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WORLD> America
US Senate passes mortgage rescue plan
(Agencies)
Updated: 2008-07-12 10:44

WASHINGTON - A mortgage rescue to help hundreds of thousands of struggling homeowners avoid foreclosure and get more affordable, safer loans passed the US Senate overwhelmingly Friday, but it faces a bumpy road amid continuing turmoil in the housing market.


Vacant lots sit for sale in an unfinished neighborhood in North Aurora, Illinois. The US Senate on Friday passed a mammoth housing rescue bill aimed at helping thousands of Americans to keep their homes, amid a deepening mortgage foreclosure crisis. [Agencies]


The 63-5 vote reflected a keen interest by Democrats and Republicans to send election-year help to distressed homeowners with economic issues topping voters' concerns.

The plan lets homeowners buckling under mortgage payments they can't afford keep their homes and get more affordable mortgages backed by the Federal Housing Administration. Banks that agreed to take substantial losses on those distressed loans could avoid costly foreclosures and be assured of recovering at least some money.

The new program would let the FHA insure as much as $300 billion in new mortgages, helping an estimated 400,000 homeowners.

It still faces challenges, however, with the House planning to rewrite key details and the White House threatening a veto without major changes.

"It's not the final stop, but it is a major stop in getting this bill done," said Sen. Christopher Dodd, D-Conn., chairman of the Banking Committee. "For those who said this Congress cannot come together in a bipartisan fashion to do something responsible about housing, this bill does that."

Rep. Barney Frank, D-Mass., the Financial Services Committee chairman and an architect of the bill, says the few but significant revisions House leaders are seeking could be made in as little as one week.

Dodd said he was expecting minor "tweaks" that could be dealt with quickly.

But key players are bracing for intense negotiations to resolve the differences. They hope to smooth over disputes with the White House at the same time, with an eye toward producing a bill President Bush could sign later this month.

The White House Friday renewed its warning that Bush would veto the Senate-passed bill without revisions, citing $3.9 billion in the measure for buying and rehabilitating foreclosed properties it said would help lenders, not homeowners.

The measure includes a long-sought modernization of the FHA and would create a new regulator and tighter controls on Fannie Mae and Freddie Mac, the government-sponsored mortgage giants. It also would provide $14.5 billion in housing tax breaks, including a credit of up to $8,000 for first-time home buyers.

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