House OKs rescue for homeowners, Freddie, Fannie

The bill is on track for Senate approval and should become law within days.

WASHINGTON (AP) — Rescue legislation sailed through the House on Wednesday aimed at helping 400,000 strapped homeowners avoid foreclosure and preventing the collapse of troubled mortgage companies Fannie Mae and Freddie Mac.

The 272-152 vote reflected a congressional push to send election-year help to struggling borrowers and to reassure jittery financial markets about the health of two pillars of the mortgage market.

Hours before the vote, President Bush dropped his opposition to the measure, which now is on track to pass the Senate and become law within days.

The White House swallowed its distaste for $3.9 billion in grants for devastated neighborhoods. In return, the administration got both the power to throw Fannie Mae and Freddie Mac a lifeline and the legislation Republicans long have advocated to rein in the government-sponsored mortgage companies.

Treasury Secretary Henry M. Paulson and lawmakers in both parties negotiated the final deal. It accomplishes several Democratic priorities, including aid for home- owners, a permanent affordable housing fund financed by the two mortgage companies and the money for hard-hit neighborhoods. The grants are for buying and fixing up foreclosed properties.

“It is the product of a very significant set of compromises,” said Rep. Barney Frank, chairman of the House Financial Services Committee. “We are dealing with the consequences of bad decisions and inaction and malfeasance from years before,” said Frank, D-Mass.

Paulson said he would push for enactment of the bill by week’s end. Despite disappointment with some items rejected, he said “portions of this bill are orders of magnitude more important to turning the corner on the housing correction and supporting our markets and our economy.”

Bush had argued the neighborhood grants would benefit bankers and lenders. But the White House said a showdown with Congress over the proposal would be ill-timed.

It was a striking split for Bush and many congressional Republicans. GOP leaders said they would not be stampeded into supporting a bill they called a bailout for irresponsible homeowners and unscrupulous lenders, even as they acknowledged it was probably necessary.

“It’s a bill that I wish I could support. It’s a bill that the market clearly needs ... but this is not a bill that I can support,” said Rep. John A. Boehner, R-Ohio, the minority leader.

Only 45 Republicans — most from districts ravaged by the housing crisis and some facing tough re-election fights — voted for it.

Liz Glenn, a community planning official in Baltimore County, Md., said the grants “would enable us to acquire and rehab more homes and offer them at an affordable price.”

The Treasury Department would gain power to extend the government-sponsored mortgage companies an unlimited line of credit and to buy an unspecified amount of their stock, if necessary. The two companies, chartered by Congress, back or own $5 trillion in mortgages — nearly half the nation’s total.

Sen. Richard C. Shelby of Alabama, the top Republican on the Senate Banking, Housing and Urban Affairs Committee, said Bush’s turnabout reflected political reality.

But conservatives led by Sen. Jim DeMint, R-S.C., were threatening to slow the measure unless Democrats allowed a vote on barring Fannie Mae and Freddie Mac from lobbying and making campaign contributions.