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Wide-reaching Housing Rescue Legislation Moves Forward

The House approved Wednesday a hotly-debated housing rescue package aimed at helping strapped homeowners avoid foreclosures after President Bush dropped his opposition to the bill. Experts examine the measure.

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    The line stretched down the street and around the block yesterday, as thousands of distressed homeowners, many facing foreclosure, braved sweltering heat in Washington, D.C., in an effort to keep their homes.


    I want you to fill out this and go to the end of the line outside.


    The nervous borrowers were in Washington at the same time as Congress moved toward final action on a major housing bill aimed at helping such homeowners.


    … this potential of putting the American taxpayer on the hook for $5 trillion…


    The tools and resources will be made available to you to help you stay in your home.


    At a downtown hotel, the nonprofit Neighborhood Assistance Corporation of America organized a five-day event to guide homeowners through the daunting process of renegotiating their home loans.

    Darren Duarte is a spokesman for the housing advocacy group.

    DARREN DUARTE, Spokesman, Neighborhood Assistance Corporation of America: What you're seeing here is counselors, 300 counselors, going over their mortgage documents. We're verifying the documents that are scanned in. And we're telling the homeowner — we're showing the homeowner what they can afford and not a dollar more.


    I'm just trying to find some relief.


    Sherman Moorefield lives in Silver Spring, Maryland, just outside Washington. His mortgage interest rate now stands near 7 percent, but is set to adjust several points higher soon.

    What would happen if you had to pay the 9 percent or 10 percent?


    I'd probably end up losing my home, because right now I'm paying $2,700 a month for my home, and that's tough.


    Did you know of any other place you could go to get help?


    No. There was no help until we heard about this.


    But some Republicans have criticized the package as too expensive. Jeb Hensarling is from Texas.

    REP. JEB HENSARLING (R), Texas: We're being asked to take — really, this is an historic moment — we're being asked to take a terribly flawed housing bill that could put the taxpayer on the line for $300 billion to help bail out people on Wall Street who made bad bets, and then couple that with a breathtaking, an absolutely breathtaking bailout of Fannie and Freddie that, in its worst-case scenario, which admittedly is unlikely, but in its worst-case scenario could add $5 trillion to the national debt at the snap of a finger.


    Massachusetts Democrat Barney Frank, the bill's lead author, said the House should not let the perfect be the enemy of the good.

    REP. BARNEY FRANK (D), Massachusetts: It is inconceivable to me that anybody would like everything in this bill, because it is the product of a very significant set of compromises. But we are here in substantial part because of a terrible housing crisis that has affected the economy of the U.S. and the world.


    John Campbell is from California, a state with a deluge of foreclosures. He was one of many Republicans who now reluctantly support the housing bill.

    REP. JOHN CAMPBELL (R), California: I am going to support this bill today, and I'm going to support it because we are in a position where we cannot afford to not have Fannie Mae and Freddie Mac in the marketplace. If you think the economy is tough now, watch what would happen if we took 50 percent of our lending capacity out of this marketplace today.


    Massachusetts Democrat Richard Neal said the measure is designed to prevent that failure and to provide a boost to a troubled sector of the economy.

    REP. RICHARD NEAL (D), Massachusetts: This bill offers hope that, if we can get industry up and moving again, and provide security for distressed homeowners, maybe the economy will respond, and get back on track, as well. We all know how important the housing industry is, not only to American economic security, but to overall economic gain.


    But many municipalities aren't waiting for federal action.

    GERALD CONNOLLY, Board of Supervisors Chair, Fairfax County, Virginia: Three years ago, we had 200 foreclosed properties in Fairfax County. This year so far, we've had 7,000.


    Gerry Connolly is chairman of the Fairfax County, Virginia, Board of Supervisors and a Democratic candidate for the House. Situated just outside Washington, Fairfax is the wealthiest county in the U.S. on a per capita household income basis.

    Nonetheless, Fairfax, too, has housing troubles. So last month, Connolly's board passed a measure to extend financial counseling to hundreds of endangered homeowners, help families find second trust mortgages, and use county funds to buy and restore distressed properties to prevent blight.


    If you can help stabilize a neighborhood by buying that key property at the end of the street, and rehabbing it, and putting a family back into that home, you can help turn around a distressed neighborhood. So it's one of the first in the country. And we think it could be a model in anticipation of these new federal dollars.


    The housing bill also includes nearly $4 billion to help localities buy foreclosed homes. The House passed the bill this afternoon. The Senate is expected to do so within days. And President Bush now says he will sign it.