Bush opposes housing rescue package

.WASHINGTON (AP) – A top housing official said Thursday that the Bush administration “strongly opposes” Democrats’ housing rescue package, calling it a bailout that would expose taxpayers to excessive risk.

Deputy Secretary of Housing and Urban Development Roy A. Bernardi also indicated that President Bush would veto a bill sending $15 billion to states for the purchase and rehabilitation of foreclosed properties.

The comments, in separate letters to lawmakers, were the most forceful rejection yet by the Bush administration of Democrats’ housing aid plans. And they were the clearest indication to date that the White House intends to put up a vigorous fight against a bill to let the Federal Housing Administration take on as much as $300 billion in new mortgages for financially strapped homeowners.

They came as the House Financial Services Committee began work on the bill by Rep. Barney Frank, D-Mass., the panel chairman. It would substantially relax the FHA’s standards to reach struggling borrowers who otherwise would be considered ineligible for a government-backed mortgage.

Homeowners would have to show they could make payments on a refinanced mortgage, and lenders would have to agree to take hefty losses on the existing loans.

“We’re not talking here about murderers or muggers or arsonists. We’re talking about people whose misdeeds were to try too hard to find housing for their family,” Frank said. “What we hope to do today is to diminish the cascade of foreclosures.”

The Bush administration has previously questioned the scope and structure of the plan, although it backs the central concept: adjusting FHA’s rules so more homeowners can refinance into government-backed loans.

An administration program, called FHASecure, made similar changes, but it is limited to borrowers who have good credit. It also doesn’t require lenders to accept losses on existing mortgages.

Frank has been working to draw Republican support for his plan, which he says has a good chance of becoming law this year.

But first, Democrats will have to deal with strong GOP philosophical objections to any measure that inserts the government into the housing maelstrom – especially one that could help people who are victims of their own irresponsible decisions.