2008-07-12 01:23:07 -

- For more than a year President Bush has called on Congress to pass responsible legislation to modernize the Federal Housing Administration (FHA), improve the housing industry and to keep more Americans in their homes. For more than four years, the President has proposed broad reform of the supervisory system for the housing government-sponsored enterprises (GSEs). Legislation passed by the Senate today has some features the President supports - in particular, critical legislation to strengthen oversight and regulation of Fannie Mae and Freddie Mac, providing a strong regulator that will ensure that the housing GSEs hold sufficient capital and are focused on their statutory housing mission. The Senate GSE oversight provisions must not be weakened.

Unfortunately, the Administration has

concerns with other parts of the Senate bill. For example, risk-based pricing is an important element of effective FHA modernization. The Senate bill bans it, and that is a mistake. Moreover, the Senate bill would provide for $4 billion in block grants to states to purchase already foreclosed homes, which just helps lenders who now own these properties, not people trying to stay in their homes. If this provision is in legislation that comes to the President's desk, he will veto it.

The President encourages Congress to work quickly to improve on the Senate bill by strengthening provisions to modernize FHA, and by maintaining the strong GSE oversight provisions in the Senate bill.

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