Housing bill clears test, foreclosure halt asked

By Patrick Rucker and Kevin Drawbaugh

WASHINGTON (Reuters) - Housing market rescue legislation cleared a procedural test vote in the U.S. Senate on Friday ahead of final passage expected on Saturday, and lawmakers asked banks to suspend further foreclosures until a new mortgage refinancing program gets going on October 1.

As Congress moved to address the deepest housing slump in generations, a real estate data firm reported that second-quarter U.S. home foreclosure filings totaled almost 740,000 properties, more than double the year-ago level.

Nevada, California, Florida and Ohio were among states hardest hit by the foreclosure wave, but most areas of the country were hurting, said market data firm RealtyTrac.

Under the bill headed for a vote in an unusual Saturday session of the Senate, Fannie Mae and Freddie Mac would get new emergency financing from the government, if they need it, and a $300 billion fund would be established to help thousands of distressed mortgage borrowers refinance.

"I would hope that no one would be foreclosed upon between now and October 1 who would have qualified for this program had the effective date been immediate," Massachusetts Democratic Rep. Barney Frank said at a hearing on Friday.

Frank chairs the House of Representatives Financial Services Committee and is the bill's primary author.

"It would be shameful for a single homeowner in California, or anywhere else hit hard by the foreclosure crisis, to lose their home if they could have been helped by this program but for this deadline" of October 1, said Rep. Maxine Waters, a California Democrat who has worked with Frank on the bill.

The refinancing fund, to be established under the Federal Housing Administration, was expected to help 400,000 distressed borrowers get into new, more affordable, government-backed mortgages and out from under loans they can't handle.

In addition to the fund, the bill would shore up Fannie and Freddie, the nation's largest mortgage finance companies, amid market worries about their ability to weather the downturn.

The Senate is expected to pass the bill on Saturday and the White House has said President George W. Bush will sign it. The House approved it on Thursday by a vote of 272-152.

The Senate voted 80-13 on Friday to limit debate on the bill, pointing the way toward a final vote on Saturday.

MENENDEZ SEES PASSAGE

"It is my expectation that ... we will get the votes necessary. This will pass and go on to the president," said New Jersey Democratic Sen. Robert Menendez.

Some lawmakers were still criticizing the plan.

"It provides too many benefits to shareholders. It provides too much benefit to the subprime lenders. ... It provides too much risk to the American taxpayer," Missouri Republican Sen. Kit Bond said.