U.S. Senate passes housing crisis bill

WASHINGTON, July 12 (UPI) -- The federal government would assume the costly, exotic mortgages of 400,000 distressed homeowners under a housing crisis relief bill passed by the U.S. Senate.

The measure, passed Friday by a 63-5 vote, would pump money into the Federal Housing Administration, allowing it to purchase up to 400,000 adjustable-rate mortgages whose rapidly rising monthly payments are forcing many foreclosures, The Washington Post reported. Current mortgage holders, however, would have to write off a part of the loan in return.

The legislation would beef up and revamp the FHA in an effort to deal with the housing crisis and credit crunch. Under the bill, it would gain increased authority to regulate the financially troubled, quasi-public Fannie Mae and Freddie Mac mortgage guarantors, the Post said.

Also included are $14.5 billion in tax breaks, such as a credit of up to $8,000 for first-time homebuyers. However, a move to provide $3.9 billion in emergency funds for local governments to purchase vacant, foreclosed properties is likely to be stripped because it has drawn a veto threat from U.S. President George Bush, the newspaper said.

The bill still has to be reconciled with a U.S. House version passed earlier.