WASHINGTON The Senate cleared the last hurdle Friday to passing a housing rescue aimed at sparing hundreds of thousands of homeowners from foreclosure and bolstering troubled mortgage giants Fannie Mae and Freddie Mac.
The 80-13 test vote showed broad support for the election-year package and put it on track to pass the Senate by Saturday. The White House says President Bush will sign it, having earlier dropped a threat to veto it over $3.9 billion in neighborhood grants.
The bill regarded as the most significant housing legislation in a generation is designed to help an estimated 400,000 homeowners escape foreclosure by letting them refinance into more affordable loans backed by the Federal Housing Administration.
It was set to clear Congress as a private company reported that the number of households facing the foreclosure process more than doubled in the second quarter of 2008 compared with a year ago. Irvine, Calif.-based RealtyTrac, Inc., said that 739,714 homes received at least one foreclosure-related notice during the quarter, or one in every 171 U.S. households.
"The American people can begin to see they're going to get some relief and some help from their Congress," said Sen. Christopher J. Dodd, D-Conn., the Banking Committee chairman.
The plan gives the Treasury Department power to spend unlimited amounts to prop up Fannie and Freddie, should they need it, to calm investor fears about their financial stability at a time of rising foreclosures and falling home values. Treasury Secretary Henry M. Paulson calls the authority a "backstop" which he has no intention of using.
Paulson's request for the emergency power helped forge a bipartisan deal on the legislation, which also creates a new regulator with tighter controls on the government-sponsored mortgage firms something Republicans have long sought.
Democrats also won key concessions as part of the compromise, including a permanent affordable housing program to be financed by Fannie and Freddie profits and the $3.9 billion in grants for buying and fixing up foreclosed properties in neighborhoods hit hardest by the housing crisis.
Many conservative Republicans are vehemently opposed to the foreclosure rescue, which they call a bailout of irresponsible homeowners and unscrupulous lenders. They are equally furious about the help for Fannie Mae and Freddie Mac, companies they say enjoy lavish profits in good times and wield their outsized political clout to resist regulation while depending on the government to bail them out should they falter.
Sen. Jim DeMint, R-S.C., was single-handedly delaying a final vote on the package until Saturday unless Democrats allowed a vote on barring the two firms from lobbying and making political contributions.
Dodd called Republican efforts to delay the measure's passage "tragic" given how many people are losing their homes each day.
More than three-quarters of Republicans voted against the measure when it passed the House on Wednesday.