News
The Big Story: Homeowner rescue awaits Bush’s signature
WASHINGTON D.C. (AP)—Congress approved mortgage relief for 400,000 struggling homeowners Saturday as part of an election-year housing plan that also aims to calm jittery financial markets and bolster the sagging economy. President Bush said he would sign it promptly, despite reservations.
The measure, regarded as the most significant housing legislation in decades, lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than losing their homes.
It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae and Freddie Mac, pillars of the home loan market whose losses have sparked investor fears, and tightens controls over the two government-sponsored businesses.
In a rare Saturday session, the Senate voted 72-13 to send the bill to the president; the House passed it Wednesday.
Bush had withdrawn a veto threat earlier in the week over $3.9 billion in neighborhood grants. He contended the money would benefit lenders who helped cause the mortgage meltdown, encouraging them to foreclose rather than work with borrowers.
Treasury Secretary Henry M. Paulson’s request for the emergency power to rescue Fannie Mae and Freddie Mac helped push through the measure. So did the creation of a regulator with stronger reins on the government-sponsored companies, as Republicans long have sought.
Democrats won cherished priorities in the bargain: the aid for homeowners, a permanent affordable housing fund financed by Fannie Mae and Freddie Mac, and the neighborhood grants.
The legislation takes several approaches to curing the ailing housing market.
It aims to spare an estimated 400,000 debt-strapped homeowners, many of whom owe more their houses are worth, from foreclosure by allowing them to get more affordable mortgages backed by the Federal Housing Administration.
The FHA could insure $300 billion in such mortgages, which would be available to homeowners who showed they could afford a new loan. Banks would first have to agree to take a large loss on the existing loans in exchange for avoiding an often-costly foreclosure.
The plan also is designed to relieve a broader credit crunch that has taken hold because of rising defaults and falling home values. To free up safer and more affordable mortgage credit, the bill permanently would increase to $625,000 the size of home loans that Fannie Mae and Freddie Mac can buy and the FHA can insure. They also could buy and back mortgages 15 percent higher than the median home price in certain areas.
The measure tries to prevent blight in areas hardest hit by the housing crisis, where waves of foreclosures have left properties sitting abandoned, dragging down property values and ruining neighborhoods. It sends $3.9 billion to such neighborhoods to buy and fix up foreclosed properties.
The legislation overhauls the Depression-era FHA. It requires lenders to show how high a borrower’s payment could get under the terms of his mortgage. It provides $180 million in pre-foreclosure counseling for struggling homeowners.
The Treasury Department gains unlimited power, until the end of 2009, to lend money to Fannie Mae and Freddie Mac or buy their stock should they need it. The Federal Reserve takes on a new “consultative” role overseeing the companies.
The measure includes $15 billion in tax cuts, including a significant expansion of the low-income housing tax credit and a credit of up to $7,500 for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.
Senate Republicans block heating aid bill
WASHINGTON D.C. (AP)—Republicans on Saturday blocked the Senate from considering a bill next week that would nearly double federal aid to help the poor pay heating and air-conditioning bills.
Although a dozen Senate Republicans support the measure, most voted with GOP leaders who would rather spend the time trumpeting their call to expand offshore oil drilling before Congress takes six weeks off for vacation and the presidential nominating conventions.
Democrats needed 60 votes to substitute the measure on heating and air-conditioning aid in place of the debate on an expansion of offshore drilling championed by President Bush and GOP presidential candidate John McCain. They got 50 votes Saturday, with 35 Republicans voting against changing the topic.
The measure, regarded as the most significant housing legislation in decades, lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than losing their homes.
It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae and Freddie Mac, pillars of the home loan market whose losses have sparked investor fears, and tightens controls over the two government-sponsored businesses.
In a rare Saturday session, the Senate voted 72-13 to send the bill to the president; the House passed it Wednesday.
Bush had withdrawn a veto threat earlier in the week over $3.9 billion in neighborhood grants. He contended the money would benefit lenders who helped cause the mortgage meltdown, encouraging them to foreclose rather than work with borrowers.
Treasury Secretary Henry M. Paulson’s request for the emergency power to rescue Fannie Mae and Freddie Mac helped push through the measure. So did the creation of a regulator with stronger reins on the government-sponsored companies, as Republicans long have sought.
Democrats won cherished priorities in the bargain: the aid for homeowners, a permanent affordable housing fund financed by Fannie Mae and Freddie Mac, and the neighborhood grants.
The legislation takes several approaches to curing the ailing housing market.
It aims to spare an estimated 400,000 debt-strapped homeowners, many of whom owe more their houses are worth, from foreclosure by allowing them to get more affordable mortgages backed by the Federal Housing Administration.
The FHA could insure $300 billion in such mortgages, which would be available to homeowners who showed they could afford a new loan. Banks would first have to agree to take a large loss on the existing loans in exchange for avoiding an often-costly foreclosure.
The plan also is designed to relieve a broader credit crunch that has taken hold because of rising defaults and falling home values. To free up safer and more affordable mortgage credit, the bill permanently would increase to $625,000 the size of home loans that Fannie Mae and Freddie Mac can buy and the FHA can insure. They also could buy and back mortgages 15 percent higher than the median home price in certain areas.
The measure tries to prevent blight in areas hardest hit by the housing crisis, where waves of foreclosures have left properties sitting abandoned, dragging down property values and ruining neighborhoods. It sends $3.9 billion to such neighborhoods to buy and fix up foreclosed properties.
The legislation overhauls the Depression-era FHA. It requires lenders to show how high a borrower’s payment could get under the terms of his mortgage. It provides $180 million in pre-foreclosure counseling for struggling homeowners.
The Treasury Department gains unlimited power, until the end of 2009, to lend money to Fannie Mae and Freddie Mac or buy their stock should they need it. The Federal Reserve takes on a new “consultative” role overseeing the companies.
The measure includes $15 billion in tax cuts, including a significant expansion of the low-income housing tax credit and a credit of up to $7,500 for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.
Senate Republicans block heating aid bill
WASHINGTON D.C. (AP)—Republicans on Saturday blocked the Senate from considering a bill next week that would nearly double federal aid to help the poor pay heating and air-conditioning bills.
Although a dozen Senate Republicans support the measure, most voted with GOP leaders who would rather spend the time trumpeting their call to expand offshore oil drilling before Congress takes six weeks off for vacation and the presidential nominating conventions.
Democrats needed 60 votes to substitute the measure on heating and air-conditioning aid in place of the debate on an expansion of offshore drilling championed by President Bush and GOP presidential candidate John McCain. They got 50 votes Saturday, with 35 Republicans voting against changing the topic.
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