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Housing assist offered by Bush

An industry coalition is formed to help keep foreclosures at bay.

WASHINGTON - The Bush administration announced a new mortgage industry coalition Wednesday aimed at helping homeowners avoid being trapped in a rising tide of foreclosures.

Treasury Secretary Henry Paulson said the initiative would boost financial companies' efforts to help an estimated 2-million homeowners whose introductory mortgages with low rates are resetting at much higher rates, just as the housing industry suffers through its steepest downturn in 16 years.

The House pursued its own plan for helping homeowners, passing a bill to create a federal trust fund to finance construction and rehabilitation of affordable housing. The measure would provide between $800-million to $1-billion a year with the goal of creating 1.5-million affordable-housing units over the next decade by funding grants to a variety of housing providers.

The trust fund would be financed mostly from profits Fannie Mae and Freddie Mac, the chief U.S. buyers and guarantors of mortgages.

Bush has threatened to veto the measure. The White House and conservative Republicans argue that it would duplicate a program at the Department of Housing and Urban Development. GOP lawmakers said that siphoning money from Fannie Mae and Freddie Mac would amount to a tax on middle-income homebuyers.

The new mortgage industry coalition promoted by the Bush administration includes 11 of the largest mortgage service companies, representing 60 percent of all mortgages in the country. Other members are mortgage counseling agencies, investors and large trade organizations, and Paulson urged more mortgage service companies to join the effort.

"We need greater participation if we are going to get to all those that need help as quickly as possible," Paulson said.

The new initiativefollows an announcement of changes to the Federal Home Loan Administration insured-loan program letting more people qualify for FHA-insured loans.

Democrats said the initiative still falls short of what is needed given the foreclosure crisis facing the country.

Sen. Charles Schumer, D-N.Y., noted that the National Association of Realtors on Wednesday revised down once again its forecast for home sales, predicting sales of existing homes will fall by 10.8 percent this year, a bigger drop than the 8.6 percent decline it forecast just a month ago.

"Unfortunately, the bottom is falling out of our housing market much more quickly than the administration is willing to stem the tide of foreclosures," Schumer said in a statement.

Schumer and other Democrats in Congress are pushing legislation aimed at helping more people avoid losing their homes. Some of the bills also would attack predatory lending practices that critics see as a prime cause for the crisis.

Estimates are that mortgages resetting from low "teaser" rates could mean an extra $250 to $300 in monthly payments on the typical $1,200 monthly mortgage payment.

FAST FACTS

Bush's solution

New group: The Bush administration announced a mortgage industry coalition aimed at helping homeowners avoid foreclosure.

Majority: Treasury Secretary Henry Paulson said 11 of the largest mortgage service companies had agreed to join the new coalition.

Judgment: Democrats say the actions so far have been too little and too late.

[Last modified October 11, 2007, 00:33:25]