House ax starts to fall on Obama housing programs

A realtor and bank-owned sign is displayed near a house for sale in Phoenix, Arizona, January 4, 2011.

WASHINGTON (Reuters) - The U.S. House of Representatives on Thursday approved the first of four bills aimed at ending government assistance for homeowners hurt by the housing crisis, though none are expected to clear the Senate.

The Republican-controlled House voted 256-171 to kill a fledgling Federal Housing Administration program that allows borrowers who owe more than their home is worth to refinance into a government-backed 30-year fixed rate mortgage.

Republicans argued the program was ineffective and not worthy of taxpayer support and the vote to kill the program broke largely along party lines.

The vote was the first in a series by Republicans who aim to shut down programs the Obama administration put in place to help borrowers who have seen home values plummet since the U.S. housing bubble burst.

On Friday, the House is set to vote on legislation to end a program that would extend loans to unemployed borrowers to help them make mortgage payments for up to two years.

Next week it plans two more votes, including one to shut down the administration's signature foreclosure prevention effort, the Home Affordable Modification Program.

Analysts see the votes as an effort by Republicans, who last November seized control of the House with an anti-bailout, anti-government spending message, to score political points.

But the bills are almost certain to die when they reach the Democrat-controlled Senate.

The bill approved on Thursday would terminate the FHA's so-called short refi program, which has only provided new loans for 44 borrowers since it was introduced last year.

"It's time that we in this body recognize when a government program is not working. We need to get rid of this program," Republican Representative Robert Dold of Illinois said during Thursday's debate.

Congress has set aside $8.1 billion for the program, though no money has been spent because taxpayers are only on the hook if a borrower defaults on the new loan.