"Fight brewing" over affordable housing fund: Frank

By Kevin Drawbaugh

WASHINGTON (Reuters) - U.S. Rep. Barney Frank on Tuesday said "a fight is brewing" over a Senate agreement to finance a new federal mortgage insurance fund by taking money from a proposed trust fund for affordable housing.

"A fight is brewing on the affordable housing trust fund," the Massachusetts Democrat said in a speech to Democrats.

Leaders of the Senate Banking Committee have agreed to set up a multi-billion mortgage refinancing fund under the Federal Housing Administration (FHA) and to use money from a related affordable housing trust fund to pay for it.

The agreement between committee Chairman Christopher Dodd and senior Republican Richard Shelby over the FHA fund is expected to be approved by the panel on Tuesday as part of a package of measures meant to stem a wave of foreclosures.

The affordable housing trust fund was a key element in a similar housing market rescue package developed by Frank and already passed by the House of Representatives.

If the full Senate clears a package from Dodd's committee, then lawmakers from the two chambers would have to attempt to hammer out a compromise measure to send the desk of President George W. Bush.

On using the affordable housing trust fund to finance the FHA expansion, Frank said: "That would be one of the most contentious issues between us ... So we will deal with that."

He added that he remained confident of Congress sending a package soon to the White House.

"I feel strongly about the affordable housing trust fund. There are a couple of other things I have to look at, but there's a great deal of agreement on this," he said.