An excellent recent article over at CNNmoney.com briefly overviewed the important parts of the new foreclosure prevention bill the congress has been cooking up this week. Here are some excerpts (italics are mine to emphasize key parts):
Congress isn’t done debating how best to stem the foreclosure crisis, but one near-certainty has emerged: Lawmakers will pull together a housing bill that expands Washington’s role in helping troubled borrowers.
Key legislators, Bush administration officials, banking regulators and the presidential candidates have lined up behind the idea of letting the Federal Housing Administration back new loans for homeowners at risk of foreclosure.
Several plans have been proposed. All of them would let the FHA insure mortgages for troubled borrowers whose lenders voluntarily write down loans to an affordable level. Once refinanced, the loans could be sold to investors, which in turn could grease the wheels of the mortgage market as a whole.
….Government risk will be a key area for compromise. To reach a deal, Seiberg said, negotiators must accomplish two things. First, make sure lenders give up enough principal so the government isn’t subsidizing them. And second, make sure borrowers pay enough – in premiums to the FHA and in equity to the government when they sell the house – to give the program the best chance of paying for itself.
Stay tuned folks. This debate is huge for those of you who can’t yet get even an FHA loan because you are upside down.