In a separate bill, the Senate on a 78-12 vote sent a $634 billion measure to President Bush, who was expected to sign it even though it spends more money and contains more pet projects than he would have liked. The measure is needed to keep the government operating beyond the current budget year, which ends Tuesday. As a result, the legislation is one of the few bills this election year that simply must pass. Bush's signature would mean Congress could avoid a lame-duck session after the Nov. 4 election. (CNNMoney, 9/27)
Homeowner Help At Last - The Hope for Homeowners program, which begins Oct. 1, allows borrowers who can't meet their current mortgage terms to refinance into more affordable, fixed-rate loans backed by the Federal Housing Administration. The legislation also calls for changes to strengthen the Hope for Homeowners program to increase eligibility and improve the tools available to prevent foreclosures, but did not specify the enhancements.
(CNNMoney, 9/28)
Banks in a Domino Effect - In a week where WaMu was acquired by JPMorgan Chase, Wachovia is the subject of a bidding war between Citigroup and Wells Fargo. Across the Pond, the governments of Belgium, Luxembourg and the Netherlands agreed late on Sunday evening to invest £9bn in huge financial services group Fortis, in effect nationalizing it. Plus Spanish bank Santander will take over 20-billion British Pounds to take over UK's Bradford & Bingley a year after Northern Rock collapsed and was nationalized by the British government. (NYTimes, 9/28, BBC, 9/28)
Emergency Rate Cut - Some economists think that the Federal Reserve will try to boost battered confidence in banks and the economy by cutting the Federal Funds Rage by at least a quarter percentage point as early as Tuesday, although the Fed's next scheduled meeting to discuss interest rates is a two-day session that ends on October 29. (CNNMoney, 9/26)
Current Mortgage Rates:
- 30-year fixed - 5.98%
- 15-year fixed - 5.65%
- 5/1 ARM - 5.98% (CNNMoney, 9/25)
Schwarzenegger signs 10 housing-related bills, vetoes one - The bill he vetoed would have banned negative amortization loans, in which homeowners pay less than the interest on their loan and can end up owing more than their homes are worth. It also would have prevented mortgage brokers from steering borrowers into more profitable but higher-risk loans if those buyers actually qualified for lower-cost mortgages. In addition, prepayment penalties would have been capped. Schwarzenegger said he vetoed the bill because it would have applied only to state-regulated brokers, leading to unequal protections for consumers. He also said it could have prompted unfair lawsuits against brokers. Lieu's bill was part of a more ambitious package of eight Assembly bills earlier this year aimed at risky lending practices. Four of the eight died in a Senate committee after bankers and mortgage brokers objected, and two others were watered down. Among the housing bills the governor signed are ones that will allow more oversight of mortgage brokers, require brokers to disclose more information to consumers and regulators, and help create new mortgage-refinancing programs. (CNN, 9/26)
Sources: CNNMoney, New York Times, BBC, KNX-AM, CNN
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