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Bush signs housing bill to provide
mortgage relief
By JENNIFER LOVEN, Associated Press Writer
WASHINGTON - President Bush on
Wednesday signed a massive housing bill
intended to provide mortgage relief for
400,000 struggling homeowners and
stabilize financial markets.
ADVERTISEMENT
Bush signed the bill without any fanfare or
signing ceremony, affixing his signature
to the measure he once threatened to veto, in
the Oval Office in the early morning
hours. He was surrounded by top
administration officials, including Treasury
Secretary Henry Paulson and Housing
Secretary Steve Preston.
"We look forward to put in place new
authorities to improve confidence and stability
in markets," White House spokesman Tony
Fratto said. He said that the Federal
Housing Administration would begin right away
to implement new policies "intended
to keep more deserving American families in
their homes."
The measure, regarded as the most
significant housing legislation in decades, lets
homeowners who cannot afford their
payments refinance into more affordable
government-backed loans rather than losing
their homes.
It offers a temporary financial lifeline to
troubled mortgage companies Fannie Mae
and Freddie Mac and tightens controls over
the two government-sponsored
businesses.
The House passed the bill a week ago; the
Senate voted Saturday to send it to the
president.
Bush didn't like the version emerging from
Congress, and initially said he would veto it,
particularly over a provision
mortgage relief
By JENNIFER LOVEN, Associated Press Writer
WASHINGTON - President Bush on
Wednesday signed a massive housing bill
intended to provide mortgage relief for
400,000 struggling homeowners and
stabilize financial markets.
ADVERTISEMENT
Bush signed the bill without any fanfare or
signing ceremony, affixing his signature
to the measure he once threatened to veto, in
the Oval Office in the early morning
hours. He was surrounded by top
administration officials, including Treasury
Secretary Henry Paulson and Housing
Secretary Steve Preston.
"We look forward to put in place new
authorities to improve confidence and stability
in markets," White House spokesman Tony
Fratto said. He said that the Federal
Housing Administration would begin right away
to implement new policies "intended
to keep more deserving American families in
their homes."
The measure, regarded as the most
significant housing legislation in decades, lets
homeowners who cannot afford their
payments refinance into more affordable
government-backed loans rather than losing
their homes.
It offers a temporary financial lifeline to
troubled mortgage companies Fannie Mae
and Freddie Mac and tightens controls over
the two government-sponsored
businesses.
The House passed the bill a week ago; the
Senate voted Saturday to send it to the
president.
Bush didn't like the version emerging from
Congress, and initially said he would veto it,
particularly over a provision
Breaking FHA News
containing $3.9 billion in neighborhood grants. He contended the money would benefit lenders who helped cause the mortgage
meltdown, encouraging them to foreclose rather than work with borrowers. But he withdrew that threat early last week, saying
hurting homeowners could not wait — and even blaming the Democratic Congress' delays in action for forcing an imperfect
solution.
Meanwhile, many Republicans, particularly those from areas hit hardest by housing woes, were eager to get behind a housing
rescue as they looked ahead to tough re-election contests. Paulson's request for the emergency power to rescue Fannie
Mae and Freddie Mac helped push through the measure. So did the creation of a regulator with stronger reins on the government
sponsored companies, as Republicans long have sought.
Democrats won cherished priorities in the bargain: the aid for homeowners, a permanent affordable housing fund financed by
Fannie Mae and Freddie Mac, and the neighborhood grants.
The bill takes several approaches to curing the ailing housing market. It aims to spare an estimated 400,000 debt-strapped
homeowners, many of whom owe more their houses are worth, from foreclosure by allowing them to get more affordable
mortgages backed by the Federal Housing Administration.
The FHA could insure $300 billion in such mortgages, which would be available to homeowners who showed they could afford a
new loan. Banks would first have to agree to take a large loss on the existing loans in exchange for avoiding an often-
costly foreclosure.
The plan also is designed to relieve a broader credit crunch that has taken hold because of rising defaults and falling home
values. To free up safer and more affordable mortgage credit, the bill permanently would increase to $625,000 the size of home
loans that Fannie Mae and Freddie Mac can buy and the FHA can insure. They also could buy and back mortgages 15 percent
higher than the median home price in certain areas.
It goes far beyond addressing the current crisis, however. the legislation overhauls the Depression-era FHA. It requires lenders to
show how high a borrower's payment could get under the terms of his mortgage. It provides $180 million in pre-foreclosure
counseling for struggling homeowners.
The Treasury Department gains unlimited power, until the end of 2009, to lend money to Fannie Mae and Freddie Mac or buy
their stock should they need it. The Federal Reserve takes on a new "consultative" role overseeing the companies. The measure
includes $15 billion in tax cuts, including a significant expansion of the low-income housing tax credit and a credit of up to $7,500
for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.
Democratic leaders, recognizing that the measure could be one of the last items to become law during what's left of their
abbreviated election-year schedule, tacked on an $800 billion increase, to $10.6 trillion, in the statutory limit on the national
debt.
Conservative Republicans were vehemently opposed to the bill, particularly the help for Fannie Mae and Freddie Mac. Critics
charge the companies enjoy lavish profits in good times and wield their outsized political clout to resist regulation while
depending on the government to bail them out should they falter.
meltdown, encouraging them to foreclose rather than work with borrowers. But he withdrew that threat early last week, saying
hurting homeowners could not wait — and even blaming the Democratic Congress' delays in action for forcing an imperfect
solution.
Meanwhile, many Republicans, particularly those from areas hit hardest by housing woes, were eager to get behind a housing
rescue as they looked ahead to tough re-election contests. Paulson's request for the emergency power to rescue Fannie
Mae and Freddie Mac helped push through the measure. So did the creation of a regulator with stronger reins on the government
sponsored companies, as Republicans long have sought.
Democrats won cherished priorities in the bargain: the aid for homeowners, a permanent affordable housing fund financed by
Fannie Mae and Freddie Mac, and the neighborhood grants.
The bill takes several approaches to curing the ailing housing market. It aims to spare an estimated 400,000 debt-strapped
homeowners, many of whom owe more their houses are worth, from foreclosure by allowing them to get more affordable
mortgages backed by the Federal Housing Administration.
The FHA could insure $300 billion in such mortgages, which would be available to homeowners who showed they could afford a
new loan. Banks would first have to agree to take a large loss on the existing loans in exchange for avoiding an often-
costly foreclosure.
The plan also is designed to relieve a broader credit crunch that has taken hold because of rising defaults and falling home
values. To free up safer and more affordable mortgage credit, the bill permanently would increase to $625,000 the size of home
loans that Fannie Mae and Freddie Mac can buy and the FHA can insure. They also could buy and back mortgages 15 percent
higher than the median home price in certain areas.
It goes far beyond addressing the current crisis, however. the legislation overhauls the Depression-era FHA. It requires lenders to
show how high a borrower's payment could get under the terms of his mortgage. It provides $180 million in pre-foreclosure
counseling for struggling homeowners.
The Treasury Department gains unlimited power, until the end of 2009, to lend money to Fannie Mae and Freddie Mac or buy
their stock should they need it. The Federal Reserve takes on a new "consultative" role overseeing the companies. The measure
includes $15 billion in tax cuts, including a significant expansion of the low-income housing tax credit and a credit of up to $7,500
for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.
Democratic leaders, recognizing that the measure could be one of the last items to become law during what's left of their
abbreviated election-year schedule, tacked on an $800 billion increase, to $10.6 trillion, in the statutory limit on the national
debt.
Conservative Republicans were vehemently opposed to the bill, particularly the help for Fannie Mae and Freddie Mac. Critics
charge the companies enjoy lavish profits in good times and wield their outsized political clout to resist regulation while
depending on the government to bail them out should they falter.
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