What the Housing Bill Means for CRE

In a rare weekend session, the U.S. Senate in a 72-13 vote approved a massive housing rescue bill that establishes a $300 billion fund expected to help some 400,000 homeowners in danger of losing their homes. It also puts the regulatory apparatus in place for the Treasury Department to implement its rescue plan for GSEs Fannie Mae and Freddie Mac . Other provisions in the bill include about $4 billion in economic development grants to local communities; additional tax breaks for home buyers; the establishment of a national licensing system for mortgage brokers and loan officers; and a raise on the limit on the size of mortgages that federal agencies can guarantee. The House of Representatives passed its bill on Wednesday. President George Bush is expected to sign it immediately .

Except for the plan to stabilized Fannie Mae and Freddie Mac, this bill targets the residential real estate market. Still, though, CRE will feel its impact, no matter how indirectly, and receive a much-needed boost. It is possible, for instance, that securitization of residential mortgages could be jump-started by the legislation, Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers, tells GlobeSt.com.

“A lot of companies have been waiting on sidelines, waiting to see what new legislation will develop,” Gibran says. He says that the bill’s limits on liabilities will give loan servicers more freedom in deciding what to with troubled loans. “If a servicer determined that the net present value of the anticipated recovery through a loan modification or work-out plan is equal or greater than what they get out of foreclosure, then that could deemed to be acting in best interest of clients,” he says. The caveat is that the bill is designed to aid owner-occupied home owners, he notes, so the impact will be limited. “So it might jump start some RMBS, which is better than nothing.”