The legislation would enable the Federal Housing Administrationto offer mortgage guarantees in certain situations in which thelender writes down a portion of the outstanding loan. It alsocreates an independent regulatory for Fannie Mae and Freddie Maccalled the Federal Housing Finance Agency. The bill also calls forthe establishment of an affordable housing trust fund.

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The bill, "the Federal Housing Finance Regulatory Reform Act of2008," is going into mark-up this morning, after which it will bepresented to the full Senate for a vote."This legislation is goodnews for both the markets and homeowners," says Dodd in a preparedstatement. "The bill addresses the root of our current economicproblems--the foreclosure crisis--by creating a voluntaryinitiative at no estimated cost to taxpayers which will helpAmericans keep their homes. The bill also establishes a new fundthat will help create more affordable housing for millions forAmericans."

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For his part Shelby noted that the new GSE regulator createdunder this legislation--the Federal Housing Finance Agency--wouldbe granted enough authority and flexibility to regulate the GSEs.He also emphasized that the affordable housing initiative would notbe taxpayer funded.

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"My primary consideration during negotiations on this packagehas been to protect the American taxpayer, and I believe we've madesignificant progress toward that goal on each component," he saysin a prepared statement. "I'm also pleased that the Hope forHomeowners proposal is paid for. I've long said that we should dowhat we can to help struggling homeowners, short of asking thetaxpayer to foot the bill." Calls to Dodd's and Shelby's Washingtonoffices were not returned in time for deadline.

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Erika Morphy

Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.