Bush signs $300 bn housing rescue legislation

July 30th, 2008 - 10:33 pm ICT by IANS  

Washington, July 30 (DPA) US President George W. Bush Wednesday signed a multi-billion-dollar housing rescue bill designed to help hundreds of thousands of homeowners threatened with foreclosure. The Housing and Economic Recovery Act allows up to 400,000 mortgage-holders to refinance into low-interest government loans - effectively guaranteeing $300 billion worth of new mortgages.

The long-awaited legislation also authorises the Treasury to take emergency steps to shore up struggling lending giants Fannie Mae and Freddie Mac.

The long-awaited bill, which was passed by large margins in both the House of Representatives and Senate last week, also contains tax incentives for first-time home buyers and $4 billion for local authorities to purchase and renovate foreclosed properties.

Bush had originally threatened to veto the measure, but dropped his opposition after the rescue plan was added for Fannie and Freddie, which together manage nearly half of the $12-trillion US mortgage market.

More than one million homeowners are facing foreclosure in the US. Housing prices have plunged more than 15 percent in the past year in the 20 largest US cities, according to the S&P/Case-Shiller Index released Tuesday.

Fannie and Freddie’s share price plunged in the last month amid concerns that the two government-chartered companies do not have enough capital to remain solvent.

The housing bill allows the Treasury to make new loans to Fannie and Freddie and even buy up shares if necessary.

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