The need for congressional action is twofold.
The first reason is that the administration wants banks to be charged what Obama called "a small fee" to pay the $5 billion to $10 billion cost of refinancing millions of mortgages rather than add to the deficits that threaten the economy, as Fed Chairman Ben S. Bernanke told the House Budget Committee two weeks ago.
The second is that Congress must authorize the expansion of FHA capacity to refinance these mortgages, including establishing a way to insure these loans separately from the rest of the agency's portfolio to limit the risk to the more solid ones.
Two years ago, when Democrats controlled both houses of Congress, the administration proposed charging lenders a fee to pay the costs of modifying loans. That idea didn't pass.
In addition, despite denials from the U.S. Department of Housing and Urban Development, FHA solvency remains an issue for many economists. If the situation reaches the tipping point, it would end in another multibillion-dollar taxpayer bailout.
There may be as many as 10 million U.S. borrowers who owe more on their mortgages than their houses are worth. Just setting up a mechanism to handle them would take months, because existing "Home Affordable" programs don't appear to have been up to the task.
All I'm saying is, don't count on this one.
Why? After the announcement, HUD kept forwarding to me - unsolicited - testimonials from academics and others on the program's viability.
Yet, if House Speaker John A. Boehner (R., Ohio) says "no way" 90 minutes before Obama even announces the program, all the favorable comments in the world won't change the outcome.
Boehner and other House Republicans have maintained from the start that these programs aren't worth the money being spent for them. In fact, Boehner maintains they have simply succeeded in delaying market recovery.
