Ohio’s LaTourette Proud of Ringleader Role in $150 Million Boost to Foreclosure Bill
House Passes $300 billion Housing Reform Bill.
Pryce, Wilson, Strickland Agree on Reworking of Grant Distribution Formula ePluribus Media OhioNews Bureau
COLUMBUS, OHIO: Ohio Congressman Steven LaTourette (OH-14) teamed up with other Ohio Congressional colleagues to rework a grant distribution formula that added another $150 million in funding to Ohio that otherwise would have gone to a state like California where home prices are much higher than in Ohio but whose rate of foreclosures is little different than that of the Buckeye State. The bill, HR 5818, known as the Neighborhood Stabilization Act of 2008 and sponsored by California Rep. Maxine Waters, passed 239 to 188. The bill provides $15 billion in loans and grants to states and cities to deal with foreclosures nationwide and includes $7.5 billion for zero-interest loans and $7.5 billion in grants to be distributed to the states based on a specific funding formula, according to a media release send to ePluribus Media OhioNews Bureau. The original formula would have steered a third of all the available money to California, which has a huge foreclosure problem and very high home values. LaTourette, of Bainbridge Township in northern Ohio, argued that the formula would penalize states like Ohio that have large numbers of foreclosures, but home prices that didn’t escalate much during the recent real estate boom. “Ohio and 46 other states do better under the new formula we brokered,” LaTourette said. “I argued that our goal should be able to help as many states and homeowners as possible, not just those in states who are having trouble keeping up with payments on million dollar homes.” [Steve LaTourette, OH14]
A spokesman for LaTourette told ePluribus Media OhioNews Bureau that In the original version of H.R. 5818, Ohio would have received about $436 million in grants and loans. But with LaTourette acting as ringleader with Ohio Congressman Debra Pryce of Columbus, a Republican leaving office this year, and Charlie Wilson, a Democrat from southeast Ohio running for his second term, the change in the funding formula will now result in about $586 million coming to Ohio, which has seen increases in the number of foreclosures filings in 2007 increase and the number of filings jumped by 20 percent or more in 46 counties, according to a recent report. LaTourette thanked his Ohio colleagues in Congress and Gov. Ted Strickland, who has made the crisis of home foreclosures a top priority. PRESIDENT BUSH CALL BILL A BAILOUT, VOWS VETO The House today let the Federal Housing Administration insure up to $300 billion in new loans over four years if lenders agree to reduce mortgage principal. Republicans and President Bush have argued that the bill is about rewarding bad behavior from real estate speculators and lenders and other who acted as if the market would only go up but who want a bail out now that the market has gone down. Despite White House support for modernizing the FHA, Bush said he would veto it. With a veto looming, and with procedural considerations on overriding Bush’s veto, Hill watchers say it might all get ironed out by July 4th. Democrats want the bill passed today, so hurting homeowners can benefit from it sooner rather than later. It is estimated that 1.4 million loans are likely to be eligible for the program, resulting in about 500,000 borrowers being insured, according to estimates by the Congressional Budget Office, which estimates the expansion program would cost taxpayers about $1.7 billion or about $73 per family. One of 39 Republicans who voted for the bill, LaTourette took issue with the talking-point tact his partisan colleagues were taking. "What's offensive is some of the rhetoric," LaTourette told the Washington Post after today's vote. "They say it rewards speculators. No, it doesn't. It's limited to homeowners. They say it's a $300 billion bailout. No, it's not. It costs $1.7 billion." Saying he would have gone about things differently from what Frank did, LaTourette nonetheless aid the housing mess "calls for some bold action" because "people are expecting us to do something." FRANK FRANK ON BENEFITS OF BILL In his closing argument about the significance of passing the bill, Frank took on Republicans over their patented argument that the free market is always right. “Clearly, there has been a market failure with regard to mortgages,” he said, adding that the need for the bill is “due to free market principles” that produced the housing crisis ravaging homeowners and causing big dents in the overall economy of the nation. Frank also said he doesn’t see the bill as a “systematic intervention into the market” but a “pro-market bill” because the “markets are in trouble” and if the many reforms its includes, including the modernization of Fannie Mae and Freddie Mac, are not adopted and put to work now, the housing problems that are affecting the overall economy will continue. Frank said the bill is not an “on-going intervention into the market” but is “time limited and limited to a subset of mortgages. Using “The Economist,” a conservative British publication to make his point that the bill “If we do not adopt appropriate responses to market failures, the problems will continue,” said Frank of a dire housing crisis that came about because of the many smart people, especially the ones who understood “collateralized debt obligation derivatives,” leapt before they looked. In his passion to articulate why the bill is not a bailout, he mocked the bill opponents, saying, “No borrower who goes through this process will say at the end of it, ‘that was fun, where do I buy another ticket to get back on Space Mountain.’” He said the real problem is not interest rates adjusting higher but the fact that “people owe more than the house is worth.”
A HARBINGER OF THINGS TO COME? President Bush and other lawmakers, mostly Republicans but with some fiscally conservative Blue Dog Democrats included as well, argue the bill is a so-called bailout of speculators and investors who made a bad bet on the market, lost, and now want taxpayers to rescue them. While this argument may hold water for some, others argue that the housing crisis is dealing a devastating blow to the national economy, as homeowners no longer tap the equity in their home to spend on other goods and services. As Frank argued today, home foreclosures first affect the other homes around them, causing their value to drift downward. With enough home foreclosures in play, as there is in Ohio, political subdivisions are affected as tax revenue dwindle, causing them to cut back on services or consider other ways to boost revenue. But the brick wall one California city ran into recently could be nothing more than an anomaly or a harbinger of things to come. Vallejo City Council, as reported in The New York Times, voted to declare bankruptcy Tuesday as they face dwindling tax revenues brought on by a “market meltdown and a faltering economy.” About the author John Michael Spinelli is a former Ohio Statehouse government and political reporter and business columnist. He now serves as the OhioNews Bureau Chief for ePluribus Media Journal. Find ONB archives here. If readers have a news tip or story idea about Ohio politics or government, contact the OhioNews Bureau at:
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