Partial Passing of Housing Rescue Bill
The United States House of Representatives passed a bill today by a vote of 239 – 188 to send $15 billion dollars to states for the purchase and renovation of properties in foreclosure. The Democrats are rallying to stop the foreclosure crisis and come to the aide of families and homeowners who have fallen victim to the mortgage turmoil. A separate section of this housing rescue package is still on the table. This portion deals with allowing distressed homeowners the ability to refinance using government backed mortgages.
The message being sent by Congress is loud and clear to the people as well as to President Bush who is not in agreement with the terms of the bills and threatens using his veto powers. President Bush believes that the bills, as they stand, will assist lenders and speculators instead of the victims.
Representative Barney Frank, D-Mass is spearheading the drive for the FHA to endorse $300 billion dollars in new mortgages for economically stressed homeowners by allowing more fixed rates to qualifying persons.
The homeowners will get funding basically at the expense of the originating lender, who must agree to the loss of proceeds of the original mortgage terms. It is estimated these bills will help 500,00 current homeowners. The bills also come with a caveat that should the homeowner refinance or sell, 50% of the profit will be returned to the FHA.
The $15 billion dollars being extended to the states will enable them to purchase, renovate and then rent or sell foreclosed properties in an effort to deter further damage to communities with a high rate of foreclosures.
Republican adversaries insist that these measures will cause motivation for foreclosure instead of incentive for lenders to offer alternative financing.
Democrats, trying to appeal to Republicans have adopted several Republican requests including an FHA overhaul producing increased regulations for Freddie Mac and Fannie Mae government backed mortgages. An additional allowance is for local and state mortgaging authorities to use tax-exempt bonds to refinance distressed sub prime mortgages. Fannie Mae and Freddie Mac ceilings would be raised to $729,750 to help in high cost areas.
One last benefit will be realized by first time homeowners who will be given a $7500 housing credit to be repaid over a 15 year time span.