By: Stella Greengrass Distressed homeowners cheered when the news broke of President Bush's signature of a new, far-reaching housing bill into law. The bill, designed to prop up the faltering housing market, also contains provision for strengthening the two largest mortage issuers in the country, Fannie Mae and Freddie Mac. The bill passed in the House last week, and the Senate approved it with a vote of 72-13 on Saturday. President Bush signed the bill into law on Wednesday, marking the beginning of relief for hundreds of thousands of homeowners across the nation. White House spokesman Tony Fratto says that, “The Federal Housing Administration will begin to implement new policies intended to keep more deserving American families in their homes.” The goal of the legislation is two-fold; the primary objectives are providing affordable mortages, insured by the US Government, to those homeowners who are at risk of foreclosure. The second primary objective of the legislation is a plan to provide stronger regulation of lenders Freddie and Fannie. The White House, until early last week, had threatened to veto the housing bill, which was viewed by many in the administration as “bloated”. The bill provides for greater involvement for the FHA, which will be permitted to insure up to $300 billion in mortgages for borrowers at risk of foreclosure. The measure requires that the mortgage lender lower the outstanding mortgage balance to 90 percent of the appraised value of the home. The bill also provides a regulator for the two companies that will decide just how much funding the two companies will receive annually, and will raise the cap on loans that can be insured by the two companies from $417,000 to $625,000. The law also authorizes the issuances of unlimited lines of credit to Freddie and Fannie. If the two companies decide to take advantage of that offer, it could cost in excess of $100 billion.
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