US approves housing market rescue bill

The US Congress has approved a multi-billion pound housing market rescue bill amid fears over mortgage titans Fannie Mae and Freddie Mac.

The bill establishes offers emergency financing to the beleaguered lenders as well as a £150 billion fund to help hundreds of thousands of homeowners to get more affordable, government-backed mortgages and get out from ones they cannot afford.

The US is currently in its deepest property slump since the Great Depression and the bill has been approved by the Senate in a 72-13 vote having been passed by the House of Representatives on Wednesday.

Fannie Mae and Freddie Mac, the largest US mortgage companies, own or guarantee almost half the country's $12 trillion in outstanding home mortgage debt and rattled global markets earlier this month over fears they could collapse.

Around 2.5 million US homes face being repossessed this year, according to The National Community Reinvestment Coalition, an alliance of 600 community investment and development groups.

The coalition said the bill is "likely to have little effect on the foreclosure crisis gripping the financial markets and economy."

The bill will not take effect until October 1 and housing activists said it might not be in full operation until 2009.

Under a provision put into the bill late in its development at the administration's urging, Fannie and Freddie could draw on a temporary line of US Treasury credit or the government could buy shares in them, if they run into trouble.

The success of the temporary fund will depend on lenders' willingness to accept losses on original loans to shift overstretched borrowers into new loans. An estimated 400,000 families could be helped by the programme.

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