7-10-08

After much debate and comprise to try to get the foreclosure bill passed the Senate is finally in position to once and for all vote on the issue. The bill would create a real alternative to foreclosure and could possible help millions of Americans kept their home with a new FHA program once the bill is passed. However now the House of representatives wants to further debate the issue which would cause further heartache for honest Americans already at the breaking point.

Christopher Dodd (D-Conn) who has sponsored the foreclosure bill is quoted as saying "Candidly, we can't wait any longer." this statement comes with the news that foreclosure fillings are up by 53% again from this time last year.

The provision of the bill that is caused much heated debate and which draws most of the criticism from the White House is that the states would be given about $4 billion to buy and fix foreclosed homes which have eroded home values in virtually every community in the country. They will be debating where are how this money will be raised, also note that it is a very small fraction of what the government used to bailout Wall St banks.

This bill would include important legislation that would:

• Create a new FHA program to help homeowners facing foreclosure. The bank holding the note would have to agree to a write down and then the FHA would refinance the now lower loan amount. It would be voluntary and your bank may not agree to it but in most case it would be a cheaper option then foreclosure so it is hoped that will appeal to the banks.
• Expand the FHA by increasing the maximum loan amounts and up date the FHA guidelines to more accurately reflect todays environment. The FHA minimum down payment will also now be set at 3.5% which will still make it the lowest cost mortgage product available since 100% financing is no longer available due to the credit crunch.
• Fannie and Freddie are going to have a new regulator that will ensure a more stable housing market in the future and will have great influence on what mortgage products would be introduced.
• It would also include money for the states to purchase back foreclosed homes and revitalize them. It is hoped this would improve the values of surrounding homes from further decreasing.
• The bill would also include tax credits for first time home buyers.

Even with all these positives there is still a possibility that Bush would still veto the measure leaving the economy further damaged. But considerable compromises have been made to hopefully avoid the looming veto threat.

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