The White House today threatened to veto a sweeping housing bill that would package measures long sought by the Bush administration together with a $300 billion expansion of FHA loan guarantee programs the administration views as a bailout.

At a press conference with Republican House leaders, Bush rejected a gambit by Democrats to bundle expansion of Federal Housing Administration loan guarantees programs with action on housing issues the administration has been stymied on for years — including increased oversight of Fannie Mae and Freddie Mac and "modernization" of FHA loan programs through risk-based premium pricing.

"We are committed to a good housing bill that will help folks stay in their house, as opposed to a housing bill that will reward speculators and lenders," Bush said. "I will veto the bill that’s moving through the House today if it makes it to my desk, and I urge members on both sides of the aisle to focus on a good piece of legislation that is being sponsored by Republican members."

The president’s veto threat came as the House of Representatives was scheduled to debate a sweeping housing bill, the American Housing Rescue and Foreclosure Prevention Act. The bill would incorporate legislation authorizing FHA to guarantee refinance loans for troubled borrowers when lenders agree to principal write-downs into a broader package of amendments to legislation passed in the Senate April 10, The Foreclosure Prevention Act of 2008.

Republicans were able to keep a $400 billion expansion of FHA loan guarantee programs proposed by Sen. Chris Dodd, D-Conn., out of that bill, HR 3121. But House Democrats hoped that by amending the bill to include provisions sought by the Bush administration, it might pass muster with the White House.

The House’s sweeping amendments to HR 3121 incorporate Massachusetts Democrat Rep. Barney Frank’s $300 billion expansion of FHA loan guarantees, as previously proposed in legislation approved May 1 by the House Financial Services Committee, HR 5830 (see story).

The proposed House amendments to HR 3121 also incorporate legislation approved last year to reform oversight of Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks (the "government-sponsored enterprises," or GSEs), and a revised version of an FHA modernization bill that would make permanent temporary increases in FHA loan limits and allow limited risk-based pricing.

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