Mortgage Crisis Help Is On The Way

The New York Times reported today that the U.S. House of Representatives approved legislation created to help alleviate our Country’s housing crisis.

Key provisions of the legislation:

1) Authorize the FHA (Federal Housing Administration) to insure up to $300 billion in refinanced loans for lenders who agree to reduce the principal balance of their individual borrower's loans to approximately 85 percent of the home’s current value. This measure could help as many as 400,000 homeowners at risk of losing their homes to foreclosure due to adjustable-rate mortgages they can no longer afford.

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2) Provide for a future bail out (if needed) of Freddie Mac and Fannie Mae (who together guarantee about 80 percent of new mortgages) by raising the national debt limit by $800 billion in the event our government needs to rescue these hemorrhaging companies.

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3) Provide approximately $15 billion in housing-related tax incentives, including a $7,500 tax credit for first-time home buyers who meet certain income qualifications.

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4)Authorize state and local housing agencies to issue $11 billion in tax-exempt bonds to refinance bad mortgages.

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5) Call for more stringent oversight of mortgage brokers.

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6) Set new disclosure requirements.

The President has indicated support of the bill and the Senate is expected to approve the legislation as early as this Saturday.

Click here for the full story online.