By: Gaurav Bhola, MSM, Managing EditorAmerican homeowners are looking to the government for some help with their mortgage home loans. The Senate Banking Committee led by Democrat Christopher Dodd has formulated a deal on a housing mortgage loan bill to help homeowners prevent foreclosures, create affordable residential real estate, and overhaul oversight of Fannie Mae and Freddie Mac.
One of the major components of the legislation would permit the Federal Housing Administration (FHA) to insure $300 billion in new home loans for certain borrowers if mortgage lenders consented to write down mortgage loan balances lower than the appraised value of the borrowers' homes.
The bill has been borne out of pressure on Congress to respond to the current housing real estate and mortgage atmosphere. The legislation is good news for some homeowners, the residential real estate market, mortgage lenders, and mortgage brokers.
The bill attempts to address root concerns of foreclosures as well, by initiating a voluntary program that will allow Americans to keep their homes at no additional cost to taxpayers. Additionally, the bill creates a fund to stimulate affordable housing.
Another issue the legislation address is to provide for stricter oversight of Fannie Mae and Freddie Mac. These two private corporations backed by the government, guarantee the procurement and sale of home loan mortgages in the secondary market.
There is another mortgage bill that has just passed by a 266-154 vote in the House Financial Services Committee. Both bills contain measures that address the current housing and mortgage loan landscape. In the Senate and the House, the bills have to be voted on by the entire membership of the Senate and House for their respective legislation.
Since both bills were hammered out by a compromise between the Democrats and the Republicans, both bills will likely pass their respective chambers in Congress. However, the question remains whether President Bush will veto the bills. George Bush has sent signals to Congress that he is more partial to the Senate rather than the House bill.
The legislation would help stave off further foreclosures by insuring approximately $300 billion in existing mortgages and creating a new regulator for Freddie and Fannie. The mortgage insurance program will be financed with proceeds from the affordable housing real estate fund financed by Fannie Mae and Freddie Mac.
The principal goal of the legislation is to arrest further home ownership being transferred from the hands of borrowers to the mortgage lenders. Hopefully, the new FHA program to insure up to $300 billion in mortgage refinancing will stem further foreclosures.
