House Passes Landmark Housing Bill

The House has passed a landmark housing bill that includes a financial backstop for Fannie Mae and Freddie Mac by a 272-152 vote, and the measure now goes to the Senate, where a few Republican stalwarts might delay final passage for a few days. The bill increases Fannie's and Freddie's line of credit at the U.S. Treasury and authorizes the Treasury secretary for the first time to purchase stock in the two government-sponsored enterprises, if necessary. The bill also strengthens regulation of Fannie and Freddie, and passage of the bill should make it easier for the mortgage giants to raise additional capital, according to James Lockhart, director of the Office of Federal Housing Enterprise Oversight. Freddie has pledged to raise $5.5 billion in additional capital. "We are hopeful passage will help them do that quicker," Mr. Lockhart told Bloomberg TV. Once the bill is signed by President Bush, Mr. Lockhart will become the chief regulator for Fannie, Freddie, and the Federal Home Loan Banks. The massive housing bill also updates the Federal Housing Administration mortgage insurance programs and creates an FHA refinancing program to help 400,000 homeowners avoid foreclosure. The foreclosure rescue program will begin Oct. 1. Tax provisions in the bill provide a $7,500 tax credit for first-time homebuyers.