Washington once again delivers the message that responsible borrowers, responsible savers, and responsible homeowners are chumps. As I’ve detailed since last summer, both Hillary and President Bush continue their housing bailout crusades on parallel tracks. Both continue to deny that their bailouts are bailouts (just as amnesty wasn’t amnesty). The latest:
With public sentiment on the economy still sagging, President Bush will make a new push for congressional action to shore up the troubled housing market, a top aide said.
In an impromptu briefing aboard Air Force One as Mr. Bush returned from his Texas ranch, top communications adviser Ed Gillespie told reporters that the president wants Congress to do more to “help make the market more stable.” The administration sees “an opportunity for bipartisan consensus” on a housing initiative, despite the feuding that erupted last year between the Republican White House and the Democratic House and Senate over issues including the Iraq war, health care, and spending for parks and museums.
“Bipartisan consensus” = Watch your wallets.
Mr. Gillespie and other aides didn’t offer new specifics for how Congress could address the housing problems. There are at least two significant pieces of legislation that Congress left unfinished last year. One would bring relief to more low-income borrowers, allowing them to refinance adjustable-rate mortgages through the Federal Housing Administration. A second initiative could help ease a credit crunch for many middle- and upper-middle-income borrowers, in part by allowing government-sponsored mortgage companies such as Fannie Mae to securitize more large loans. Currently, those companies can’t take on loans with values of more than $417,000. The administration supports a temporary increase in that limit but only in connection with comprehensive reform of the agencies’ oversight, including a strong regulator with authority to limit the size of the mortgage portfolios they hold.
A third possible element in a housing initiative would give states authority to issue more tax-exempt bonds to help troubled homeowners refinance their homes.
Last month, the White House announced a voluntary initiative that encourages mortgage-servicing companies to freeze interest rates for people with adjustable-rate mortgages who are running into problems as their rates rise. As many as 1.2 million homeowners with subprime loans, or those to borrowers with poor credit, theoretically could get either rate freezes or expedited refinancing.
But some observers expect the actual impact of that program to be more limited. Meanwhile, estimates of the overall number of homeowners who might go into default has risen to three million. That is creating a need for further help from state and local governments.
“Changing the tax code can also help state and local government do their part to help homeowners,” Mr. Bush said in December. “This temporary measure would make it easier for state housing authorities to help troubled borrowers — and Congress should approve it quickly.”