Refinance bill would aid hardest-hit homeowners

Last update: April 17, 2008 - 7:38 PM

Homeowners buckling under their mortgage payments would be allowed to refinance into more affordable government-backed loans under a proposal introduced by a House committee chairman.

The measure by Rep. Barney Frank, D-Mass., calls for the Federal Housing Administration (FHA) to insure $300 billion in new mortgages for distressed borrowers, even if they are badly behind on their payments and have poor credit -- including those who owe more than their homes are worth.

The bill would substantially relax the standards of the Depression-era FHA in an effort to reach the hardest-hit homeowners, leaving the government responsible for paying off their loans if they cannot.

Frank has described the plan -- regarded by some Republicans as a bailout for reckless borrowers -- as a measured response to the housing crisis that is necessary to head off further economic problems.

HELP FOR STUDENTS

The House backed a measure aimed at ensuring that students get college loans amid the turmoil in the credit markets.

Passage of the bill on a 383-27 vote comes as worries mount that the tightening credit markets, stemming from the subprime mortgage crisis, could limit financial aid for students.

PROBING INTERCHANGE

The Senate requested a criminal investigation into changes to a $10 million "earmark" in 2005.

Speaker Nancy Pelosi, D-Calif., and top Republicans endorsed an ethics committee investigation of how the language governing the pet project was altered.

On a bipartisan 64-28 vote, the Senate approved a resolution that asks the Justice Department to look into the circumstances surrounding the $10 million expenditure for a highway interchange in Florida backed by Rep. Don Young, R-Alaska, the former chairman of the House Transportation and Infrastructure Committee.

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