Dodd, Shelby close in on housing deal

Key senators say they’re close to a deal on legislation that would rescue homeowners facing foreclosure.

The potential deal between Senate Banking Committee Chairman Chris Dodd (D-Conn.) and Sen. Richard Shelby (R-Ala.), the committee’s ranking member, would also tighten the reins on mortgage giants Fannie Mae and Freddie Mac.

{mosads}"I'm pretty optimistic," Dodd said. “I think we're in pretty good shape. Let's see what happens in the next few hours."

Shelby also pronounced himself hopeful. "We're getting a good concept and we're working on the language right now," he said.

Shelby and Dodd declined to discuss any details of the negotiations.

"We've been close, and then sometimes you get far apart," Shelby said in describing his talks with Dodd. "I'm very hopeful right now," he said, adding, "be patient."

Dodd delayed a scheduled markup of his own housing bill twice on Thursday to buy time as the two struggled to reach a deal on the bill.

In a press release sent late Thursday evening, Dodd indicated that he would reconvene the committee next week to consider the legislation.

The negotiations were unusually tight, with lobbyists and even other committee members and staff kept in the dark.

One sticking point was the portion of Fannie Mae and Freddie Mac profits earmarked for an affordable housing fund in legislation approved by the House. Shelby is demanding that the profits be used to cover the cost of the homeowner rescue program, which would allow the Federal Housing Administration to refinance up to $300 billion in mortgages for at-risk homeowners.

The rescues program, which would be temporary, carries an estimated $1.7 billion cost over five years. Shelby spokesman Jonathan Graffeo said the senators are wrangling over whether profits from Fannie Mae and Freddie Mac should cover “the estimated cost or the actual cost” of the program. Actual costs would mean covering the price to the federal government of defaults in the program.

The government would only incur costs on the portion of the mortgages that defaulted.