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May 9, 2008 - The House approved comprehensive legislation to help homeowners on May 8. The American Housing Rescue and Foreclosure Plan, H. R. 3221, combines a number of bills including measures to modernize the Federal Housing Administration (FHA) and reform Government Sponsored Enterprises (GSEs).
The bill provides mortgage refinancing assistance to help stabilize the housing market by expanding FHA so borrowers can refinance into lower-cost, government-insured mortgages. In addition, it provides $230 million for counseling. The bill will assist about a half million homeowners.
The provisions for GSE reform will provide liquidity in the housing market by buying loans already made and by releasing money for new mortgages and refinances. It would also raise the GSE loan limits for single family homes in high cost areas. Similar GSE reform legislation was passed in the House in May of 2007.
Further, the bill encompasses provisions that provide mortgage servicers clarity for their actions concerning mortgage modifications. This combines legislation introduced earlier this year to address concerns of investor lawsuits against mortgage servicers.
Earlier this week, the House passed the Neighborhood Stabilization Act, HR 5818, that allows loans be made to states to prevent foreclosures in neighborhoods. The bill provides incentives for states, cities and counties to use the funds to stabilize as many properties as possible.
The Senate will have to consider both pieces of legislation before going to the President to be signed into law. However, President Bush has threatened to veto H.R. 3221, saying that it rewards “speculators and lenders.”
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