Foreclosure rescues approved

    WASHINGTON  _ The House on Thursday approved sending $15
billion to states to buy and fix up foreclosed property.
    The measure, passed 239-188, is part of a sweeping housing
package Democrats are pushing to prevent more foreclosures and help
homeowners and communities deal with the fallout from the mortgage
meltdown.
    The House also approved  a housing aid plan to provide $300 billion in refinanced mortgages for struggling homeowners. It passed 266-154 with
support from 39 Republicans.
    The measure would let debt-ridden homeowners refinance into
fixed-rate, government-backed mortgages they could afford.
    Congressional analysts say it could help as many as 500,000
borrowers and cost $2.7 billion over the next five years.
    The White House calls it a burdensome bailout that would open
taxpayers to inappropriate risk and reward those who helped cause
the housing crisis.was expected to vote later Thursday on a homeowner
rescue bill that would let strapped homeowners refinance into
government-backed mortgages.
    The 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.
    President Bush has threatened to veto both bills, contending
they reward lenders and speculators.
    The centerpiece of the plan is a measure by Rep. Barney Frank,
D-Mass., the House Financial Services Committee chairman, to have
the Federal Housing Administration back up to $300 billion in new
loans for debt-ridden homeowners. It would let the FHA relax its
standards to guarantee fixed-rate loans for borrowers currently too
financially strapped to qualify.
    Those homeowners could refinance if their lenders agreed to take
substantial losses on the original mortgages. Borrowers would have
to show they could afford to make payments on the new loans. They
would have to share with FHA at least half of their proceeds if
they profited from selling or refinancing again.
    The plan is projected to help roughly 500,000 borrowers at a
cost of $2.7 billion over the next five years.
    The House-passed bill by Rep. Maxine Waters, D-Calif., would
send $15 billion in loans and grants to states to purchase,
rehabilitate and resell or rent foreclosed properties. Proponents
say it will prevent blight in neighborhoods plagued by abandoned,
foreclosed homes.
    But Republican critics say it rewards lenders and investors who
own the property, and could act as an incentive for them to
foreclose rather than find ways to help struggling borrowers stay
in their homes.
    Democrats, seeking Republican support for the broader housing
package, were planning to attach a grab-bag of measures Bush has
sought.
    Those include legislation to overhaul the FHA, to more tightly
regulate government-sponsored mortgage giants Fannie Mae and
Freddie Mac, and authority for state and local housing finance
agencies to use tax-exempt bonds to refinance distressed subprime
mortgages.
    The plan is also to include a housing tax credit of up to $7,500
for first-time home-buyers, to be paid back over 15 years. It would
permanently raise the limit on the size of loans FHA could insure
and Fannie Mae and Freddie Mac could buy to $729,750 in the
highest-cost housing markets. Those caps are scheduled to fall at
the end of the year, to $362,790 for the FHA, and to $417,000 for
Fannie Mae and Freddie Mac.