The legislation, approved 93-1, is the Senate's first attempt to address the looming subprime mortgage crisis through stand-alone legislation. The bill would allow the Federal Housing Administration to back refinanced loans for tens of thousands of borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial levels.
The Senate bill raises the maximum mortgage the FHA can insure in high-cost areas from $362,790 to $417,000 - the same level as loans backed by Fannie Mae and Freddie Mac.
ADVERTISEMENT
An estimated 2 million to 2.5 million adjustable-rate mortgages are scheduled to reset this year and next, jumping from low "teaser" rates for the first two or three years to much steeper rates that could cost borrowers their homes.
The wave of resets could crest during the presidential and congressional election campaigns next year, and the issue has brought politically charged debate in recent weeks over possible responses by the government.
"It is good before the Christmas season we have made a down payment on the solution to this problem," said Sen. Mel Martinez, R-Fla. "The government will not be able to fix all of the problems out there in the credit community. However, this is a first step, a good first step, and a good bipartisan step."
President Bush last week announced an agreement with mortgage companies to freeze interest rates for certain subprime mortgages for five years. The FHA has been pushing Congress for years for the ability to guarantee more loans.
But critics say the size of mortgages the government agency can back is often too small to attract borrowers in expensive areas such as California and the Northeast. As a result, FHA's share of the single-family mortgage market has dropped to about 4 percent, down from 19 percent more than 10 years ago.
The House passed similar legislation back in September, although representatives wanted to raise the caps to as much as $729,750 in high-cost areas. The two chambers must now come to an agreement on the legislation before sending it to the White House for approval.
The Bush administration applauded the Senate bill and called on Congress to hurry on a final product.
Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.
source: news.enquirer.com
No comments:
Post a Comment