House Approves Bailouts for Banks, Homeowners

May 09, 2008 12:17 PM
by findingDulcinea Staff
by Cara McDonough
Despite a veto threat from President Bush, the House has passed two bills to help banks and homeowners bounce back from the mortgage crisis.

30-Second Summary

The first bill approves sendng $15 billion to states, allowing them to buy foreclosed properties from banks and fix them up. The bill, which essentially provides banks with buyers for foreclosed homes, passed 239-188 Thursday morning.

A second bill, which would allow the Federal Housing Administration to take on up to $300 billion in new mortgages so that struggling borrowers could refinance with government loans, passed 266-154 Thursday afternoon.

The largely Democrat-supported measures “constitute the most significant action Congress has taken to date to address the housing crisis that’s at the center of the nation’s economic woes,” writes the Associated Press.

Both pieces of legislation have received criticism—mostly from Republicans—and President Bush has threatened to veto both bills. The White House says the $300 billion housing aid plan is a “burdensome bailout” that will reward those who helped create the housing crisis in the first place.

Republican opponents say the foreclosure bill could act as an incentive for lenders to foreclose rather than help struggling borrowers remain in their homes.

Whatever the final outcome, the bills represent the next step in the government’s oversight of the mortgage meltdown, which as of February has left 8.8 million American homeowners owing more than their houses are worth.

Over the past few months, the Federal Reserve has been working on new rules to prevent abuses by mortgage lenders, including requiring lenders to demonstrate that borrowers can afford their mortgages and prohibiting deceptive advertising practices.

Headline Links: House passes bills aimed at helping banks, homeowners

Opinion & Analysis: Government involvement gets political

Background: The Federal Reserve and the impact of the crisis

Reference: Applying for a mortgage


Most Recent Beyond The Headlines