House OKs funds for foreclosed homes

A U.S. House panel approved a measure to help states buy and refurbish foreclosed homes as lawmakers move to stabilize the U.S. real-estate market in the wake of the subprime-mortgage crisis.
The House Financial Services Committee last week approved creation of a $15 billion loan-and-grant program during a hearing in Washington, D.C., sending it to the full House for its consideration. The program would focus on owner-vacated homes and split the funds evenly between grants and loans.
“Cities are being badly hurt, and this is the only vehicle proposed that goes to the aid of the cities and counties,” said Rep. Barney Frank, the Massachusetts Democrat who leads the House panel.
The legislation aims to help states repair and find residents for foreclosed homes to fill vacancies that lawmakers say undercut the value of neighboring properties. Under the plan, funds would be allocated based on a state’s percentage of foreclosures, with the hardest-hit states, such as Ohio and Nevada, benefiting most. The measure was introduced by Rep. Maxine Waters, a California Democrat.
Congress is pushing legislation to stem rising foreclosures amid the worst housing slump in a quarter century. Foreclosure filings rose 57 percent in March from a year earlier, Irvine, Calif.-based RealtyTrac Inc., reported.
Committee Republicans opposed the bill, saying it would benefit lenders at taxpayers’ expense and create incentives for companies to seek foreclosure.
“This proposal could have an adverse effect of encouraging lenders to move toward foreclosures so they could move these bad loans off their books and have the taxpayers cover the cost,” said Rep. Shelley Moore Capito, a West Virginia Republican.
Frank has introduced legislation to let the Federal Housing Administration insure as much as $300 billion in refinanced mortgages after loan holders agree to cut principal to help struggling borrowers. Frank said he expects the full House to take up the measure in May. •