WASHINGTON — Trying to curb foreclosures, the Senate voted Wednesday to make it easier for homeowners with risky credit to switch to a lower-cost mortgage backed by the government.
The bill, passed 91-5, also would give banks a break by reducing fees they must pay for the government to insure deposits.
While both steps put taxpayer money on the line, lawmakers say the legislation is needed to prevent the economy from getting worse.
"Given the size and scope of the struggles too many Nevadans and Americans endure, it will take more time before housing normalizes again,” said Senate Majority Leader Harry Reid, D-Nev. "But with this bill, we are working to hasten that day so that no family will ever accept losing its home as the way it is.”
Also Wednesday, Democratic leaders in the House and Senate hashed out a plan to establish a $5 million, independent commission that would investigate the cause of the financial crisis and chart a path forward.
The Senate bill would expand an existing $300 billion program called "Hope for Homeowners,” which encourages lenders to write down an individual’s mortgage if the homeowner agrees to pay an insurance premium.
The program, which is set to expire in 2011, is intended to swap out a homeowner’s high-interest rate for a 30-year fixed loan backed by the Federal Housing Administration. So far, the program has been a dud.
When the program was established last year, Congress envisioned helping some 400,000 troubled homeowners. But because eligibility requirements were so strict, one borrower has completed the refinancing process and only 51 more are in the works, according to statistics released last week.
The program also has been stymied by high fees, complex regulations and a requirement that banks that are volunteering to participate in it will absorb large losses.
by the associated press
The bill, passed 91-5, also would give banks a break by reducing fees they must pay for the government to insure deposits.
While both steps put taxpayer money on the line, lawmakers say the legislation is needed to prevent the economy from getting worse.
"Given the size and scope of the struggles too many Nevadans and Americans endure, it will take more time before housing normalizes again,” said Senate Majority Leader Harry Reid, D-Nev. "But with this bill, we are working to hasten that day so that no family will ever accept losing its home as the way it is.”
Also Wednesday, Democratic leaders in the House and Senate hashed out a plan to establish a $5 million, independent commission that would investigate the cause of the financial crisis and chart a path forward.
The Senate bill would expand an existing $300 billion program called "Hope for Homeowners,” which encourages lenders to write down an individual’s mortgage if the homeowner agrees to pay an insurance premium.
The program, which is set to expire in 2011, is intended to swap out a homeowner’s high-interest rate for a 30-year fixed loan backed by the Federal Housing Administration. So far, the program has been a dud.
When the program was established last year, Congress envisioned helping some 400,000 troubled homeowners. But because eligibility requirements were so strict, one borrower has completed the refinancing process and only 51 more are in the works, according to statistics released last week.
The program also has been stymied by high fees, complex regulations and a requirement that banks that are volunteering to participate in it will absorb large losses.
by the associated press
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