Washington, D.C. - Congressman Dale E. Kildee (D-MI) today voted to stabilize housing markets and to assist families at risk of foreclosure. The House of Representatives passed by a 272-152 vote legislation to create an independent regulator of Fannie Mae and Freddie Mac and to restore confidence in the key mortgage lending enterprises. The House also amended H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act of 2008, to assist homeowners at risk of foreclosure and to protect home property values.

The bill would establish a new and substantially strengthened government-sponsored enterprises (GSE) regulator to oversee the business practices, operations and obligations of Fannie Mae and Freddie Mac. The bill would also provide explicit government backing to boost confidence in them by providing temporary authority to the Treasury Department to financially back the GSE’s in the unlikely case that they require intervention.

Together Fannie Mae and Freddie Mac hold about half of all mortgages in the country, accounting for $5.2 trillion. Since last week’s announcement by Treasury Secretary Henry Paulson of a plan to bolster the GSEs, their shares have risen by about 40 percent.

“The backstop that this bill provides will bolster investors’ confidence in our housing markets and prevent what might otherwise be a catastrophic failure of the market. This authority is the best tool we have to inspire growth, and it reduces the chances that a bailout would even be necessary,” said Kildee. “This bill protects the interests of Michigan homeowners and taxpayers.”

Michigan has been among the states most affected by the current mortgage crisis and subprime lending abuses in recent years. According to PEW Charitable Trusts estimates, 30 percent of all loans in 2005 and 2006 in Michigan were subprime, and 1 in 36 Michigan homeowners are expected to experience foreclosure due to high-cost loans.

“The first step in turning around the economy is to stabilize the housing market. The housing crisis affects local tax revenues for schools and police and fire protection, and it may even reduce the home values of the responsible homeowners who are not in danger of foreclosure,” said Kildee.

To protect the value of homes and revitalize the state’s economy, the American Housing Rescue and Foreclosure Prevention Act would also:

• Provide $300 billion to the Federal Housing Administration to exercise new authority to insure refinanced lower-cost loans for borrowers;
• Establish a National Affordable Housing Trust Fund to support homeownership among very low- and low- income families and to increase investment in economically distressed areas; and
• Establish a $4 billion loan and grant program for the purchase and rehabilitation of owner-vacated properties.

H.R. 3221 requires Senate approval, and the President today revoked his veto threat on the measure.