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Housing Rescue Plan Nears Senate Approval

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The Associated Press

Published: July 26, 2008

WASHINGTON - The Senate cleared the last hurdle Friday to passing a housing rescue aimed at sparing hundreds of thousands of homeowners from foreclosure and bolstering troubled mortgage giants Fannie Mae and Freddie Mac.

The 80-13 test vote showed broad support for the election-year package and put it on track to pass the Senate by today.

The White House says President Bush will sign it, having earlier dropped a threat to veto it over $3.9 billion in neighborhood grants.

The bill, regarded as the most significant housing legislation in a generation, is designed to help an estimated 400,000 homeowners escape foreclosure by letting them refinance into more affordable loans backed by the Federal Housing Administration.

The plan gives the Treasury Department power to spend unlimited amounts to prop up Fannie and Freddie, should they need it, to calm investor fears about the mortgage giants' financial stability at a time of rising foreclosures and falling home values. Treasury Secretary Henry Paulson calls the authority a "backstop," which he has no intention of using.

Sen. Jim DeMint, R-S.C., was single-handedly delaying a final vote on the package until today because Democrats refused to allow a vote on his proposal barring the two firms from lobbying and making political contributions.

More than three-quarters of Republicans voted against the measure when it passed the House on Wednesday.

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