President Bush had threatened to veto the bill. But despite this, the House gave the green signal to the piece of legislation last Thursday that would go a long way in helping people fight foreclosures.

With huge Democratic support a package of bills was passed through the House. It permits the Federal Housing Administration to give guarantee to new loans up to $3000 billion. This would apply to new loans that would be sanctioned to house owners who are facing foreclosure because of high interest rates. In another clause the first time buyers of houses will be given a tax credit of $7,500. $15 billion would be granted to various states to enable the government to buy vacant foreclosed units vitiating the neighbourhood.

One of the few Republicans supporting the bill is Rep. Christopher Shays. He said that he was thankful to the House for providing this relief to the foreclosure victims. He said that ‘when a house enters foreclosure, everyone loses.’ It is not just the families, who are thrown out of houses that were their homes, but property value of the locality drops, local bodies lose taxes, and investors their returns.

The proposal further allows the FHA to relax lending standard so as to guarantee long term fixed rate mortgages to those borrowers who qualify for the same. The lenders on their part must agree to accept losses on the original mortgage amount. Another condition is that the borrowers would have to show proof of their income capability of repayment. With the FHA they would have to share half the profits if they sold or refinanced the units.

Rep.Rosa DeLauro opined that with each passing day it is becoming more difficult to come out of the Bush recession days. It is hoped that the housing package will somewhat help house owners. If house values increase then the economy will get a boost.

It is calculated by the Pew Charitable Trust, that 35% of the house owners in Connecticut will be affected by the foreclosure crisis. It would cost the tax and revue kitty by about $2 billion. In March alone, 2,000 units in Connecticut were gobbled up by foreclosures. It is hoped, commented Rep. Chirs Murphy that the law will help to bring back the housing market on its rails. The hue and cry is for the Congress to do something concrete. The states cannot just sit back and watch, while Congress fiddles.

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