Congress looks set to pass a housing rescue bill that will backstop Fannie Mae and Freddie Mac, create tougher oversight of the mortgage finance giants and spend billions to prevent home foreclosures.
The sweeping legislation is moving with uncommon speed and could be in place by next week.
President Bush and key lawmakers have said they hope the legislation will help restore confidence in a U.S. housing finance system battered by a wave of failing loans.
Following are some key provisions of the legislation:
—Fannie Mae and Freddie Mac , which each have a $2.25 billion line of credit with the Treasury, would see their current government loan limit raised until January 2009.
—If the companies' financial condition were to reach a crisis, Treasury could take an equity stake in either company. That power, too, would expire in January 2009.
—There is a better-than-even chance that the emergency measures will not be needed, meaning there will be no cost to taxpayers. If the lifeline is required, the Congressional Budget Office said, there is a 5 percent chance that the companies may need $100 billion but more likely would need $25 billion.
—A new regulator would be created with broad powers to set capital levels for Fannie Mae and Freddie Mac, with the Fed's consultation.
—The Federal Housing Administration would be authorized to refinance up to $300 billion in failing mortgages with Fannie Mae and Freddie Mac covering billions in expected losses.
—Fannie Mae, Freddie Mac and FHA would be be permitted to purchase loans as large as $625,500 in high-cost areas -- a big increase from the $417,000 cap typically in place.
—Local communities that are burdened with maintenance of abandoned properties would have access to nearly $4 billion in federal grants to buy and repair those homes.
—Many first-time home buyers would be eligible for a tax break worth up to $7,500, and $200 million would be offered to foreclosure-prevention programs + Local governments would have authority to issue an additional $11 billion of tax-exempt bonds to refinance shaky loans.
—The bill would increase the federal debt limit by $800 billion to $10.6 trillion.