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Heck only Republican to dissent as House OKs GOP bill killing refinance program

WASHINGTON — With Rep. Joe Heck of Nevada the only Republican dissenter, the House on Thursday voted to kill assistance for people who want to refinance homes that are worth less than they paid for them.

The mostly party-line vote, 256-171, came despite a White House veto threat against the measure. The bill killing the Federal Housing Administration Refinance Program stands scant chance of reaching President Barack Obama’s desk because its fate in the Democratic-run Senate is dim.

Even so, the measure and three similar bills to soon follow underscore the House GOP’s desire to slash the size of government at a time when annual budget deficits have surged past $1.6 trillion.

At the beginning of February there were only 245 loan applications through the program, according to Corelogic, a housing research firm that cited the fact it was new, required lenders to update their systems to process the loans and to agree to make “meaningful principal reductions” on the mortgages.

The analyst firm cited reports that Wells Fargo and Ally Financial were preparing to introduce pilot programs to move troubled borrowers into the refinance program.

Heck, a freshman whose performance on housing matters is closely scrutinized because his Southern Nevada district is the epicenter of the national foreclosure crisis, said the program has not been promoted and was worth saving.

He announced in a speech he would vote against the bill, citing more than 390,000 Nevadans who owe more on their homes than they are worth. In the end, he was the only Republican to vote against it.

“I say a failed PR job should not be the reason a good program dies, and the FHA refinance program can be a good program,” Heck said. “But it needs more attention, and perhaps reform, so homeowners know it’s an option.”

“Prior to my getting here I did not know this program existed,” Heck said afterwards. “As with most things, you say it has failed, but it never has had the opportunity to get started.”

Fellow Nevada Republican Dean Heller voted to terminate the mortgage program saying “it is not working for our state.”

“Many federal programs … were created with good intentions. We must have the courage to eliminate the programs that do not work,” Heller said.

Rep. Shelley Berkley, D-Nev., voted to keep the assistance, saying it has flaws but should not be ended.

“There’s no question this program needs more work and that it has been slow to get off the ground, but its potential to help homeowners in Las Vegas and other communities … is too great to just terminate this effort overnight.”

Democrats said the program is helping people stay in their homes when nearly one in four households with home mortgages are underwater. In Nevada, two-thirds of homeowners are underwater on their mortgages.

Democrats accused Republicans of preferring to spend money on farm subsidies and to help the governments of Iraq and Afghanistan, not for domestic problems.

“It’s part of the ‘so be it’ attitude,” said Rep. Carolyn Maloney, D-N.Y. She described the GOP’s attitude as, “You’re on your own. We’re not going to help you.”

The refinance program started last year and has so far helped 63 underwater homeowners convert their mortgages into more affordable FHA-insured loans, according to Housing and Urban Development Department figures. It is backed with $8.1 billion from the $700 billion federal financial bailout of 2008 — money that would only be spent if one of the newly refinanced mortgages falls into default.

The House is likely to approve another measure on Friday erasing a $1 billion program supplying loans for homeowners who have lost their jobs or become seriously ill.

A third House bill would end the Home Affordable Modification Program, Obama’s chief thrust against foreclosures. A fourth gives money to states and local governments to buy and refurbish abandoned and foreclosed properties.

The Associated Press contributed to this report. Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or 202-783-1760.

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