The House of Representatives is expected to vote next week on a package of bills including a $300 billion expansion of Federal Housing Administration loan guarantee programs and a $7,500 credit for first-time home buyers sought by home builders.

The package will also include measures sought by the Bush administration, including legislation updating FHA loan guarantee programs and stricter independent oversight of Fannie Mae and Freddie Mac, Rep. Barney Frank said.

Also part of the package is a proposal to provide $15 billion in loan and grant programs to buy up owner-vacated foreclosed homes, HR 5818, authored by Rep. Maxine Waters, D-Calif.

Frank has said his bill to expand FHA loan guarantee programs, HR 5830, would help up to 2 million borrowers and would mostly pay for itself through premiums collected from borrowers, but concedes taxpayers could be on the hook for up to $6 billion in losses.

Others say participation in the program would be more limited, because lenders would have to agree to accept no more than 85 percent of a home’s present assessed value to participate.

The Congressional Budget Office released an estimate Friday that the program could cost $2.7 billion over five years and help 500,000 borrowers refinance into FHA-backed mortgages. An analysis by Citigroup Global Markets projected that depending on how housing markets fare, the government could come out $31 billion ahead or lose as much as $20 billion in guaranteeing between 1 million and 1.5 million refinance loans.

Addressing members of the Mortgage Bankers Association on Monday, Frank said the House Financial Services Committee will hold a hearing on May 21 to look into the pricing and availability of jumbo mortgages. The committee chairman said he was disappointed at problems in implementing temporary increases in the conforming loan limit for loans eligible for purchase or guarantee by Fannie Mae and Freddie Mac, the Associated Press reported.

The government-sponsored enterprises (GSEs) have built cautious underwriting and pricing standards into the loans to protect themselves against losses, and are packaging the mortgages for sale to secondary market investors separately from loans that meet the old $417,000 conforming loan limit.

Analysts polled by Reuters said they expect Fannie Mae will post a $2 billion loss for the quarter, while Freddie Mac was expected to report $920 million in losses. Fannie Mae reports earnings today, while Freddie Mac plans to release its results May 14.


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