WASHINGTON — The House on Wednesday approved a still-controversial housing bill that supporters say could offer some relief for the San Joaquin Valley's foreclosure crisis.
California and Valley agencies, for instance, could purchase some of the region's myriad foreclosed and abandoned homes with the help of a new $4 billion grant program.
"This is just a stopgap," said Rep. Dennis Cardoza, D-Merced, "but it's the best we can do today.
Cardoza joined other lawmakers in contributing provisions to the forbiddingly technical, 694-page bill that has bounced around Capitol Hill for about a year. President Bush this week dropped his earlier veto threats, giving a green light for final approval.
Even so, the bill approved on a 272-152 margin vexes some.
Up until the last minute, the White House denounced the housing bill's $4 billion grant program as an unwarranted bailout for private lenders. Even after Bush dropped his opposition, at the urging of Treasury Secretary Henry Paulson, some GOP lawmakers held firm.
"It will allow local governments to expose themselves to the risks of the market," warned Rep. Pete Sessions, R-Texas, while others denounced what they called a "slush fund."
Republican Rep. Devin Nunes of Visalia added that "99 percent of the folks are fine with their mortgages. And he cautioned about a price tag that could rise into the hundreds of billions of dollars.
"In the long run, this could be a dangerous bill," Nunes said. "We don't even know its costs."
A big part of the bill props up Fannie Mae and Freddie Mac, the giant government-sponsored mortgage finance companies that together own or guarantee half of the nation's mortgage debt.
The new $4 billion grant program would enable state and local housing agencies to "purchase and redevelop" abandoned and foreclosed homes within 18 months. The government agencies could buy the properties at a discount, and then choose to sell, rent or demolish the homes.
Lawmakers declare the grants should target "areas hit hardest by foreclosures." This will be determined by a formula that includes the number of foreclosures, the extent of sub-prime lending and other factors set by the Department of Housing and Urban Development.
The word "California" does not appear anywhere in the Housing and Economic Recovery Act of 2008. Nonetheless, the state in general and the San Joaquin Valley in particular could get a fair-sized chunk of the money.
Lenders began foreclosure activities on a record 118,120 California homes between April and June, according to data compiled by DataQuick Information Systems. Foreclosure proceedings had begun on about 53,000 California homes during the same three-month period last year.
The second-quarter foreclosure surge has been most dramatic in the region between Stockton and Merced. The number of default notices soared 200 percent in Merced County, 169 percent in Stanislaus County and 141 percent in San Joaquin County.
"We want to keep as many people in their houses as we can," said Democratic Rep. Jerry McNerney of Pleasanton, whose district includes part of San Joaquin County. "This is a bill that really does help people."
McNerney authored a provision that boosts loan limits for veterans.
Second-quarter default notices increased 158 percent in Madera and Tulare counties, 150 percent in Kings County and 104 percent in Fresno County over last year, the DataQuick records show.
First-time homebuyers would get a $7,500 refundable tax credit, under the bill. Proponents say this could help more people buy the Valley's foreclosed-upon houses, thousands of which remain vacant.
The bill also provides $180 million for financial counseling and legal assistance to help current homeowners. The bill targets some of this money for the 100 U.S. metropolitan areas with the "highest home foreclosure rates," which will guarantee funding for the Valley.
McClatchy Newspapers 2008