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July 26, 2008

Economy – Saturday: Senate Passes Housing Assistance Bill For Struggling Homeowners

 In a rare Saturday session the Senate passed a housing rescue legislation aimed at helping struggling homeowners avoid foreclosure and providing financial support to troubled mortgage giants Fannie Mae and Freddie Mac – the vote passed 72 to 13.

The bill, which cleared the House Wednesday by a 272-152 vote after months of political power struggle and negotiations between the House and Senate, Treasury Department, and other federal regulators, now goes to President Bush. The White House said Bush will sign it quickly, even though he has expressed concern about $4 billion in the bill aimed at helping communities buy and restore foreclosed homes.

Included in the bill is a $300 billion program to refinance loans for struggling borrowers and an ambitious rescue plan for Fannie Mae and Freddie Mac. The bill would give the Treasury Department authority to provide support as needed to government-sponsored agencies Fannie and Freddie, which guarantee or own nearly half the nation’s mortgages. It would also raise the size of mortgages that can be purchased by Fannie and Freddie and insured by the FHA, the report added. Concerns about the companies’ financial stability have dented their shares and sparked fears that a failure of one or both could have catastrophic consequences for the already depressed U.S. housing market.

The legislation would also help some 400,000 homeowners avoid foreclosure by refinancing into affordable loans backed by the Federal Housing Administration.

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