Law has help for housing market

Some observers say the housing package may be too little and too late.

MCCLATCHY NEWSPAPERS

WASHINGTON — President Bush signed legislation Wednesday morning aimed at shoring up the housing market, providing an emergency safety net for mortgage giants Fannie Mae and Freddie Mac and helping several hundred thousand families avoid foreclosure.

“We look forward to putting in place new authorities to improve confidence and stability in markets and to provide better oversight for Fannie Mae and Freddie Mac,” said White House spokesman Tony Fratto. “The Federal Housing Administration will begin to implement new policies intended to keep more deserving American families in their homes.”

Among the major components of the new law are the following:

UAllowing homeowners who cannot afford their monthly payments to refinance into government-backed loans through the Federal Housing Administration.

UExtending a line of credit to Fannie and Freddie, the government-sponsored mortgage-finance titans.

UModernizing the FHA, increasing the loan limit for FHA loans and increasing conforming-loan limits for Fannie and Freddie.

Some Republican lawmakers have urged the president to reject the housing bill, claiming that it risks taxpayer dollars. Bush signed the bill despite his own objections to a provision that directs $4 billion in emergency aid to local communities to buy and rehabilitate foreclosed homes. Supporters for the funding say it will help stabilize neighborhood prices and housing availability.

As persistent housing woes slow down the economy, some observers have worried that the housing package is too little too late, and that consumer benefits will be muted.

Further, the FHA refinancing program for troubled mortgages is voluntary, and there’s concern that industry may not fully participate.