White House veto threat on home refinance bill

AP News
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Posted: Mar 08, 2011 7:27 PM
White House veto threat on home refinance bill

The White House on Tuesday threatened to veto a Republican bill that would abolish an Obama administration program aimed at helping people refinance homes that are worth less than they paid for them.

The veto threat could be the first of several as House Republicans begin working on bills terminating four administration-backed programs aimed at preventing foreclosures.

The House Financial Services Committee voted last week to terminate the Federal Housing Administration Refinance Program on a 33-22 party line vote. Republicans, who hold the majority in the House, said the program had not worked and was a waste of money, while Democrats said it was part of a drive to help homeowners still reeling from weak housing prices and a glut of foreclosures.

The program began last September and has so far helped 63 so-called underwater homeowners convert their mortgages into more affordable FHA-insured loans, according to Housing and Urban Development Department figures. It is backed with $8.1 billion set aside from the $700 billion federal financial bailout of 2008 _ money that would only be spent if one of the newly refinanced mortgages falls into default.

"This program offers a cost effective approach to assisting underwater borrowers and will lead to sustainable long term homeownership," the White House budget office said in a statement.

The statement said President Barack Obama's advisers would recommend a veto should the bill reach his desk. That prospect seems unlikely, though, since even if the GOP-run House approves the legislation, it would still have to make it through the Democratic-led Senate.

"Simply ending foreclosure assistance, which has had modest results, won't make the problem go away," said Sean Oblack, spokesman for Senate Banking Committee Chairman Tim Johnson, D-S.D.

Twenty-three percent _ or nearly one in four _ households with home mortgages were underwater at the end of 2010, according to figures released Tuesday by CoreLogic, a housing data firm.

The bill seems likely to be approved by the full House this week, along with a second committee-passed measure ending a $1 billion program providing loans to homeowners who have become unemployed or seriously ill.

The Financial Services panel also plans to approve two other bills this week. One would end the Home Affordable Modification Program, the Obama administration's main thrust against foreclosures, while the other gives money to states and local governments to buy and refurbish abandoned and foreclosed properties.