Housing Measures on Tap in Washington This Week

Washington, DC, February 25, 2008--Homeowners on the verge of bankruptcy or foreclosure could get relief from Congress this week.

Proposals on the table would loosen bankruptcy rules, protect banks from lawsuits and providing government help to homeowners facing foreclosure.

The housing proposals are expected to face more resistance than the stimulus package.

A bill to revise the U.S. bankruptcy code so judges could cut interest rates and reduce what's owed on troubled borrowers' mortgages could be taken up this week.

The bankruptcy measure is fiercely opposed by lenders and many Republicans.

The Mortgage Bankers Association is also lobbying against the measure because it believes the change would hurt many more borrowers in the long run by requiring "higher interest rates and larger down payments to offset the risk."

Consumer advocates, meanwhile, are pushing senators to approve the change.

Also in the Senate legislation is a provision mandating $200 million for foreclosure-prevention counseling services and an allowance for states to issue more tax-exempt bonds so that housing agencies could help homeowners refinance high-cost mortgages.

In the House is a measure to protect banks from lawsuits brought by investors whose holdings of mortgage securities are hurt changes in loan terms or other measures intended to help at-risk borrowers.

Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, wants to create a $20 billion federal corporation to buy distressed mortgages and help homeowners refinance into affordable loans.