No compromise on bill, Reid says

WASHINGTON -- Senate Majority Leader Harry Reid said Wednesday he will defy a White House veto threat and seek passage of a bill to provide greater mortgage relief to homeowners threatened by foreclosure.

Reid said he did not expect compromise on the Democratic bill, which would allow bankruptcy judges to lower interest rates on subprime and adjustable mortgages, letting homeowners rework their deals with lenders.

"I have no intention to try to work something out with the White House because I have found in seven plus years they are unwilling to compromise," Reid, D-Nev., said at a news conference.

"So we are going to do what we think is best for this country," Reid said. "If we get 67 votes (to override a veto), that is great. If not, the president is going to have to veto this legislation."

Reid said he expects Republicans will vote for the relief bill. "I am confident they are feeling the squeeze at home just like we are."

Democrats have advertised the measure as a follow-up to the $152 billion economic stimulus package enacted earlier this month.

That bill cleared the way for tax rebate checks for most Americans and offered some tax breaks on business equipment.

Foreclosures and drops in home values have risen to crisis levels in Nevada and other states, a drag on the economy that justifies more action by Congress, Reid said.

The Senate was expected to start debate Tuesday on the housing bill but got tied up in debate on Iraq. Now, votes on the mortgage measure are expected in the next week.

In Nevada, Reid said, Washoe County is $20 million short on its budget this year because of a downturn blamed in part on the mortgage crisis.

In Las Vegas last month, he said, "there were more foreclosures than there were homes sold."

The mortgage aid bill would allow judges to roll back interest rates on home mortgages as part of restructuring debt in bankruptcy court. The aim would be to help owners keep their homes when they emerge from bankruptcy.

Bankruptcy judges are allowed now to restructure debt on vacation homes but not principal residences, a distinction Reid said made little sense in the current climate. He said credit unions and small commercial banks have signed on to the bill, though not larger banks.

The bill would authorize a $4 billion increase in community development block grants for local governments to buy and recondition foreclosed homes in distressed areas.

In a veto message Tuesday, the Bush administration said the bill would "undermine existing contracts" and force lenders to raise interest rates on other borrowers.

The Bush administration has a voluntary program called Hope Now, which allows mortgage lenders to modify home loans. Democrats said their bill goes further.

Sen. John Ensign, R-Nev., has not signaled a position, spokesman Tory Mazzola said.