust fund would be financed mostly from profits from Fannie Mae and Freddie Mac, the chief U.S. buyers and guarantors of mortgages.
President Bush has threatened to veto the measure. The White House and conservative Republicans contend that it would duplicate a program at the Department of Housing and Urban Development. GOP lawmakers said siphoning money from Fannie Mae and Freddie Mac would amount to a tax on middle-income home buyers.
The mortgage industry coalition promoted by the Bush administration includes 11 of the largest mortgage service companies, representing 60% of all mortgages in the country. Other members are mortgage counseling firms, investors and large trade organizations, and Paulson urged more mortgage service companies to join the effort.
"We need greater participation if we are going to get to all those that need help as quickly as possible," Paulson said at a joint news conference with HUD Secretary Alphonso Jackson.
The initiative, dubbed HOPE NOW, follows an Aug. 31 announcement by Bush that the administration was changing the Federal Home Loan Administration insured-loan program so that more people could qualify for FHA-insured loans.
Democrats said the initiative fell short of what was needed.
Sen. Charles E. Schumer (D-N.Y.) noted that the National Assn. of Realtors on Wednesday revised down once again its forecast for home sales, predicting that sales of existing homes would fall by 10.8% this year, a bigger drop than the 8.6% decline it forecast just a month before.
