Bush signs bill to provide mortgage relief

July 30, 2008 7:06:44 PM PDT
President Bush quietly signed a massive housing bill on Wednesday, which was the same measure he had threatened to veto. It throws a temporary lifeline to troubled mortgage companies Freddie Mac and Fannie Mae and allows some homeowners to refinance, rather than lose their homes.

President George W. Bush signed the housing bill with little fanfare, but some are calling it the most significant legislation of its kind, in decades.

"The fact that it wasn't vetoed is a big deal," said Maria Benjamin, program director for the North Richmond Community Housing Corporation.

The North Richmond Community Housing Corporation which gets 20 to 30 calls per day about foreclosure.

"For those that it will help, it's beautiful. I'm excited about it. Because it gives us one more tool to be able to help people," said Benjamin.

The bill is expected to provide relief for 400,000 struggling homeowners, by allowing them to get more affordable mortgages backed by the Federal Housing Administration. The FHA could insure $300 billion in such mortgages, which would be available only to those who demonstrate they can afford a new loan.

In order to qualify, the home must have been purchased between 2005 and 2007; monthly mortgage payments must not exceed 31 percent of the borrower's gross income, and he or she cannot have any second mortgages or home equity loans.

The housing bill will help some homeowners avoid foreclosure, but many more will likely be left to fend for themselves.

"This certainly is a band-aid to help some people, but I don't think it's going to resolve the whole crisis," said Rick Olsen, president of Walnut Creek's Peregrine Lending. "I think the damage was done and these banks have to realize, these folks have to realize the market's down. They got in over their heads."

The housing measure also includes a tax credit that amounts to a $7,500 interest-free loan for first-time home buyers.


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