Bush signs bill to shore up housing market
7/31/2008WASHINGTON - President Bush signed legislation yesterday aimed at shoring up the housing market, providing a safety net for mortgage giants Fannie Mae and Freddie Mac, and helping several hundred thousand families avoid foreclosure.
Early in the morning and out of public view, the President signed the measure in the Oval Office, adding his signature to a measure he once threatened to veto.
The White House said he was accompanied by Treasury Secretary Henry Paulson, Housing and Urban Development Secretary Steve Preston, and other administration officials.
"We look forward to put in place new authorities to improve confidence and stability in markets," White House spokesman Tony Fratto said.
He said the Federal Housing Administration would begin to put in place new policies "intended to keep more deserving American families in their homes."
The legislation is regarded as the most significant housing bill in decades. It won approval from lawmakers eager for an answer to the housing crisis.
The measure includes $300 billion in new loan authority for the government to back cheaper mortgages for troubled homeowners; $3.9 billion for communities to fix up foreclosed properties causing blight in neighborhoods; and $15 billion in tax cuts, including an expanded low-income housing tax credit and a credit of up to $7,500, to be repaid, for some first-time home buyers.
The number of homeowners who could lose their homes to foreclosure by the end of 2009 is estimated by some to be around 2.8 million.
Under the legislation, 400,000 having trouble with payments could avoid it by trading their loans for new, more affordable mortgages through the Federal Housing Administration.
Their banks would have to agree to the swap and to take a loss in exchange for avoiding the foreclosure process.
To qualify, homeowners would have to be paying more than 31 percent of their incomes toward their mortgages and show they could afford the payments on a smaller loan.
The measure also is designed to help stabilize markets, in part by making credit more easily available amid rising defaults and falling home values.
The bill permanently increases to $625,500 the size of home loans in high-cost areas that the government-sponsored mortgage companies Fannie Mae and Freddie Mac can buy and the FHA can insure.
The White House sought to focus attention on parts aimed at calming markets. Those include the offer of a temporary, but unlimited, line of credit for Fannie Mae and Freddie Mac.
The Treasury Department gains power, until the end of 2009, to lend them emergency money or buy their stock.