White House renews veto threat on housing bill

U.S. President George W. Bush speaks during a meeting with members of his economic team at the Department of Energy in Washington July 11, 2008. At left is Treasury Secretary Henry Paulson. REUTERS/Kevin Lamarque

WASHINGTON (Reuters) - U.S. President George W. Bush would veto Senate housing legislation if it includes $4 billion in block grants to states to buy foreclosed homes, White House spokeswoman Dana Perino said on Friday.

After weeks of wrangling and growing concerns about wobbly housing markets, the U.S. Senate passed a plan to save hundreds of thousands of American homeowners and their families from foreclosure and sent it to the House of Representatives.

The Senate measure also overhaul regulation of Fannie Mae and Freddie Mac, the nation’s largest mortgage finance companies, which have come under tremendous pressure in the last few days amid concerns about reserves.

“The Senate bill would provide for $4 billion in block grants to states to purchase already foreclosed homes, which just helps lenders who now own these properties, not people trying to stay in their homes,” Perino said in a statement.

“If this provision is in legislation that comes to the president’s desk, he will veto it,” she said.

The White House also opposes a Senate provision that would ban risk-based pricing for Federal Housing Administration loan insurance.

Perino praised the Senate bill for strengthening oversight and regulation of Fannie Mae and Freddie Mac, providing “a strong regulator that will ensure that the housing GSEs hold sufficient capital and are focused on their statutory housing mission.”

“The Senate GSE oversight provisions must not be weakened,” she said.

Fannie Mae and Freddie Mac shares have dropped sharply this week as investors fret over the whether the two government- sponsored enterprises have the reserves needed to survive sinking home values and soaring defaults.

Reporting by Jeremy Pelofsky; Editing by Andre Grenon