This Wednesday, the House approved a sweeping plan to ease the country's most serious housing crisis since the Great Depression. How do they plan to do so? By providing aid to homeowners facing foreclosure and a federal backstop for struggling mortgage giants Fannie Mae and Freddie Mac.
Despite President Bush's opposition to a provision to provide $4 billion to communities to buy and fix up vacant properties, the White House dropped its veto threat and signaled that Bush would infact sign the bill. Hopefully Senate's approval will come by the end of the week.
The measure seeks to stave off foreclosure for 400,000 or more homeowners in part by allowing them to refinance into lower-cost government-insured mortgages, provided lenders agree to take a loss.
It also includes a plan by Treasury Secretary Henry M. Paulson to bolster confidence in Fannie and Freddie by allowing the government to temporarily increase its lending to the federally chartered companies and to buy their stock.
Another provision seeks to stimulate the housing market with about $15 billion in tax breaks, including a tax credit of as much as $7,500 for first-time home-buyers. Of interest to California and other areas with high housing costs, it would permanently raise the cap on mortgages that Fannie Mae and Freddie Mac can buy or guarantee to $625,500.
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