The House approved a federally backed bailout for the housing market; as skimpy as it may seem. Not supported by the White House, the foreclosure prevention package was passed in a 266-154 vote.
The package will let FHA insure up to $300 billion in new loans over the next four years as long as lenders agree to reduce the mortgage principle. The lender would have to cut the amount owed to no more than 85% of the current appraised value. If they FHA insured loans went into default, then the FHA would pay the lender the remaining principal owed.
The estimated cost to taxpayers is around $1.7 billion with around 1.4 million loans estimated to be eligible. The Congressional Budget Office, however, estimates that it will only end up helping around 500,000 borrowers.