WASHINGTON — A key House panel took the first steps last week toward providing relief to financial institutions and individuals hurt by housing foreclosure crisis.
The House Financial Services Committee was scheduled to vote late Wednesday on a measure to make $15 billion in loans and grants available to states and cities to deal with problems caused by the surge in foreclosures. Some of the funds could be used by governments to purchase foreclosed properties.
Republicans on the panel said the measure is too costly and would reward lenders, investors and speculators and possibly make foreclosure a more attractive option for lenders.
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NAFCU Director of Legislative Affairs Brad Thaler said that while his organization has not taken a position on the bill, it benefits credit unions by helping governments take some of the foreclosed properties off the hands of financial institutions.
CUNA had not taken an official position on the measure.
After press time on Thursday, the committee was scheduled to begin consider the creation of an insurance fund that guarantees up to $300 billion in refinanced mortgages. Representative Barney Frank's office has estimated that the plan would cost between $3 billion and $6 billion. Under the Massachusetts Democrat's measure, borrowers with loans worth more than the value of their home would be able receive a newer, more affordable government-backed loan.
Republicans contend that Frank's measure is too expensive and burdensome and are backing a bill that includes stronger registration and licensing requirements for lenders but no federal insurance fund for refinanced mortgages.
The measure would also expand disclosure requirements, increase support for consumer counseling on housing matters and expand a program that helps subprime borrowers transition into FHA loans.
CUNA Vice President of Legislative Affairs Ryan Donovan said his group is supportive of what Frank has put forward and sent him a letter to that effect in March. "But we also recognize that there are many ideas to address the current situation. As we approach the mark up, we'll be looking at the amendments that are filed to make sure that they do not adversely affect credit unions' ability to serve their members."
NAFCU had not returned a call at press time seeking comment.
Senate Banking Committee Chairman Christopher Dodd (D-Conn.) is working on a measure similar to Frank's but has not introduced it.
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