New housing plan expected soon: Congress aide

WASHINGTON Thu Oct 20, 2011 7:45pm EDT

A realtor sign is displayed near a house for sale in Phoenix, Arizona, January 4, 2011.  REUTERS/Joshua Lott

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

Credit: Reuters/Joshua Lott

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WASHINGTON (Reuters) - The Obama administration and the regulator for Fannie Mae and Freddie Mac are expected to unveil new steps to help distressed homeowners in the next week or two, a senior congressional aide said on Thursday.

The aide commented on the plan after Democratic Senator Dianne Feinstein said the Federal Reserve planned to send Congress "legislative recommendations" on housing.

The aide said Feinstein "misspoke for a second" and meant the administration and the Federal Housing Finance Agency.

After Senate Democrats met with Fed Chairman Ben Bernanke, Feinstein told reporters the central bank chief had stressed that more needed to be done to help the housing sector.

"They are going to submit a list of recommendations next week," Feinstein told reporters. She said the pending proposals are "legislative recommendations we can look at."

Senator Mark Warner, who also attended the meeting, said Bernanke spoke about what can be done to get mortgage refinance moved "down the field."

"There might be some ideas we are going to have shortly on that," he told reporters after the meeting.

It is unclear what Congress might do given deep political divisions in the House of Representatives and the Senate.

A handful of Senators are trying to advance a proposal that would make it easier for middle-class Americans to buy homes in expensive real estate markets.

Separately, the administration is pushing the regulator for Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB), the two biggest U.S. housing finance providers, to allow more homeowners who owe more than their homes are worth to refinance their loans at lower rates.

Treasury Secretary Timothy Geithner said on Tuesday he hoped a proposal could be laid out "in the coming days." A source familiar with the plans told Reuters they could be unveiled as early as Monday.

The Fed has been exploring what steps it might be able to take to spur a more vigorous economic recovery and pull down an unemployment rate that has been stuck above 9 percent for five straight months.

On Thursday, Fed Governor Daniel Tarullo said the central bank should consider purchasing more mortgage-backed securities.

He said an MBS purchase program could be made more effective if further steps were taken to help so-called underwater borrowers refinance. He said such an effort need not focus only on loans backed by Fannie Mae and Freddie Mac, but that legislation might be needed if policymakers wanted to reach other homeowners.

The U.S. central bank has kept overnight interest rates near zero since December 2009 and has already bought $2.3 trillion in government and mortgage-related bonds.

In September, it decided to shift its holding of bonds to try to put more downward pressure on longer-term rates. It also said it would begin reinvesting principal payments from its holdings of mortgage-related debt to help housing.

(Additional reporting by Pedro Nicolaci da Costa and Tim Ahmann; Editing by Sandra Maler, Vicki Allen, Leslie Adler and Andrew Hay)

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Comments (3)
y31pilot wrote:
Ben Bernanke and Barney Frank must be sleeping together. The Dems just keep recycling the same failed policies. Lets make buying a house easier for those who aren’t working. We’ll worry about jobs later!!!

Oct 20, 2011 4:25pm EDT  --  Report as abuse
Jeepgirl wrote:
I think it may be too late for the current administration to do anything constructive to help people hold onto their homes and lives. Obama and his cohorts should have been working on this and real jobs instead of supporting failing solar companies and Obamacare.

Oct 21, 2011 4:02am EDT  --  Report as abuse
minipaws wrote:
Why would antyone pay their bills when the goverment will bail them out. Let’s just keep training people to borrow more than they can afford.

Oct 24, 2011 9:35am EDT  --  Report as abuse
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