The housing bill Congress is preparing to send President Bush would:
Give the Federal Housing Administration $300 billion in new lending authority and relax standards to provide affordable, fixed-rate mortgages to debt-ridden homeowners. Any losses would be covered by an affordable-housing fund financed by Fannie Mae and Freddie Mac, the government-sponsored companies that finance mortgages.
Allow the Treasury Department temporary authority to lend money to Fannie and Freddie or buy their stock to avert a collapse of one or both of the mortgage giants. The authority expires on Dec. 31, 2009.
Create a new regulator and tighten controls on Fannie and Freddie, including power for the regulator to approve pay packages for company executives. Create a new affordable-housing fund drawn from their profits. Permanently raise the limit on the loans they may buy -- set to revert to $417,000 by the end of the year -- to $625,000 in the highest-cost areas. Allow them to buy loans 15 percent higher than the median home price in certain cities.
Provide $3.9 billion in grants to the hardest-hit communities for buying and fixing up foreclosed property.
Modernize the FHA and allow it to back loans for riskier borrowers. Permanently increase the size of loans the agency may insure -- currently set to revert to $362,790 by the end of the year -- to $625,000 in the highest-cost areas. The agency could buy loans 15 percent higher than the median home price in certain cities.
Bar the FHA from insuring mortgages in which the borrower's down payment is paid by the seller, beginning on Oct. 1, 2008. Place a one-year moratorium to bar the agency from charging premiums based on the riskiness of the homeowner, until Oct. 1, 2009.
Provide $15 billion in housing tax breaks, including for low-income housing. Give a credit of up to $7,500 for first-time home buyers who purchase residences between April 9, 2008, and July 1, 2009. Allows people who don't itemize their taxes to claim a $500-$1,000 deduction on their 2008 property taxes.
Give states an additional $11 billion in tax-free municipal bond authority for low-interest loans to first-time home buyers, construction of low-income rental housing and refinancing subprime mortgages.
• Offer protection from investor lawsuits for mortgage holders that modify loans to borrowers who are in default or about to default.
• Provide $180 million for pre-foreclosure counseling and legal services for distressed borrowers.