Democrats call for "mortgage czar," borrower aid
WASHINGTON (Reuters) - Democratic leaders in the U.S. Congress called on Wednesday for the appointment of a "mortgage czar" to help stem a jump in foreclosures and $200 million of fresh funding to help troubled borrowers save their homes.
Foreclosure filings have soared in recent months as borrowers with shaky credit have been unable to afford escalating loan payments.
About 1.7 million home loans will go into foreclosure this year and next, according to estimates by Moody's Economy.com. U.S. lawmakers have called this a national catastrophe in the making.
"This crisis is the equivalent of a slow-motion, 50-state Katrina, taking people's homes one by one, devastating their lives and destroying their communities," Sen. Christopher Dodd, chairman of the Senate Banking Committee, said at a press conference.
Dodd, along with fellow Democratic Sen. Harry Reid, the Senate Majority Leader, and Nancy Pelosi, the speaker of the House of Representatives, called for the current limit on Fannie Mae and Freddie Mac investments to be lifted so the mortgage finance companies can buy more troubled home loans.
The two government-sponsored enterprises, or GSEs, are under orders from their federal regulator, the Office of Federal Housing Enterprise Oversight, to freeze investment holdings near their current level of a combined $1.4 trillion.
The regulator has said those caps, imposed over a year ago, could be lifted in February. But lawmakers said they should be lifted now in the face of a crisis.
"We're standing here today saying 'Mr. President, February is hundreds of thousands of foreclosures away,'" said Sen. Charles Schumer, Democrat from New York. "The time to act with sensible policies is today -- not months from now."
Schumer has introduced legislation that would let Fannie and Freddie increase their investment holdings for one year.
SOME FRANK TALK
Rep. Barney Frank, chairman of the House Financial Services Committee, said on Wednesday that he could support a "one-year, temporary increase of the portfolio" even though he previously opposed what he called such a "piecemeal approach" to reform.
Still, the Massachusetts Democrat said that he would not go as far as other Democrats who support increasing the size of loans that Fannie and Freddie may purchase above the current ceiling of $417,000. Mortgages above that level are known as "jumbo" loans.
"I would not do anything that's going to relieve pressure for a bill. Raising the (investment) caps indefinitely or raising the jumbo loan would do that," he said.
In May, Schumer first called for fresh grants to non-profit groups that counsel on foreclosure prevention and Democratic leaders on Wednesday endorsed giving $200 million in such a program.
The lawmakers also called for a new mortgage czar to be appointed by U.S. President George W. Bush to coordinate the federal response to increased foreclosures.
Frank suggested that former Republican Congressman Jack Kemp would be a good choice for the role.
Kemp served as the head of the Department of Housing and Urban Development under President George H.W. Bush, who is the father of the current president. But Kemp was traveling Wednesday and could not be reached for comment.
In late August, President Bush announced that he would relax rules of the Federal Housing Administration, a federal mortgage insurance program, so that it could help 240,000 homeowners win more affordable loan terms next year.
Bush has previously warned that Fannie and Freddie should not be permitted to grow their investment holdings until the companies agree to comprehensive oversight reform.
White House spokesman Tony Fratto said on Wednesday that Democratic lawmakers, who control both chambers of Congress, have yet to pass key mortgage reform measures and have a responsibility to bring sensible measures to the President.
He said Democrats had so far "neglected" FHA reform legislation and that Fannie and Freddie reform legislation was "bottled up in Congress."
"We're pleased that they have made some movement on the tax relief plan for mortgage debt that the president called for in a bipartisan way, but they haven't accomplished it yet," Fratto said.
"We would like Congress to get its work done on this issue," he said.
Asked about making a special appointment to deal with the mortgage crisis, Fratto said, "We have a housing czar. His name is Alphonso Jackson. He's the secretary of (the Department of) Housing and Urban Development."
