House approves colossal housing package

July 24, 2008

U.S. House leaders Wednesday approved a colossal housing package that allows the federal government to back up to $300 billion in refinanced loans for at-risk borrowers, a measure that could save thousands of Southwest Florida homeowners from foreclosure.

President Bush backed down from his veto threat of the broad-based legislation, fast-tracking passage of a bill aimed at stimulating recovery and boosting confidence in housing markets. The House vote was 272-152, and the Senate is expected to agree by week’s end, bringing relief to about 400,000 homeowners nationwide. This bill also included tax credits of up to $7,500 for first-time home buyers.

The package also entails a plan to bolster the ailing government-sponsored mortgage giants, Freddie Mac and Fannie Mae, with emergency funding and enhanced oversight.

The two companies, which provide funding for or back roughly half the home loans written in the United States, have taken a beating from investors in recent weeks amid growing solvency concerns brought on by bad-loan losses. The proposal would allow the federal government to extend credit to the companies as they weather one of the worst housing meltdowns in recent history.

The bill sets up a permanent affordable-housing fund financed by Fannie Mae and Freddie Mac and allocates $3.9 billion in local government grants to preserve property values and provide affordable housing through the purchase of foreclosures.
Additionally, the legislation would provide $180 million for foreclosure prevention efforts, another area of need for South Florida agencies overwhelmed by borrowers seeking assistance.

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