WASHINGTON (Reuters) - The U.S. Senate on Tuesday cleared the way for passage of a housing rescue package that would create a multibillion dollar mortgage rescue fund and give billions more in aid to communities hit by a wave of foreclosures. Despite a veto threat from President George W. Bush, Democratic and Republican supporters of the bill expect it to become law.
The legislation must first be reconciled with companion legislation that has already passed the U.S. House of Representatives. Following is a summary of some key differences between the House and Senate bills:
Both plans would expand the Federal Housing Administration and authorize the federal agency to refinance up to $300 billion in failing mortgages but there are important differences:
* FUNDING - The Senate plan would have Fannie Mae and Freddie Mac pay for the insurance program through an ongoing tariff on the mortgage-finance companies. The House bill would see the federal government absorb mortgage losses expected to reach $1.7 billion.
* IMPACT - The Senate bill is expected to refinance 400,000 loans between October 2008 and the end of September 2011 when the program would end. The House bill would open the mortgage insurance fund this year and close it at the end of 2013 and is expected to touch 500,000 loans.
Both plans would create a new regulator for Fannie Mae and Freddie Mac with more oversight authority for the two government-sponsored enterprises (GSEs) but there are differences in their plans.
* LOAN LIMITS - Both versions of the bill would raise the current limit on the size of loans that Fannie Mae and Freddie Mac may purchase. Those limits are $729,750 for high-cost areas through the end of the year. The House plan would hold those limits in place indefinitely while the Senate plan would cap the limits to $625,000 in those same, high-cost regions.
* ENACTMENT - The Senate reform plan would empower a new GSE regulator before the end of the year. Lawmakers in the House want the new regulator to take over next year, after the November elections.
The Senate and House would both send additional aid to communities hard-hit by foreclosure and to borrowers who are facing the loss of their homes.
* A House plan would create $15 billion in federal grants to help local communities buy and rehabilitate foreclosed homes that have fallen into disrepair. The Senate would allocate $4 billion for such work.
* The Senate bill would extend $180 million in funding for housing and legal counseling. The House bill would give new homebuyers a $7,500 tax credit.
Reporting by Patrick Rucker; Editing by Chizu Nomiyama