Bush signs measure to rescue homeowners

President Bush signed a housing bill Wednesday intended to rescue about 15 percent of the cash-strapped homeowners nationwide who are in fear of foreclosure in the next year or so.

In Utah, several economists and real-estate experts said the measure could help stabilize the local housing market by sending a message to creditors that the government is willing to intervene. The measure is designed to help stabilize markets, in part by making credit more easily available amid rising defaults and falling home values.

"If it gives some confidence to the overall market and diminishes the panic, that will be great for everyone, including all Utah home owners, not just those in foreclosure," said James Wood, director of the University of Utah's Bureau of Business and Economic Research.

Early in the morning and out of public view, the president added his signature to a measure he once threatened to veto. The White House said he was accompanied in the Oval Office by Treasury Secretary Henry Paulson, Housing and Urban Development Secretary Steve Preston and other administration officials.

The legislation is regarded as the most significant housing bill in decades. It won approval from lawmakers who were eager, in an election year, to come up with an answer to the growing housing crisis.

The measure includes $300 billion in new loan authority for the government to back cheaper mortgages for troubled homeowners; $3.9 billion for communities to fix up foreclosed properties causing blight in neighborhoods; and $15 billion in tax cuts, including an expanded low-income housing tax credit and a credit of up to $7,500, to be repaid, for some first-time home buyers.

The number of homeowners who could lose their homes to foreclosure by the end of 2009 is estimated by some to be around 2.8 million. Under the legislation, 400,000 having trouble with payments could avoid it by trading their loans for new, more affordable mortgages through the Federal Housing Administration.

Their banks would have to agree to allow the swap and to take a large loss in exchange for avoiding the lengthy and costly foreclosure process. To qualify, homeowners would have to be paying more than 31 percent of their incomes toward their mortgages and show they could afford to make the payments on a new, smaller loan.

Wood predicted a potential record year for foreclosures in Utah in 2009.

"Right now, we're at about 4,000 homes in foreclosure," he said. "Over the next 12 to 18 months, that could go as high as 13,000."