GOP to offer cut rate mortgages in stimulus bill, Ensign says

WASHINGTON – Republicans this week will push to broaden the nation’s economic recovery package to do more for housing, including a proposal that could allow homeowners to refinance their mortgages at a bargain 4 percent rate, Sen. John Ensign said Sunday.

As the Senate prepares to debate an $888 billion stimulus bill, Ensign, R-Nev., said Republicans will focus on falling home values, which he said remains “the cancer” behind the nation’ economic crisis.

One GOP amendment would call for government subsidies to enable homeowners to refinance their mortgages at an interest rate of 4 percent, he said on the CNN talk show “State of the Union.” The average rate on a 30-year fixed rate mortgage currently is 5.1 percent, the Federal Home Loan Mortgage Corp., reported Thursday.

Ensign said the proposal would bolster the housing industry while putting $400 or more monthly into the pockets of average homeowners. “That would be very stimulative and if you combine that with properly targeted tax cuts, we could get this economy growing,” he said.

During the Republicans’ weekly radio address on Saturday, Senate Minority Leader Mitch McConnell of Kentucky mentioned the plan. He estimated the average family would see its monthly mortgage payment drop by $466 a month, or $5,600 a year. Over the life of the loan the savings would be $167,760, he said.

An Ensign spokesman said Sunday the amendment still is being drafted, and Republicans have not come up with a cost yet. Democrats have said they would be willing to take a look at it, but outside experts say the expense and complications of re-doing millions of mortgages could make it unworkable.

A number of senators have said the stimulus bill being considered by the Senate does not do enough to address housing as it seeks to create jobs by pumping billions of dollars into the economy .

“Regardless of the jobs you are going to create you are not going to treat the cancer that is affecting our economy, and that is the housing problem,” Ensign said. “The cancer spread to other parts of the economy but it still is the underlying problem.”

In another bid to reduce the number of homes lagging on the sales market, Republicans also are considering amendments to sweeten tax breaks for first time homebuyers, offering a credit of $15,000.