WASHINGTON - Both the House and Senate were expected last week to pass the massive housing rescue bill, with new provisions that would provide for a bailout of Fannie Mae and Freddie Mac, if necessary.
While Congress was planning to pass the bill, the White House was holding its plans close to the vest, but was indicating it would drop the veto threat at press time. Among those concerns was a provision for a $4-billion community development block grant that would be used by states and cities to buy foreclosed homes and refinance them.
The Congressional Budget Office put a $25-billion price tag on the Fannie and Freddie bailout provisions, which include authority by the Treasury to extend loans or buy equity in the two secondary mortgage market giants, if necessary. Of course, the cost could also be zero if the bailout is never enacted.
The bill would also authorize the Federal Housing Administration to refinance and to insure up to $300 billion in troubled mortgages expected to go bad in the coming months.
It also includes several inducements for individuals to buy homes. Like a tax break for first-time home buyers worth as much as $7,500.
The massive bill–which runs to almost 700 pages–also includes long-debated reforms for the secondary mortgage market. They include creation of a new regulator for Fannie and Freddie, as well as the 12 Federal Home Loan Banks. Another provision would raise the conforming loan limits for Fannie and Freddie to as much as $625,000 in some markets, in order to include some so-called jumbo loans.
A group of Republicans and the House and Senate were opposing the package last week on the principle of a government bailout, but their opposition did not appear to be strong enough to defeat the bill.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
