July 23, 2008 House votes to bail out Fannie Mae, Freddie Mac Play video

(Peter Howe, NECN) - The House has passed legislation that allows the government to bail out the two mortgage backers. And the measure is on track to pass the Senate.

After weeks of haggling, the US congress and president Bush are finally agreeing on a major housing bill. It has Massachusetts congressman Barney Frank's plan to help 500,000 Americans facing foreclosure renegotiate their loans a federal bailout, if needed, for ailing mortgage companies Fannie Mae and Freddie Mac.

And nearly four billion dollars in aid to cities to buy up foreclosed homes before they become neighborhood-wrecking blights. Bush had threatened a veto, calling the four billion a reward to irresponsible lenders.

But his spokeswoman says, "The positive aspects of the bill are needed now to increase confidence and stability in the housing and financial markets. While we have concerns with other aspects of the bill, it is important that the new authorities are put in place promptly."