What's Congress doing to help you avoid foreclosure?

Lately, both the Senate and the House have been working on bills that go much further than the Hope Now project and project Lifeline mentioned in a prior post. They each have separate versions which will have to be reconciled before the President can sign it into law. It's constructive to discuss each plan individually to give you an idea of what to expect in the near future.

Maxine Waters (D-California) has proposed a bill to give $15 billion to the states to be used to purchase foreclosed properties. The idea is that the states will buy and rehabilitate these properties so that they do not become eyesores which blight the whole neighborhoods.

Barney Frank (D-Massachusetts) has proposed a plan which in addition to Waters' plan provides the following: an FHA guarantee for $300 billion in refinance funds. These funds will provide loan guarantees allowing lenders to refinance loans to homeowners facing foreclosure because of high interest payments. It relaxes standards for FHA loans in order to provide fixed rate loans to financially strapped homeowners who can prove that they will be able to pay the new loan. The current lender will have to agree to take a substantial loss on the loan.

In addition to the FHA guarantees, Barney Frank's bill will provide up to a $7500 tax credit to anyone purchasing a foreclosed property.

On the Senate side, the Senate Majority leader, Harry Reid has proposed the Senate version of the bill which among other things provides: a $25 billion tax break for money losing businesses such as homebuilders, a $7000 tax credit for individuals buying foreclosed properties, $4 billion in grants to communities to buy and fix foreclosed properties, $150 billion for pre-foreclosure counseling to individuals in jeopardy of losing their homes and finally $10 billion in tax free revenue bonds to help refinance loans for homeowners in jeopardy of losing their homes.

The Senate version of the bill seems to favor lenders and builders more than the homeowners who really need to be bailed out, so I'm guessing the bill will have to be much closer to the House version in order to avoid a veto by the President. I'll keep tabs on this and let you know what happens.