Senate Approves Housing Bill To End Record Foreclosures

Washington, D.C. (AHN) - Senate passed a bipartisan legislation to alleviate the housing crisis on Thursday. The measure, called the Foreclosure Prevention Act, includes a provision earlier rejected by the White House to provide $4 billion to buy up and refurbish foreclosed properties.

Senators voted 84-12 to pass the legislation drafted by Banking Committee Chairman Sen. Christopher Dodd (D-CT) and Rep. Richard Shelby (R-AL), the committee's highest-ranking Republican. The measure sets aside $10.9 in bonds to refinance sub-prime mortgages, $180 million to counsel homeowners with bad loans, tax incentives for businesses and buyers of foreclosed homes. The controversial provision to buy up foreclosures was also included despite the White House previously saying it "constitute[s] a bailout for lenders and speculators.''

Senate Majority Leader Harry Reid (D-NV) said President George Bush is unlikely to veto the measure, according to CQ Politics. He issued a statement through his website before the vote saying the bill "is not perfect [and] not a magic bullet that will solve the problem... But it is an important step."

A counterpart bill is being drafted by lawmakers in the House.The measure is expected to cost $11 billion over the next 10 years. It would work in tandem with a proposal to allow the Federal Housing Administration to underwrite up to $300 billion in loans for homeowners experiencing difficulties in keeping up with their mortgage payments.

Dodd is quoted by the Los Angeles Times as saying on Thursday, "Quite candidly, what we have done does not quite live up to the title. We do some things but not enough." He previously described the current record level of 8,000 foreclosures a day as "on a par" with the foreclosures during the Great Depression.

That same week, Federal Reserve Chairman Ben Bernanke for the first time warned of a possible recession on Wednesday while testifying in front of the Joint Economic Committee in Congress. "Recession is possible, but recession is a technical term... It's clearly a period of very slow growth extending back to the fourth quarter of last year, and we are trying to set our policies appropriately for that situation," he said.

AHN's Vittorio Hernandez contributed to this report.