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Senate leaders compromise on FHA expansion

Dodd, Shelby see Fannie and Freddie covering losses

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Senate Banking Committee leaders agreed to a multibillion-dollar expansion of FHA loan guarantee programs Monday, saying Fannie Mae and Freddie Mac would cover losses rather than taxpayers. The Congressional Budget Office has estimated that taxpayers might be liable to up to $1.7 billion in losses if the program -- approved May 8 in a 266-154 House vote -- helps 500,000 borrowers over the next five years. With the Bush administration threatening a veto, Senate action on the bill was thought to depend on the support of Sen. Richard Shelby, R-Ala., who had opposed leaving taxpayers on the hook. A compromise announced Monday between Shelby and Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, would cover losses by tapping an affordable housing fund to be created as part of another bill strengthening oversight of Fannie Mae and Freddie Mac. The compromise was approved by the committee today in a 19-2 vote, moving the Federal Housing Finance Regulatory Refor...