Senate Leaders Agree on Housing Aid

Source: NYT

http://www.nytimes.com/2008/05/20/business/20housing.html?_r=1&hp=&pagewanted=print&oref=slogin

May 20, 2008
Senate Leaders Agree on Housing Aid
By DAVID M. HERSZENHORN

WASHINGTON — Senate negotiators on Monday said they had reached a deal on legislation aimed at helping hundreds of thousands of homeowners in danger of foreclosure by expanding the availability of government-insured mortgages.

The Bush administration, which previously said it would oppose legislation to rescue troubled homeowners, suggested that it was willing to consider the Senate deal because lawmakers had found a way to eliminate any direct cost to taxpayers.

The Senate bill would create an affordable housing fund, financed by the government-sponsored lenders, Fannie Mae and Freddie Mac, and that fund would be used in its first year to provide about $500 million for the foreclosure rescue effort. <snip>

Under both the House and Senate plans, lenders could limit their losses from potential foreclosures by agreeing to reduce the principal balances of loans at risk of default. The borrowers, many with expensive adjustable-rate loans, could then apply to refinance with a more stable, 30-year, fixed-rate mortgage insured by the government through the Federal Housing Administration.<snip>

Read more: http://www.nytimes.com/2008/05/20/business/20housing.html?_r=1&hp=&pagewanted=print&oref=slogin

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The important point is that while a 3 year program rather than 5 it would still likely assist about 500,000 foreclosed mortgages - the same as the house bill. I wish the conforming loans limit - $417,000 now but temporarily set to $729,250 in the most expensive housing markets under the economic stimulus plan approved by Congress and signed by the president in February - was reset to a higher permanent number than the Senate bills $550,000 in the most expensive markets, but if the lower number gets it passed it is a hell of a lot better than nothing IMHO.

The compromise with Bush on financing - no tax monies since financed via fee paid by lenders - is per WH comments - a way to get him to sign it into law. A nice compromise.

All it will do is prop up the overpricing a little longer and postpone the inevitable correction.

Also, I don't see how $500 million will help "hundreds of thousands." If it's 200,000 loans, that's $2,500 per loan. Something smells fishy to me. Is there a bush crony in line to get this money?

hundreds to thousand...
yeah it's BS, hopefully there won't be a "bottom" end where people will fall through :(