Bailout Bill Delayed Until After July 4th Recess

CNNMoney reports on the housing bailout bill:

After failing to approve an omninbus housing rescue package this week, the Senate is scheduled take up the bipartisan-supported bill again the week of July 7....

On Wednesday, a clearly frustrated Banking Committee Chairman Christopher Dodd, D-Conn., who negotiated the housing legislation, said lawmakers were close to getting passage on the bill "if only we can get it to the floor."

The Stanford Group, a policy research firm, dropped its odds of enactment to 70% based on the delays....

The provision that has garnered the most attention is one that would allow the Federal Housing Administration to insure up to $300 billion in new loans for at-risk borrowers if lenders agree to write down loan balances below the appraised value of borrowers' homes....

Critics of the plan say lenders are more likely to saddle the program with their worst loans - those most likely to foreclose. The Congressional Budget Office estimates that the program would end up guaranteeing 400,000 loans worth $68 billion, and of those, about a third would result in default. The CBO estimates the net loss from those defaults would be $680 million, or 1% of the total loan amounts guaranteed.

Another provision would raise the cap on the size of mortgages guaranteed by Fannie and Freddie to $625,000 from $417,000. The House version raises the limit to nearly $730,000.

House Speaker Nancy Pelosi, D-Calif., whose state has some of the priciest real estate in the nation, made her preference clear in a press conference on Thursday. "We want higher limits."

...Among the tax breaks in the legislation is a one-year tax credit for first-time buyers that would be worth up to $8,000. But in effect, the credit would work as an interest-free loan that the home buyer would eventually need to repay.

Again, as before, I encourage you to email your senators asking them to oppose the bill.