Housing Rescue Bill Passes Key Senate Test

Vote To Speed Up Work On $300 Billion Mortgage Aid Plan Gets Broad Bipartisan Support

(AP)  A massive foreclosure rescue bill overwhelmingly cleared a key Senate test Tuesday, drawing broad support from Democrats and Republicans alike.

The Senate voted 83-9 to speed up work on the $300 billion mortgage aid plan, putting it on track for a final vote as early as the end of the day.

The resounding vote reflected a keen interest in both parties in claiming election-year credit for helping homeowners amid tough economic times.

Still, the measure faces a veto threat from President Bush and disputes among Democrats about key details. Those challenges will probably delay any final deal until mid-July.

Sen. Christopher J. Dodd, D-Conn., the Banking Committee chairman, said the legislation "would allow us to begin to put a tourniquet on the hemorrhaging of foreclosures in this country."

"What better gift on independence could we give the American people than a sense that this, their Congress of the United States, can come together, despite political differences, and craft legislation to make a difference for our country," Dodd said.

Senate passage would set the stage for high-stakes negotiations to resolve Democrats' differences. Conservative Democrats known as "Blue Dogs" are concerned about how to pay for the measure, while members of the Congressional Black Caucus - most of them liberal - call it "unacceptable," arguing it doesn't do enough to address the needs of African Americans.

Leaders also are divided on how high to place loan limits that apply to government mortgage insurance and financing.

The centerpiece of the package is a foreclosure rescue program in which the Federal Housing Administration would provide $300 billion in new, cheaper mortgages for distressed homeowners who otherwise would be considered too financially risky to qualify for government-insured, fixed-rate loans.

Borrowers would be eligible for the housing rescue if their mortgage holders were willing to take a substantial loss and allow them to refinance, and would ultimately have to share with the government a portion of any profits they made from selling or refinancing their properties.

The measure was advancing as a widely watched housing index said U.S. home prices fell in April at their steepest rate since the index began in 2000. The Standard & Poor's/Case-Shiller home price index of 20 cities fell by 15.3 percent in April versus a year ago, according to Tuesday's report.

A separate report from the Office of Federal Housing Enterprise Oversight said U.S. home prices fell 4.6 percent in April from the same month last year, when the index peaked. The government index is calculated using mortgage loans of $417,000 or less.

The bill would tighten controls and create a new regulator for Fannie Mae and Freddie Mac, which provide huge amounts of cash flow to the mortgage market by buying home loans from banks.

It also would provide a $14.5 billion array of tax breaks, including a credit of up to $8,000 for first-time homebuyers who buy a home in the next year and boosts in low-income tax credits and mortgage revenue bonds.

In a letter to Democratic leaders last week, the 42 House members of the Black Caucus said the bill is plagued with "glaring omissions," including affordable housing funds for states affected by Hurricane Katrina and grants for states and localities to buy and fix up foreclosed properties.

To draw GOP support, Senate Democrats diverted the affordable housing money to pay for the foreclosure aid program.

The Senate bill provides $3.9 billion in grants to deal with foreclosed properties - compared with a House plan providing $15 billion - but the White House singled out the funds in its veto threat, and Blue Dogs are demanding that the money be offset with cuts elsewhere.

Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, said he'd be willing to yank the money and add it to a separate measure in the interests of a deal.

[faith_in_w]

Barney Frank? Isnt he a queer?

[lochlan-2009]

And not a single reward or tax incentive for anyone who did the responsible thing and bought a house (in the last several years) that they could afford with a fixed rate rather than an ARM or interest only mortgage. Instead we get to pay more in taxes to the people who did. Why do people do the responsible thing in this country? Why don''t we make the banks pay extra taxes and remove all incentives for the next several years to pay for these fraudulant loans by these criminals?

[faith_in_w]

lochlan, you dont want the banks to fail do you?

[vrnnjoseph]

Anybody wonder what happened to the money the banks were paid to sell the loans on Wall Street? The banks do not have the notes. What a scam!!!

[vrnnjoseph]

I don''t think anyone is more queer than these neo-nuts!

[lochlan-2009]

lochlan, you dont want the banks to fail do you?

Posted by faith_in_w

No, but 0 profit for a few years until they''ve payed back what they stole doesn''t seem to me to be asking to much. Same with the oil companies.

[joelycra]

An ammendment to this bill also gives the federal government and the IRS the right to snoop on all your electronic transactions. All electronic transactions will now have to be reported to the IRS. Even that soda you just bought at the gas station with your debit card.

Watch out... big brother is coming.

Payment Card and Third Party Network Information Reporting. The proposal requires
information reporting on payment card and third party network transactions. Payment settlement
entities, including merchant acquiring banks and third party settlement organizations, or third party
payment facilitators acting on their behalf, will be required to report the annual gross amount of
reportable transactions to the IRS and to the participating payee. Reportable transactions include
any payment card transaction and any third party network transaction. Participating payees include:

persons who accept a payment card as payment and third party networks who accept payment from
a third party settlement organization in settlement of transactions. A payment card means any card
issued pursuant to an agreement or arrangement which provides for standards and mechanisms for
settling the transactions. Use of an account number or other indicia associated with a payment card
will be treated in the same manner as a payment card. A de minimis exception for transactions of
$10,000 or less and 200 transactions or less applies to payments by third party settlement
organizations.

[yongamerica]

Another rescue for the rich who were caught stranded speculating the land market. Way to go, there are more important matters than recovering some of the super rich hedge fund''s losses.

Give the rich more.

Economically, the top one percent of rich Americans have more money that the lower 90 percent of Americans combined.

[radbean]

Gee, where was the government when my wife lost here job and we couldn''t afford to make her car payment any longer. I didn''t see the government step up to keep the bank from repossessing the car.

Why is there a double standard?

Don''t make the comment about keeping the banks from failing. The bank that repossessed my wife''s car will auction it off and get far less than what it was worth or what she had left to pay on it. The bank comes out the loser.

Same thing happened to me years ago. I had a boat, and when I lost my job B of A repossessed the boat after refusing to work with me while I tried to sell the boat through a consignment place. The boat was appraised at $14,000. B of A autioned it off and got $8,000, then proceeded to come after me for the rest, which I couldn''t pay on unemployment insurance, so I was forced to declare bankruptcy. The government didn''t step in to help me.

I sick of people who bought homes valued at far more than the people could afford to pay for them on ARMs thinking they should be entitled to government bailouts. People in this country refuse anymore to take responsibility for their decisions.

[triplet-man]

What about those of US... who didn''t do something STUPID like get in over our heads on a loan for a house that we couldn''t afford.
What is the FED going to give us? For being responsible? Oh yeah... higher taxes to pay for others STUPIDITY!@@#
How can someone who makes a combined income of $80k a year even BEGIN to think that they can afford a $250,000 house? Just because the lenders will LET you do it... doesn''t mean that you CAN !

[payasyougo]

It''s so wonderful that the government is here to rescue us from ourselves and as a bonus make the banks, home builders and REALTORS(c) continue their prosperity so they can continue to contribute to campaigns.

[lovesamerica]

I kept the family home after I was divorced so that my kids could stay in their neighborhood. I did the dumb thing of refinancing,due to lackluster child support,and repairs needing to be done. I got a fixed rate, 5.8%...great eh? except my taxes are almost 8,ooo dollars a year on a 150,000 dollar house in the country. I cannot sell my house now due to the market and have to work 5 jobs to keep up. I resent having to possibly pay even more taxes,hence another job, because people wanted bigger and better without thoughts to the consequences.No one is gonna bail me out, nor do I want them to....