Certified Blogaholic

Bush Approves Housing Bill to Provide Mortgage Relief

President George W. Bush signed Wednesday the proposed housing bill that will provide mortgage relief to 400,000 homeowners currently struggling to meet mortgage payments and avoid foreclosure. The bill intends to provide assistance to troubled mortgage companies Fannie Mae and Freddie Mac and stabilize financial markets.

It is regarded as the most significant housing legislation in decades which allows homeowners who cannot afford their payments refinance into more affordable loans supported by the government instead of losing their homes. The bill aims to take several approaches in assisting the ailing housing market. Homeowners will be provided more affordable mortgages backed by the Federal Housing Administration which would insure a total of $300 billion in mortgages. However, banks would have to agree to take large losses on the existing loans to avoid costly foreclosures. The bill would increase to $625,000 the size of home loans that Fannie Mae and Freddie Mac can buy and the FHA can insure. They also could buy and back mortgages 15 percent higher than the median home price in certain areas.

Until 2009, the Treasury Department is given unlimited power to lend money to Fannie Mae and Freddie Mac or buy their stock if necessary while the Federal Reserve will take on a new “consultative” role to watch over the companies.

Moreover, the measure includes $15 billion in tax cuts which includes an expansion of the low-income housing tax credit and a credit of up to $7,500 for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.

Tags: affordable mortgage, fannie mae, Federal Housing Administration, freddie mac, home mortgage, mortgage refinancing   Posted in Money & Biz