New Markup

The Senate Banking Committee is going to try again on Tuesday to mark up and vote on a GSE bill to strengthen regulation of Fannie Mae and Freddie Mac and a foreclosure prevention bill that uses the Federal Housing Administration to refinance struggling homeowners with underwater mortgages. Committee chairman Christopher Dodd, D-Conn., has tentatively scheduled the May 20 markup in hopes of reaching a bipartisan agreement with Sen. Richard Shelby, R-Ala., and producing a legislative package with strong bipartisan support. "Sen. Shelby and I are very close to reaching an agreement on this important piece of legislation, and are working with each other and other members of the committee to resolve the few differences that remain," Sen. Dodd said. To help pay for the foreclosure bill, which is expected to cost $1.7 billion to refinance 500,000 homeowners into FHA-insured loans, committee leaders might tap funds that Fannie and Freddie are supposed to contribute to a new affordable housing trust fund created by the legislation. Sen. Shelby is pushing this idea because he does not want taxpayer funds used to "bail out" speculators and "irresponsible" homebuyers. However, the two government-sponsored enterprises have reported losses for the past three quarters and they are raising capital to shore up their capital. "Sen. Shelby's oft repeated concerns about GSEs having adequate capital seem to have fallen by the wayside in his rush to extract money from Fannie and Freddie to pay for an FHA plan he opposes as a bailout," industry consultant Howard Glaser said.