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HOUSING BILL APPROVED IN U.S. HOUSE - HEADED TO SENATE!

PRESIDENT BUSH REVERSES COURSE - NOW SAYS HE WILL SIGN HOUSING RESCUE BILL!

After months of speculation, and considerable debate, the U.S. House of Representatives voted 272-152 to send the Housing Rescue Bill to the Senate.  Shortly before the House voted, President Bush dropped his earlier opposition to the bill, in essence agreeing timely passage of massive mortgage assistance legislation is critical.  Assuming the U.S. Senate approves the bill, it could become law within the next few days.

The bill would let the Federal Housing Administration (the FHA) back up to $300 Million in special loans to an estimated 400,000 homeowners who cannot afford their house payments, and are sliding toward foreclosure.  The new loans would be safer, more affordable, and would offer lenders an additional equity share in the houses they mortgage, rather than a costly bank-owned foreclosed home.  Lenders would take a substantial discount on their original loan in order to set up this refinanced rescue loan, in conjunction with the FHA.

This new plan also establishes tighter lending procedures for federally-sponsored loan backers and guarantors, the privately-owned Fannie Mae and Freddie Mac.  In addition, it offers $15 Billion in housing tax breaks, including a tax credit of as much as $7,500 for first-time home buyers.  The statutory limit on The National Debt would also increase - to $10.6 Trillion, from its current $800 Billion cap.

In a more controversial side of the Housing Bill, the U.S. Treasury Department would offer a virtually unlimited line of credit to Fannie Mae and Freddie Mac, if needed, or the power to buy stock in the two companies.  Investors are concerned this could dilute stock values of the companies, but supporters feel the lifeline is needed to prevent financial collapse of either or both of the giant mortgage companies.  Together, Freddie and Fannie back nearly one-half of the mortgage debt in the U.S. - roughly $5 Trillion in mortgages.

Read Julie Hirschfield Davis's story in today's Chicago Tribune for more detail, as well as quotes from several of the Congress Members who voted on the new bill, for or against.

DEAN MOSS & DEAN'S TEAM CHICAGO

Posted: Wednesday, July 23, 2008 8:21 PM by Dean's Team

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