Bill to Aid Communities Cope With Aftermath of Foreclosure Passes House

The House late Thursday approved a narrowly focused bill that would provide $15 billion to the states to buy and spruce up foreclosed properties.

The bill is different from one that has been widely discussed that would enable to Federal Housing Administration (FHA) to ensure new mortgages where the original loans were written down by lenders to reflect a substantial discount off of the original loan. That bill, sponsored by Rep. Barney Frank (D-MA) is scheduled for a vote before the full house perhaps as early as this week. The bill just passed was initiated by Rep. Maxine Waters (D-CA.)

Ms. Waters' bill would make loans and grants available to the states for the rehabilitation and eventual rental or sale of foreclosed properties. These properties, thanks to the huge inventory managed by banks and the effects of vandalism, neglect, and other forces, quickly deteriorate and, where more than one or two foreclosed houses exist in a neighborhood, can impact the entire area with a form of creeping blight and decreasing property values. Ms. Waters' bill passed by a vote of 239 to 188. Only one Democrat voted against the bill while 11 Republicans voted in favor.

President Bush has vowed to veto either of the two bills should they reach his desk. The House may have enough votes to override his veto by the necessary two-thirds majority.