State of the Housing rescue bill.

As of today, July 5th, 2008, it looks like the Housing Rescue Bill is set to pass both the House and Senate and that President Bush will be willing to sign it (see post from June 10th for more info). It looks like they might add a provision championed by Senator Chris Dodd of Connecticut, which should be particularly helpful for people who have already fallen behind on their payments and for whom foreclosure is imminent.

What's great about it is that not only will it allow people with sub-prime loans that are at risk of having their interest rates resetting to much higher rates, but it will also: 1) be allowed for people who are already behind on their payments and 2) will attempt to get the lenders to accept a payoff of their loan with much less than is owed to them. So let's say you owe $250,000 on house that is worth $180,000. Then, they'll try to refinance your loan at $180,000 and have the prior lender accept the $180,000 as payment in full. Your monthly payment will be much lower because your interest rate will be lower and your loan amount will be much lower.

Things you'll need to keep in mind, it hasn't been approved yet. Also, you'll have to prove that you can make the new payment in order to be accepted. Finally, you will have to be willing to share any future profits that you get once the market improves. I'll keep you posted.