House Panel Approves Bill to Assist Borrowers

The House of Representatives Financial Services Committee on Thursday approved a sweeping bill led by the Democrats to finance $300 billion in distressed mortgages with the aim of helping homeowners facing the threat of foreclosure.

The Financial Services Committee approved the bill 46 to 21, with 10 Republicans joining the Democrats in favor of it. The committee chaired by Rep. Barney Frank, the main author of the bill stressed the need for urgency.

"There are people who made loans that should not have been made; there are some people that were wrong to take loans out, some wrong to make the loans. If nothing happens all those loans go under foreclosure, the economy suffers," he highlighted.

The Massachusetts Democrat also said he hoped President Bush would sign the bill if it reached the White House as part of a wider package and it contained the legislation that Mr. Bush had demanded.

The new loans would be limited to no more than 90 percent of a property's value based on an updated appraisal. The government would retain a stake in any future sale of the property, worth 3 percent of the initial loan balance or 50 percent of net profit from a sale, whichever is greater.

Borrowers would have to demonstrate the ability to repay the new loan and if they default, they will forfeit the property. Democrats say the plan could help as many as 2 million homeowners.

House Panel Approves Bill to Assist Borrowers
By: MortgageLoan.com