Frank argued that the refinanced loans would not reward speculators and investors because they would be awarded only to people who live in their homes. The homeowners would also have to demonstrate an ability to repay, accept high mortgage insurance premiums, and share proceeds from any future sale of the home with the government.
The bill includes a tax credit of $7,500 to help first-time homeowners enter the market. The credit would be paid back over 15 years, effectively making it an interest-free loan, and would be phased out for taxpayers with adjusted gross incomes in excess of $70,000 or $140,000 for joint filers.
In a separate measure, the House passed a bill sponsored by Rep. Maxine Waters (D-Los Angeles) to grant $15 billion to local governments to buy and repair foreclosed property for resale. The bill passed 239 to 188, but also faces the threat of a presidential veto.
Also notable is what was not in the bill -- a tax credit for home builders. A Senate housing bill included the $6-billion tax credit to help developers and home builders, but the measure was dropped from the House version.
The legislation passed Thursday includes several provisions that were long sought by the Bush administration, including tighter oversight of Fannie Mae and Freddie Mac, and modernization of the FHA.
At least initially, the White House showed little inclination to compromise, denouncing the House bill as a bailout.
"House Democrats passed legislation that they know will never become law," White House spokesman Tony Fratto said after the vote. "Most Americans understand that we shouldn't create a taxpayer-funded bailout for lenders and speculators."
But congressional Democrats and some Republicans, worried about the possible political cost of failing to act, believe further negotiations could change that position.
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maura.reynolds@latimes.com
Times staff writer Richard Simon contributed to this report.
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What the bill would do
Key provisions of the housing rescue plan approved Thursday by the House:
* Offer up to $300 billion in refinanced, federally insured mortgages for homes facing foreclosure. To qualify, lenders would have to write down the principal of the original mortgage to 85% of the home's current appraised value. Borrowers would have to meet strict criteria, including that they occupy the home, can document their income and can pay high mortgage insurance premiums. If the home is sold within five years, some or all of the proceeds would return to the government. This program would cost $2.7 billion over five years and prevent about 500,000 foreclosures.
* Permanently raise to $729,750 the conforming loan limit for government-secured mortgages (through Fannie Mae, Freddie Mac and the FHA) in high-cost regions.
* Include a $7,500 tax credit for first-time home buyers to be repaid over 15 years.
* Provide taxpayers who do not itemize a $350 credit ($700 for joint filers) for property taxes.
* Provide $230 million for financial counseling for struggling homeowners.
* Tighten oversight of Fannie Mae, Freddie Mac and the Federal Home Loan Bank system.
* Offer some protection from lawsuits for mortgage servicers who rewrite securitized mortgages.
* Give states $10 billion in municipal bond authority to generate capital for mortgage refinancing and building low-income rental housing.
Source: Times research
