Senate Passes Mortgage Aid Bill

Despite opposition from the Bush administration, Senate Banking Committee leaders have agreed upon a housing bill designed to prevent foreclosures and create affordable housing for an increasingly beleaguered mortgage industry.

The deal which was struck between the top Democrat and Republican on the Banking Committee; Chairman Christopher Dodd and Richard Shelby, respectively will afford greater power to the Federal Housing Administration (FHA).

Under the new legislation, the FHA will be able to insure $300 billion in new loans for vulnerable borrowers if lenders agree to write down loan balances below the appraised value of borrowers' homes.

"The legislation is good news for both the markets and homeowners. The primary goal is to keep people in their homes, but also to help establish a floor and a bottom," to the housing slump, Dodd said.

"This is a victory for the taxpayers, Shelby of Alabama, said on CNBC. "We're not funding this."

The legislation would also create a structure to ensure financial stability for Fannie Mar, Freddie Mac and the Federal Home Loan Bank system. Other aspects of the House version of the legislation, including tax credits for first time home buyers and federal support for mortgage counseling will be debated by the Banking committee today.