Senate Committee Takes Up Housing Debate

The Senate Banking Committee is set to tackle proposed housing legislation on Thursday, and a key Democratic lawmaker said this morning that a deal with Republicans was nearing fruition. Committee Chairman Christopher Dodd (D-CT) told the press Thursday morning that a deal was “very close” during an interview on Fox Business Network; last second negotiations involving GOP leaders shuttled a scheduled committee markup on the Senate’s housing package from 10am EST to 11:30EST.

Dodd has been working hard to gain the support of key Republicans for a tentative housing relief package, postponing earlier committee markups in the face of stiff GOP opposition.

The House of Representatives last week passed its own sweeping version of housing relief as part of a revised Foreclosure Prevention Act. House Financial Services Committee Chairman Barney Frank (D-MA), who originally pushed for the proposed legislation, has said he wants to authorize the Federal Housing Administration to insure up to $300 billion in refinanced mortgages for troubled borrowers, when the investor agrees to take a haircut on a portion of the outstanding debt.

Critics suggest such loans are significantly more likely to default than those mortgages already on the FHA’s books, essentially pushing the housing mess into the lap of taxpayers.

The primary roadblock in the Senate so far has been Sen. Richard Shelby (R-AL), the ranking Republican on the Senate Banking Committee, who is seen as either the last bastion of sensibility or a troublesome holdout.

It’s not clear if Dodd and Senate Democrats have made progress in gaining Shelby’s support, or if an effort to go around the leading Republican is in the works — talks between Shelby and Dodd had broken down late last week, according to media reports, although the Republican Senator’s office signaled that the door might yet be open for further negotiation.

Sources suggest to Housing Wire that the housing package will have little hope of passage in the Senate without Shelby’s stamp of approval. President Bush has already threatened to veto the package.