WASHINGTON, July 26, 2008
Senate Approves Housing Relief Bill
Legislation Aims To Save 400,000 Strapped Homeowners From Foreclosures; Bush Expected To Sign
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(AP Photo/David Zalubowski, File)
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Play CBS Video Video Congress' Mortgage Rescue Bill As homeowners face foreclosure, Congress has passed a relief bill in an attempt to ease a nationwide crisis. Kimberly Dozier reports on one of the biggest economic bailouts within the last 25 years.
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Video House Bails Out Lenders The House has passed a bill which will grant $25 billion to embattled mortgage giants Fannie Mae and Freddie Mac. As Jim Axelrod reports, President Bush has relented and will sign the bill.
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Timeline Credit Crunch Feeling the squeeze? Here's a look at actions and statements from key players in Washington.
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News Tools Foreclosure Rates A state-by-state look at foreclosure rates, which were up 81 percent nationwide in 2008.
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 - pillars of the home loan market whose losses have sparked investor fears - and tightens controls over the two government-sponsored businesses.
Fannie Mae and Freddie Mac own or guarantee nearly half of the $12 trillion in outstanding U.S. mortgages, reports CBS News correspondent Kimberly Dozier.
What began as a showdown between the White House and the Democratic-led Congress over how far the government should go in rescuing homeowners evolved into a bipartisan effort that could be the last such compromise before Bush leaves office in January.
In a rare Saturday session, the Senate voted 72-13 to send the bill to the president; the House passed it Wednesday.
Bush had withdrawn his veto threat earlier in the week over $3.9 billion in neighborhood grants.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.
"Because of the Democratic Congress' delays and the need for action now, President Bush will sign this bill when he receives it, despite our concerns with some provisions, including nearly $4 billion to help lenders, not the homeowners this legislation is intended to serve," said Tony Fratto, deputy White House press secretary.
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.
"Republicans knew that in an election year they could not be accused of sinking a bill that would do so much for so many people," Mike Allen, chief political correspondent for Politico, told CBS News.
Treasury Secretary Henry M. 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.
"This is far more than sending a bill to the president's desk for his signature. It's sending a message to the American people that the Congress of the United States - despite an alternative reputation - can actually get things done, and can work together to achieve a good result," said Sen. Christopher J. Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee.
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Still, Republicans weren't eager to celebrate. Bush was not expected to hold a White House signing ceremony, and Senate GOP leaders didn't mention it at a news conference following the vote. In the House, more than three-quarters of Republicans voted against the bill.Republicans knew that in an election year they could not be accused of sinking a bill that would do so much for so many people.
Mike Allen, chief political correspondent for PoliticoDodd, D-Conn., said he had summoned administration officials to his office next week to demand that the foreclosure rescue program be put into place quickly.
The legislation 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.
The measure tries to prevent blight in areas hardest hit by the housing crisis, where waves of foreclosures have left properties sitting abandoned, dragging down property values and ruining neighborhoods. It sends $3.9 billion to such neighborhoods to buy and fix up foreclosed properties.
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.
Sen. Carl Levin, D-Mich., said the legislation will "help keep struggling families in their homes" and help keep "declining property values stable."
"The flood of foreclosures is destroying dreams, sapping our economy of its strength and impacting most home values," Levin said. "This landmark legislation will hopefully turn that tide and reverse those threats to America's well being."
He said Michigan will receive nearly $170 million in federal grants aimed at rehabilitating blighted neighborhoods, and the Michigan State Housing Development Authority will be able to help homeowners refinance adjustable rate mortgages through the new tax-exempt bond authority.
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.
Sen. Jim DeMint, R-S.C., delayed the final vote because Democrats refused to allow him a vote on a proposal to ban the companies from lobbying or making political donations to lawmakers.
"We can't have the people who are supposed to watch over these organizations getting money from these organizations," DeMint said. "At least if we're going to ask the American taxpayer to be on the hook for billions, possibly trillions of dollars, let's stop this."
Provisions Of The Bill
H.R. 3221 would:
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- That is funny, it is the Republicans who voted to deregulate it in the first place. Talk about hypocrites...
Posted by brianbwb at 06:03 AM : Jul 27, 2008
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If you trace major problems backward, 90% originate from GOP scheming, stupidity, greed, expediency, and mismanagement. And likewise, in every case, one of them can always concoct to show you why THEY are responsible for NOTHING bad that happened!
Which begs the question: if THEY''RE not responsible for it, and they were the majority party for so many years, than HOW did it happen? An evil,doppelganger GOP congress?
Perhaps? - Reply to this comment
- Politicians are nothing more than a legalized criminal class.
Posted by JT_Lancer at 08:49 PM : Jul 27, 2008
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DITTO! EXACTLY! Now, you understand. So, do you really think it''s a good idea to vote to send the same ones back to ''D.C.'' to cheat you again and again?! - Reply to this comment
- Funny, I bought a home a few years ago, at a fixed rate. I pay my bills every month. I am a responsible homeowner.
Yet, I am being forced to subsidize the poor decision-making of others, at the expense of my own family? Disgusting. It''s no different than theft.
Politicians are nothing more than a legalized criminal class. - Reply to this comment
- "How did those people lose their ability to pay? How much of it was due solely to circumstances within their control? (Generalizations can be fun, but blanket statements put in innocent people too.)"
Well, yes, you are correct. I should not do that. Sorry.
I just happen to know of two families who took out ARM''s when we had the low interest rates. Those loans took almost half of their take home pay at the time. When I asked them how they would pay for it when interest rates went up, both said the same thing. Worry about it then.
Maybe I hold those two as examples of those who made poor decisions and lump the rest in with them. They ''could have'' bought a cheaper place. They could have saved until they had enough to get a more stable ''non ARM'' loan.
I like these people. I''m just not sure that the taxpayer should be put on the spot for it. - Reply to this comment
- Posted by dougmsbbs
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How did those people lose their ability to pay? How much of it was due solely to circumstances within their control? (Generalizations can be fun, but blanket statements put in innocent people too.) - Reply to this comment
- As I have said many times, if we give them a bail out, then we should become the owners of the corporation. That means for every dollar they get as taxpayer bailout, we get a dollar of their corporate value, and not as new stock, take it away from the "investors". As Senator Dodd said about the well-compensated mortgage shills and Wall Street hucksters: "Socializing risk and privatizing reward". Actually, this was done at the behest of the same "conservative Republicans" who are complaining, remember they are the ones behind the privitazation of just about everything, but they got their wish, they get the profit, but the taxpayer gets the risk.
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- You might say stupid people or stupid banks but they have one thing in commen they are both spinning down real fast and this time the consumer shopping at walmart is not going to bail anybody out because they are tapped out allready. When in doubt just sell it to China.
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- Changed my mind how about After a 500 billion + more in writedowns maybe the banks will get real. and this bail out is for 400,000 home owners. I think there are a few they forgot. And lets face it $600 is not going to change a thing but banks could if forced.
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- Lets look at CBS''s own title in the video section "Home intrest rates going up" How is that going to help Banks seem to want a 5 year supply of empty houses they can not sell. They have to pay to keep them up as not let them become wothless. Intrest rate changes, fees, points, closing cost are out of control. My favorite is points one point is 1% of the mortgage value you pay to the bank for nothing. When I sold my house (pre housing problem days) I was asked about points. My answer was im not paying the buyers bank blood money for anything. Let the buyer worry about it or go find someplace else. After a 100 billion more in writedowns maybe the banks will get real.
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- I am a middle aged man who saved for years, and bought a house for cash. Because I did that, I have to pay for the ones who can''t see past thier next pay day loan?
Also, since this never would have passed in a non election year, it was designed to buy votes. How many of these renters, er, homeowners, are actual voters? Figure that out, and you can see how much the Dems just paid per vote... with us picking up the tab. - Reply to this comment
Ex-NBA ref Tim Donaghy 
