JURIST - Paper Chase: Senate approves foreclosure bill

[JURIST] The US Senate [official website] in a special Saturday session passed [vote summary] by 72-13 the Foreclosure Prevention Act of 2008 [HR 3221 materials], designed to address problems from the country's so-called "sub-prime mortgage collapse." The Act provides for government grants allowing municipalities to buy and redevelop foreclosed properties, and would allow the federal government to provide additional financial backing to the publicly supported Fannie Mae and Freddie Mac [corporate websites] mortgage companies. The bill passed [JURIST report] in the US House of Representatives [official website] earlier this week with the support of President Bush, who said he will sign the bill [NYT report], rescinding an earlier veto threat because of the included grants. Some have speculated that the legislation will increase the national debt by $800 billion, but a Congressional Budget Office (CBO) [official website] estimate [PDF text] places the cost of the program at about $25 million over the next ten years. Reuters has more.

Earlier this month, the Federal Reserve Board approved new rules for home mortgage loans [draft regulations, PDF; JURIST report] designed to reduce unfair lending practices and increase consumer protection. In June, the Federal Bureau of Investigation (FBI) [official website] announced that more than 400 people had been indicted [press release; JURIST report] for fraud involving individual mortgages and the US Attorney's Office for the Eastern District of New York [official website] announced the indictments [text, PDF; press release] of two senior hedge fund managers at Bear Stearns [corporate website] for allegedly misleading investors even after they knew their mortgage-related funds were at serious risk of collapse.

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