Rep. Frank, administration battle over housing blame

Rep. Barney Frank (D-Mass.) is shooting back at the Bush administration, saying Congress is not to blame for a beleaguered housing program, passed over the summer, that has yet to show significant results.

On Monday, Frank released a memo acknowledging problems in the $300 billion Hope for Homeowners program, but criticizing the Bush administration for its role in drafting and implementing legislation intended to help roughly 400,000 homeowners avoid foreclosure.

{mosads}“Recent reports by the news media have cited low participation in the Hope for Homeowners program. While this is certainly an issue, and one that Chairman Frank is committed to fixing, some Bush administration officials have blamed Congress for the problems in participation. That charge is incorrect; and the facts tell a different story,” said Frank’s spokesman, Steve Adamske.

Democrats and the White House have increasingly been pointing fingers in the last months of the Bush administration over who is to blame for the financial crisis, and particularly for the troubled housing market at its root.

So far the Hope for Homeowners program, run under the aegis of the Housing and Urban Development agency, has reportedly attracted only a few hundred applications. HUD Secretary Steve Preston has recently pinned the blame on congressional Democrats, saying they designed a much too rigid program.

Frank’s memo alleges that Preston “executed a complete administration about-face.” It charges Preston with initially saying terms of the program were too generous, but now claiming that they are too strict.

The program also levies significant fees on homeowners who participate, which could discourage participation, the memo said. Frank is urging the administration to use some of the $700 billion financial rescue package passed in October to subsidize the fees, and criticized Treasury Secretary Henry Paulson for failing to act.

Separately on Monday, a group of private banks said they expected to modify about 2 million mortgages in 2009. The Hope Now Alliance, which is acting at Treasury’s urgings, estimated that a total of 950,000 loans were modified in 2008 and that 2.2 million foreclosures were prevented.

Despite those numbers, there were new signs on Monday that the housing market is still under significant stress. A report from the government’s Office of Thrift Supervision and the Office of the Comptroller of the Currency said that there was a high rate of re-default among homeowners with mortgages modified in 2008. Among the mortgages modified in the first quarter of 2008, more than half after six months were delinquent in payment by at least 30 days.

“This trend of increasing delinquencies underscores the need to understand why these modifications have not been more sustainable,” said John Dugan, the comptroller of the currency.