Connecticut mortgage lenders

The mortgage scandal plagued senate will have a test-vote today on housing foreclosure rescue program in which the Federal Housing Administration (FHA) would provide $300 billion in new, cheaper mortgages for struggling homeowners who otherwise would be considered too financially risky to qualify for government backed, fixed-rate loans.

A plan that will help hundreds of thousands of homeowners avoid foreclosure is drawing support in the Senate. But the recent mortgage scandal involving several senators seems to be fresh on their minds and for good reason.

Reuters:

Reuters reported on Friday a congressional ethics panel is examining allegations that Conrad and Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, received preferential loans from Countrywide.

Both have acknowledged they refinanced properties as members of Countrywide’s VIP program, but Conrad wrote in his letter the loans he received through Countrywide were “completely within what was commercially available in the market, and widespread practice among mortgage lenders”.

The far-reaching housing plan faces a Senate test-vote Tuesday, when it could also come to a final vote. The disputes among Democrats over key details, however, as well as a veto threat from the White House will almost certainly push any final agreement into July.

AP:

In a letter to Democratic leaders last week, the 42 House members of the Black Caucus said the bill is plagued with “glaring omissions,” including affordable housing funds for states affected by Hurricane Katrina and grants for states and localities to buy and fix up foreclosed properties.

To draw GOP support, Senate Democrats diverted the affordable housing money to pay for the foreclosure aid program.

The Senate bill provides $3.9 billion in grants to deal with foreclosed properties — compared with a House plan providing $15 billion — but the White House singled out the funds in its veto threat, and Blue Dogs are demanding that the money be offset with cuts elsewhere.

Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, said he’d be willing to yank the money and add it to a separate measure in the interests of a deal.