Frank: Raise Revenues for Foreclosure Prevention

Revenue raising provisions, such as removing a cap on FHA reverse mortgages and raising the FHA loan limits, should be used to cover the cost of a Federal Housing Administration foreclosure rescue program, according to House Financial Services Committee chairman Barney Frank, D-Mass. "We will find other sources," Rep. Frank told attendees at the American Bar Association affordable housing conference. The House FHA bill is expected to refinance 500,000 struggling homeowners at a cost of $1.7 billion over four years. Removing the cap on the FHA reverse mortgage program would provide $300 million per year. There is a disagreement between the House and Senate on how high to raise the loan limits, but Rep. Frank said it could raise tens of millions of dollars. Meanwhile, the Senate Banking Committee has approved a GSE regulatory reform bill that taps Fannie Mae and Freddie Mac to contribute to a new affordable housing fund. During the first three years, the Senate wants to use the AH funds to pay for the FHA refinancing program. In 2006 and 2007, the House passed GSE regulatory reform bills that directs the affordable housing funds to the Gulf Coast states for rebuilding housing destroyed in Hurricane Katrina. Rep Frank maintains it is unfair to divert that assistance away from Katrina victims.