US President Bush signed a housing bill Wednesday intended to rescue about 15 percent of the cash-strapped homeowners in fear of foreclosure in the next year or so.
A sign advertising a reduced price is seen in front of a home for sale in Richmond, California, June 2008. US President George W. Bush has signed an elaborate housing rescue plan designed to help thousands of homeowners avert foreclosure and bolster mortgage finance giants. [Agencies]
Early in the morning and out of public view, the US president signed it without fanfare in the Oval Office, adding his signature to a measure he once threatened to veto. The White House said he was accompanied by Treasury Secretary Henry Paulson, Housing and Urban Development Secretary Steve Preston and other administration officials.
"We look forward to put in place new authorities to improve confidence and stability in markets," White House spokesman Tony Fratto said. He said the Federal Housing Administration would begin to put in place new policies "intended to keep more deserving American families in their homes." The legislation is regarded as the most significant housing bill in decades. It won approval from lawmakers eager, in an election year, to come up with an answer to the growing housing crisis.
"By expanding homeownership opportunities and protecting families against foreclosure, we are helping keep the American Dream alive," said House Speaker Nancy Pelosi.
The measure includes $300 billion in new loan authority for the government to back cheaper mortgages for troubled homeowners; $3.9 billion for communities to fix up foreclosed properties causing blight in neighborhoods; and $15 billion in tax cuts, including an expanded low-income housing tax credit and a credit of up to $7,500, to be repaid, for some first-time home buyers.
The number of homeowners who could lose their homes to foreclosure by the end of 2009 is estimated by some to be around 2.8 million. Under the legislation, 400,000 having trouble with payments could avoid it by trading their loans for new, more affordable mortgages through the Federal Housing Administration.
Their banks would have to agree to allow the swap and to take a large loss in exchange for avoiding the lengthy and costly foreclosure process. To qualify, homeowners would have to be paying more than 31 percent of their incomes toward their mortgages and show they could afford to make the payments on a new, smaller loan.