Senate Committee Adds Muni Bond Subprime Refi Program to Stimulus Package
In passing its own version late Wednesday of the economic stimulus package now being considered by Congressional leaders, the Senate Finance Committee voted 14-7 to include changes that would allow states to issue municipal bonds to refinance subprime mortgage loans. Under current law, state and local governments may issue bonds to finance new mortgage loans to first-time homebuyers; the added provision would temporarily expand the use of the bond program to include refinancing of subprime loans. HW noted yesterday that Sen. Charles Schumer (D-NY) had suggested that the municipal bond legislation may be added to the Senate's stimulus package. The new housing-related measure came as senators John Kerry (D-MA) and Gordon Smith (R-OR) both pushed to include the legislation, which will allow states to issue up to $10 billion in additional bonds over the next three years for refinancing troubled subprime mortgages. A press statement by John Kerry's office said that the National Council of State Housing Agencies believes the proposal would lead to roughly 80,000 new loans. â€œAt a time when families across the nation desperately need help to avoid foreclosure, these funds will provide thousands of safe, fair mortgages to homeowners facing foreclosure and families looking for their first home," said Kerry. â€œBy including $10 billion in targeted mortgage relief to the homeowners, we are standing by our pledge to create a targeted, timely, effective stimulus package.â€? The Senate is expected to vote on a final stimulus package before the end of this week.