U.S. Senate Approves Landmark Housing Bill To Rescue Homeowners From Mortgage Crisis

Washington, D.C. (AHN) - The United States Senate has approved a landmark housing bill to rescue America's battered housing market.

The Senate, meeting in a rare weekend session on Saturday, voted 72 to 13 in favor of the bill that offers up to $300 billion in loan guarantees for homeowners to get cheaper loans.

The new law will also be used to rescue the beleaguered firms, Fannie Mae and Freddie Mac, which have found difficult to raise fresh capital enough to shore up its weakened balance sheet.

The two giant mortgage lenders have portrayed a grim picture of the housing and credit markets in the United States over the past few weeks as investors speculated that government can rescue the sinking firms.

Over the last 12 months, the shares of the government-chartered, publicly traded companies have incurred more than 80 percent of losses.

Fannie Mae and Freddie Mac, which support $5 trillion in home loans out $12 trillion in total, were trading at about $60 a year ago.

President George Bush, who had initially threatened to veto the bill that was passed within a short span of time, is expected to sign it into law next week.

The housing legislation, which is the second major step by the Bush administration after economy stimulus package in tax rebates, is aimed to help hundreds of thousands of families from losing their homes to foreclosure.

On Friday, a report show the number of foreclosure filings surged by 120 percent in the second quarter, nearly triple the filings registered a year ago and up by 14 percent compared to the first quarter.

According to a housing market report Friday issued by RealtyTrac, a total of 739,714 foreclosure filings were registered in the second quarter.

The report showed that one of every 171 U.S. households received a foreclosure filing, including notices of default, auction sale notices and bank repossessions.

According to the report, 48 out of 50 U.S. states and 95 of the 100 biggest metropolitan regions showed a year-over-year rise in the number of foreclosure filings during that three-month period.

The measure, which some Republican critics claim will cost the taxpayers billions, will allow troubled homeowners the chance to refinance with state-backed, fixed rate loans.

Under the new measure, the lenders have to agree to write down loan balances to 90 percent of the homes' current appraised value, once their debt-ridden borrowers opt for new 30-year fixed-rate mortgages.

The bill would also provide $3.9 billion in grants to the hardest-hit families in different communities for buying and relieving foreclosed property.