Housing Rescue Bill Passes

Over the weekend, the US Senate passed a bill that aims to reduce the number of foreclosures by permitting homeowners to refinance into government-backed loans. The House of Representatives approved the bill last week and it now is headed to the President for his signature, which is anticipated.

The program would be available to an estimated 400,000 home owners and would be administered by the FHA. It will insure up to $300 billion in refinanced thirty-year fixed-rate loans.

For mortgages that now exceed the value of the home, the lender would be asked to voluntarily write down the principal to the qualifying level.

That's the rub: the success of the program will depend on how receptive banks will be to writing down a portion of the loan.