Senate approves housing relief bill

Dodd to families: ‘Help is on the way’

By Richard Simon | Los Angeles Times | July 27, 2008

WASHINGTON – Congress completed work Saturday on the government’s most sweeping response yet to the nation’s housing crisis, sending to President George W. Bush a bill designed to help homeowners avoid foreclosure, spur home buying and prop up struggling mortgage giants Fannie Mae and Freddie Mac.

The Senate, in a rare weekend session, overwhelmingly approved the measure, 72-13.

Bush has said he will sign the bill, which the House approved, 272-152.

“Today, Congress did more than send a bill to the president – we sent a message to American families that help is on the way,” said Senate Banking Committee Chairman Christopher Dodd (D-Conn.), who helped write the legislation.

The measure’s critics attacked it as a bailout of speculators and irresponsible borrowers at potentially huge cost to taxpayers.

“This bill is fraught with too much risk and too little protection to the taxpayer,” said Sen. Christopher Bond (R-Mo.), contending it would allow lenders to “dump their worst subprime mortgages” on the Federal Housing Administration.

All the votes opposing the legislation were cast by Republicans.

The bill passed Saturday contains a key provision that would allow the Federal Housing Administration to guarantee as much as $300 billion in lower-cost mortgages – provided that lenders accept significant losses.

The provision is expected to help at least 400,000 homeowners.

The bill also would give the U.S. Treasury Department authority temporarily to increase its lending to Fannie Mae and Freddie Mac and buy their stock, a provision that Treasury Secretary Henry Paulson has called crucial to bolstering confidence in the companies and stabilizing housing finance markets.

Presidential candidates Sens. John McCain and Barack Obama each expressed support for the measure but missed the vote.

Highlights of the legislation

• Includes about $15 billion in tax breaks, including what amounts to an interest-free loan of as much as $7,500 for first-time home buyers.
• Funnels $4 billion to communities to buy and renovate vacant foreclosed properties.
• Gives states authority to issue an additional $11 billion in tax-exempt bonds to refinance troubled loans and finance low-income rental housing.
• Raises the cap on mortgages that Fannie Mae and Freddie Mac can buy.
• Sets up Federal Housing Finance Agency to oversee the mortgage giants.