WASHINGTON -
The bill, which now goes to the Senate, would allow the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, to back refinanced loans for tens of thousands of borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial "teaser" levels.
The measure, which exceeds limits favored by the Bush administration, is Congress' first stand-alone bill in response to the mortgage-market tumult of the summer, which came amid a rising tide of defaults and foreclosures.
The Senate last week passed spending legislation that includes $200 million to provide aid to non-profits and other groups that offer counseling and information to help homeowners avoid foreclosure.
House Republicans sharply objected to a $300-million-a-year fund for grants for affordable rental housing and homeownership assistance for low-income families, which would be financed from FHA revenues-a plan also opposed by the Bush administration.
But House Republicans mostly were swept along in the vote for the bill, the overall thrust of which they endorsed in the face of the mortgage crisis.
Separately, a bill introduced in the Senate would help ease the current mortgage crisis by lifting both the amount of mortgages Fannie Mae and Freddie Mac can purchase from credit unions and banks, and the conforming loan limits, allowing the two to buy some jumbo mortgages.
The bill would lift the limits on Fannie Mae and Freddie Mac's mortgage portfolios by 10% and increase the conforming loan limit, now $417,000, by 50% in high-cost areas. Both changes would expire in one year.
The approximately $145 billion in new portfolio authority would be available only for refinanced mortgages with adjustable rate loans that were scheduled for an interest-rate reset between June 2005 and December 2009.
An estimated 2 million to 2.5 million adjustable-rate mortgages are scheduled to "reset" this year and next, jumping from low "teaser" rates for the first two or three years to much steeper rates that could cost borrowers their homes.
The wave of resets could hit its peak during the presidential and congressional election campaigns next year, and the issue has brought politically charged debate in recent weeks over possible responses by the government.
