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Cost outlook for Senate housing legislation
WASHINGTON (6/11/08)—A Senate housing bill to allow the Federal Housing Administration (FHA) to insure up to $300 billion in subprime mortgages would benefit about 400,000 of the country’s 2.2 million borrowers expected to face the threat of foreclosure on their homes over the next few years. That estimate was unveiled Tuesday by the Congressional Budget Office (CBO) as part of a cost estimate of the legislation, an evaluation ordered reported by the Senate Banking Committee on May 20. According to an article in CongressDaily PM (June 10), the CBO also said the measure, introduced by Senate Banking Chairman Christopher Dodd (D-Conn.) and ranking member Richard Shelby (R-Al.), ultimately would cost FHA $729 million over a 10-year period to help guarantee new mortgages for those troubled loans at risk of default. The CBO estimated that beyond the bill's ceiling of $300 billion in new guarantees, the FHA would also provide $68 billion in new loan commitments. The article pointed out that the Senate bill varies from a companion bill in the House in a few ways, including the fact that it has a narrower eligibility than the House version. That bill, sponsored by Rep. Barney Frank (D-Mass.), head of the financial services panel, is expected to cost $1.7 billion and help an estimated 500,000 borrowers. The FHA refinancing program is part of a broader housing package that both the House and Senate are working to reach agreement on before July.
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