Senate Advances $300 Bil Mortgage-Rescue Measure

Investor's Business Daily (06/25/08) P. A1; Graham, Jed
Although the Senate this week voted 83-9 in favor of a U.S. government plan to take on up to $300 billion in distressed mortgages, supporters of the measure still must resolve differences with the House of Representatives and overcome a presidential veto threat. The proposed program offers assistance to distressed borrowers with loans that are worth more than their residences and to lenders looking to escape steep losses often associated with foreclosed homes. Under the plan, which the Congressional Budget Office believes will have only a minor impact, the FHA would accept loans at 90 percent of current appraised value. Reducing loan principal would lower monthly payments while giving the homeowner some equity and the opportunity to benefit from price gains down the road.