Senate moves toward easing mortgage terms

May 6, 2009 12:24:15 PM PDT
The Senate has voted to make it easier for homeowners with risky credit to switch to a lower-cost mortgage backed by the government. The bill passed the Senate on Wednesday by a vote of 91 to 5. It will give banks a break by reducing fees they must pay for the government to insure deposits.

Lawmakers say the legislation is needed to prevent the economy from getting worse.

The Senate bill would expand an existing $300 billion program called "Hope for Homeowners," which encourages lenders to write down an individual's mortgage if the homeowner agrees to pay an insurance premium. The program, which is set to expire in 2011, is intended to swap out a homeowner's high-interest rate for a 30-year fixed loan backed by the Federal Housing Administration.

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