House Approves Bill HR 3221  

Only 23, 2008, The House of Representatives approved bill HR 3221, the American Housing Rescue and Foreclosure Prevention Act of 2008, a $300 billion plan that expands guarantees of the Federal Housing Association (FHA) loan programs. The bill puts a proposed cap up to $625,500 on conforming loan limits in high-cost areas for Fannie Mae, Freddie Mac and FHA loans.   The bill also gives the Treasury Department more discretion to buy the debt of Fannie Mae and Freddie Mac, who are also in financial trouble these days.

Highlights of the Bill 

By providing mortgage-refinancing assistance to troubled homeowners, Congress hopes that this bill will help reduce the number of families losing their homes to foreclosures and help stabilize the housing market, with no cost to American taxpayers by using funds in the first few years from the Affordable Housing Trust Fund.  Components of the plan will also help to prevent future mortgage abuse and crises by establishing a nationwide loan originator licensing and registration system and improving mortgage disclosure requirements.

The bill is on the way to the Senate, and President Bush has agreed to sign it when it reaches his desk. The three-year program is scheduled to take effect October 1, 2008.

Originally, the bill also would have provided for $4 billion in emergency grant funding to communities that had been hard hit by the foreclosure crisis to enable them to purchase and rehab the foreclosed homes.  The administration had previously objected to that portion of the bill, but now says they will not veto the bill if it includes the provision, as reported by Reuters.