Mortgage Foreclosure & Refinance Resource

United States regulators have ripped up longstanding restrictions on the government-sponsored mortgage companies Fannie Mae and Freddie Mac, freeing them to buy significantly more mortgages and potentially to reinvigorate the secondary market for mortgage debt. At the same time, Senate Democrats have introduced a bill that includes a controversial provision to the mortgage banking industry — it would restructure the bankruptcy code to allow homeowners to avoid foreclosure. bankruptcy judges, under the bill authored by Senate Majority Whip Dick Durbin, D-Ill., could restructure a loan on a primary residence, something they cannot now do.

Earlier this week, the White House threatened to veto the bill, saying that it was just a cover for a lender bailout. “In addition to being extremely costly, this new program would constitute a bailout for lenders and speculators, while doing little to help struggling homeowners,” the White House said in a statement.

President Bush and larger mortgage lenders prefer to take a more hands-off approach, allowing lenders and troubled homeowners to negotiate new, more affordable home loan rates.

Reid promised Wednesday, despite delays caused by Iraq-related legislation on the floor, that the Foreclosure Prevention Act of 2008 will be taken up by the end of this week. Republicans and Democrats tried to work out details Wednesday in hopes of having an agreement to take up the housing bill by Thursday afternoon.