Mortgage Aid Bill Passes

The House, on Tuesday, September 18, 2007, approved a plan to expand federal backing of mortgages in an effort to help struggling homeowners in the U.S. avoid foreclosure on their homes. "The American dream is in peril for many families in this country as foreclosures rise and dreams shatter," Rep. Betty Sutton, a Democrat from Ohio, a state particularly hard-hit by mortgage defaults, declared in House debate before the vote.

The new bill for Mortgage Aid, which passed the House, 348-72, would allow the Federal Housing Administration, which insures mortgages for low and middle income borrowers, to back refinanced mortgage loans for tens of thousands of borrowers who are delinquent on payments because their home mortgages are resetting to much higher rates from the low initial teaser levels.

The new measure, which exceeds limits favored by the Bush administration, is Congress' first stand-alone bill in response to the mortgage-market crisis of the summer, which brought about an abundance of defaults and foreclosures. The Senate last week passed spending legislation that includes $200 million to provide aid to nonprofits and other groups that offer counseling and information to help homeowners avoid foreclosure procedings.

The White House wants to expand the mandate of the Depression-era FHA, part of the Department of Housing and Urban Development, to allow it to insure loans of delinquent borrowers that are refinanced to lower rates.

Administration officials have said the full impact on the economy of the worst housing slump in 16 years and flexibility in the financial markets has yet to play out.
Article Source: Credit Facts