GSE housing fund must have many voices-top Democrat

By Patrick Rucker

WASHINGTON, Feb 1 (Reuters) - An affordable housing fund envisioned as part of a reform measure for mortgage finance companies Fannie Mae (FNM.N) and Freddie Mac (FRE.N) should have several contributors and be managed by a wide range of housing groups, a top congressional Democrat said on Thursday.

"My concern is simply that no one entity controls this fund ... There is so much expertise, so much need that we need the voices of all those who care about affordable housing," said Rep. Maxine Water, head of the housing subcommittee of the U.S. House Financial Services Committee.

Barney Frank, the new committee chairman, wants Fannie Mae and Freddie Mac to be required to create an affordable housing fund under the reform legislation. Frank, of Massachusetts, has said that in its first year, the fund could deliver about $500 million to the Gulf Coast communities damaged by hurricanes in 2005.

Fannie Mae and Freddie Mac are government-sponsored enterprises that hold a federal charter to nurture the mortgage market.

Rep. Waters, of California, said the two companies should form the cornerstone of an affordable housing fund, but that other contributors should be found.

"We're not just looking to the GSEs, although that is an important source of the capital that we need," she said. She did not elaborate.

While Waters expressed enthusiasm for the fund, many Republicans in the House have said they would not support it because it could raise the cost of borrowing for homeowners whose mortgages are managed by Fannie and Freddie.

Democrats have the votes to pass their own version of reform through the House, but hope to find common ground to craft a bipartisan bill, Waters said.

"We don't want to simply run over them in committee or on the floor," she said. "We want the kind of operation so that it gets signed by the president and that all is well."