Homeowners can start breathing a sigh of relief as reprieve may soon hit home. The U.S. Congress approved a bill that will bring relief to thousands of homeowners, including South Floridians, who are struggling with their mortgage payments and are in serious danger of joining the growing lists of homeowners who have already been forced to foreclose.

The measure, said to be the largest such housing rescue bill since the Great Depression of the 1930’s, provides some $300 billion that allow for homeowners who cannot meet their mortgage payments to refinance into more affordable government guaranteed loans, to save their homes. On July 23, the House of Representative approved the foreclosure rescue bill by a 272 to 152 votes, and in a rare Saturday session, the Senate, on July 26, approved the measure by a 71 to 13 vote. Florida House members, and both senators, Republican Mel Martinez and Democrat Bill Nelson voted in favor of the bill.

Originally, President George Bush had vowed to veto the bill, particularly because it also includes a provision of $3.9 billion to assist communities across the country with grants to purchase and foreclosed properties. However, Bush relented and signed the bill on Wednesday. Bush’s change of heart was most likely due to the bill giving temporary authority (until December 2009) to the government to lend money to the giant mortgage guarantee companies Fannie Mae and Feddie Mac in order to prevent the collapse of the two agencies.

The new bill is particularly heartening to Florida realtors, mortgage companies and home owners as the state, as South Florida is among the worst regions hit with foreclosures and threat of pending foreclosures. Maria Kong, Caribbean-American president/CEO of the National Association of Real Estate Brokers hails the new measures and congratulates Congress for the initiative.

In South Florida, property values have significantly fallen where the value of some homes is less than the outstanding mortgage. Projections are that home values will fall by 52 and 51 percent by early 2010 in Miami-Dade and Broward respectively.  The $3.9 billion provision included in the bill will provide local governments in Florida with grants to preserve property values and also allow them to provide affordable housing by purchasing foreclosed properties. According to a report, the Enterprise Community Partners, a national nonprofit entity helping cities to develop affordable housing programs, estimates that Florida could get $288 million to distribute to cities with high foreclosure rates. The bill also provides funding for Florida and other states to construct low-income rental housing and refinance sub-prime mortgages.

The measures provide tax credits of up to $7,500 for first time home buyers. This credit will be available to first-time buyers purchasing homes between April 9, 2008 and July 1, 2009, and is repayable over 15 years. The FHA will be able to back loans for risky borrowers, allowing the size of some loans to be increased based on the relating circumstances, and cover loans for home valuing up to $625,000.

Borrowers refinancing under the new measure will receive new fixed rate mortgages, offsetting the problems caused with the troublesome adjustable rate mortgages (ARM’s) that have created problems for borrowers. Any potential losses to lenders on these loans will be covered by an affordable housing fund financed by Fannie Mae and Freddie Mac. This refinancing provision is particularly great news to Floridians because a report released by Moody’s Economy.com earlier this week stated that Florida, at 4.5 percent, led the nation in the percentage of first mortgage defaults, or two-and-a-half times that of the national average. Kong sees this provision as a mixed blessing, because to refinance, borrowers must have good credit and she fears that some of these borrowers may not.

The inclusion of $180 million in the bill to allow housing agencies to provide pre-foreclosure counseling is very significant, especially since a large number of South Floridians acquired mortgages with little understanding of the agreements. Housing agencies in the region will be able to cope with the increasing demand from homeowners seeking help to offset foreclosure. The Broward County Housing Authority is overwhelmed with demand for such counseling help.