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The U.S. House of Representatives passed legislation Wednesday to help thousands of homeowners facing foreclosure and back two mortgage finance giant, McLean-based Freddie Mac and Washington, D.C.-based Fannie Mae. The Senate is expected to vote on the bill later this week, and the White House has said it would approve the bill.
Leaders hope the legislation would encourage lenders to offer struggling homeowners the opportunity to trade their mortgages for government-sponsored loans with lower interest rates.
Freddie and Fannie together own or back more than half the mortgages in the U.S. Concerns about their finances during the housing crisis have caused the market to reel and their stock prices to plummet. Under the federal plan, Treasury Secretary Henry Paulson would have the power to extend credit to the companies or buy stock if their finances fall.
Paulson has said he does not think he would need to use the new power, as Fannie and Freddie’s finances were not near a crisis.
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