Foreclosure Property- House Searches for Bill

Proposed Legislation sponsored by Rep Barney Frank, D-Mass., designed to help the struggling housing market passed in the House of Representatives by a vote of 266-154 yesterday.

The legislation would enable the FHA (Federal Housing Administration) to ensure up to 300 billion dollars in new home loans if lenders agree to reduce outstanding dept to no more that 85% of the houses appraised value. The CBO (Congressional Budget Office) has estimated the cost to taxpayers will be 1.7 billion dollars for ensuring the 500,000 borrowers who will qualify for the program.

Opponents of the proposed legislation assert that this is a government bail out for speculators who may have undertaken undue risk, and that only the riskiest of loans would be brought to the FHA's doorstep.

Conversely, supporters say that the target demographics are owner/occupied residents, sharing equity with the government and paying slightly higher insurance premiums to the FHA. They also stress that if these refinanced loans still can't be paid, then the loans won't qualify for the proposed FHA program.

The bill has additions such as stricter rules for oversight of the two GSE's Fannie Mae and Freddie Mac, & "Modernization" of the FHA designed to attract support across party lines.

The White has threatened a veto of the Frank measure, which has been viewed as a bid for more real estate disclosure and leverage in negotiations by political analysts. This leverage has already materialized in other similar measures in development, such as a bill offering reform of both the GSE, FHA, with an attached FHA rescue plan, co-authored by Christopher Dodd, D-Conn, and Richard Shelby, R-Ala. For the housing market, this type of bipartisanship may be seen as a sign of progress, and that home forclosure help is on the way.