The Senate overwhelmingly passed legislation that would rescue hundreds of thousands of homeowners avoid foreclosure and help them obtain more affordable, safer mortgage loans.
The plan allows homeowners get loans backed by the Federal Housing Administration (FHA). Banks that agreed to take substantial losses on distressed loans could avoid costly foreclosures and be assured of recovering some of their money under this new law.
The new program would let the FHA insure up to $300 billion in new mortgages and assist about 400,000 homeowners by doing so.
The legislation faces some real hurdles with the House of Representatives planning to rewrite some of the details and the White House threatening to veto the bill without some major changes.
Senator Christopher Dodd, D-Conn., chairman of the Banking Committee stated: "It's not the final stop, but it is a major stop in getting this bill done". Dodd said he is expecting minor revisions to be made to the bill.
The bill allows for a long-sought-after modernization of the FHA and would create a new regulator and tighter controls on Fannie Mae and Freddie Mac, the government-sponsored mortgage corporations which insure or own about 50% of all mortgages in the United States.
Democrats are divided over important elements of the plan, including limits on loans the FHA may insure and Fannie Mae and Freddie Mac may buy. The Senate measure sets them at $625,000, while a number of House leaders want the cap as high as $730,000.
House leaders also oppose the immediate effective date of the Senate plan, preferring to phase in new regulations for both Fannie Mae and Freddie Mac over a period of six months.
Another area of dispute in the bill is the funding in the Senate measure for buying and fixing foreclosed properties. Many conservative Democrats oppose this measure due to the cost and concern that it would cause the budget deficit to increase unless combined with cuts or tax increases built-in to cover the cost of this measure.
Both Congress and the White House agree in principle on the rescue plan since the goal is to allow the government to backstop new mortgages for struggling homeowners.
The plan allows homeowners get loans backed by the Federal Housing Administration (FHA). Banks that agreed to take substantial losses on distressed loans could avoid costly foreclosures and be assured of recovering some of their money under this new law.
The new program would let the FHA insure up to $300 billion in new mortgages and assist about 400,000 homeowners by doing so.
The legislation faces some real hurdles with the House of Representatives planning to rewrite some of the details and the White House threatening to veto the bill without some major changes.
Senator Christopher Dodd, D-Conn., chairman of the Banking Committee stated: "It's not the final stop, but it is a major stop in getting this bill done". Dodd said he is expecting minor revisions to be made to the bill.
The bill allows for a long-sought-after modernization of the FHA and would create a new regulator and tighter controls on Fannie Mae and Freddie Mac, the government-sponsored mortgage corporations which insure or own about 50% of all mortgages in the United States.
Democrats are divided over important elements of the plan, including limits on loans the FHA may insure and Fannie Mae and Freddie Mac may buy. The Senate measure sets them at $625,000, while a number of House leaders want the cap as high as $730,000.
House leaders also oppose the immediate effective date of the Senate plan, preferring to phase in new regulations for both Fannie Mae and Freddie Mac over a period of six months.
Another area of dispute in the bill is the funding in the Senate measure for buying and fixing foreclosed properties. Many conservative Democrats oppose this measure due to the cost and concern that it would cause the budget deficit to increase unless combined with cuts or tax increases built-in to cover the cost of this measure.
Both Congress and the White House agree in principle on the rescue plan since the goal is to allow the government to backstop new mortgages for struggling homeowners.
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