Congress passes anti-foreclosure bill

Congress on Tuesday sent the president legislation that encourages banks to spare homeowners from foreclosure after the industry helped scuttle a tougher measure that would have forced lenders to reduce monthly payments of owners in bankruptcy.

The House voted 367 to 54 to pass the Helping Families Save Their Homes Act. The Senate had voted 91 to 5 in favor of the bill and approved the final version by unanimous consent.

“In the last few weeks, we have cracked down on corporate and mortgage scams and helped more struggling homeowners keep their homes,” Senate Majority Leader Harry Reid (D-Nev.) said.

The bill would expand a $300-billion program that encourages lenders to write down an individual’s mortgage if the homeowner agrees to pay an insurance premium. The program, set to expire in 2011, would swap out a homeowner’s high interest rate for a 30-year fixed loan backed by the Federal Housing Administration.

Because of strict eligibility requirements, only about 50 homeowners are refinancing through the program compared with the 400,000 people it was estimated to help.

The legislation also would expand eligibility for homeowners and potentially give banks a break on fees they pay to the Federal Deposit Insurance Corp. to insure customers’ deposits.