The American Housing Rescue and Foreclosure Prevention Act also would include $4 billion in federal aid to help hard-hit communities buy and repair foreclosed properties, a provision that has drawn a White House veto threat and could complicate passage of the overall measure.
It would also give the Federal Housing Administration new authority to guarantee repayment of up to $300 billion in mortgages if a lender agrees to write down the loan principal below a home's current appraised value.
For The Record
Los Angeles Times Saturday, July 26, 2008 Home Edition Main News Part A Page 2 National Desk 2 inches; 64 words Type of Material: Correction
Home foreclosures: An article in Section A on Wednesday on home foreclosures said the number of homes repossessed in California in the three months ended June 30 increased 33.5% from the same period last year. The increase was from the first quarter of 2008. The article also said that DataQuick Information Systems began tracking foreclosure data in 1992. The firm's tracking began in 1988.
Finally, it includes measures aimed at stimulating the housing market, including a tax credit for first-time home buyers and authority for states to issue an additional $11 billion of tax-exempt bonds to refinance subprime loans, provide loans to first-time home buyers and fund the construction of low- income rental housing.
And it would permanently raise to $625,000 the limit for mortgages that Fannie Mae and Freddie Mac could buy, less than the amount sought by officials in California, with its high housing costs, but more than the previous limit.
The legislation comes as the Democrats who control Congress have talked about a second economic stimulus measure costing $50 billion or more for consideration in September that could include increased spending for such things as infrastructure projects and energy assistance for low-income households. That would be on top of the two-year, $168-billion economic stimulus package approved in February.
Treasury Secretary Henry M. Paulson Jr. urged Congress to act quickly to shore up Fannie and Freddie, saying in a speech in New York that "their continued activity is central to the speed with which we emerge from this housing correction and remove the underlying uncertainty in our financial markets and financial institutions."
UCLA's Leamer, however, said home sales and prices won't recover until buyers can get loans, but that banks won't lend until prices start to rise.
The federal aid package, he said, "is too little to really matter."
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peter.hong@latimes.com
richard.simon@latimes.com
Hong reported from Los Angeles and Simon from Washington.
