WASHINGTON, DC - The U.S. Senate today passed landmark housing legislation by a vote of 72 to 13. The Housing and Economic Recovery Act of 2008 contains several key provisions authored by U.S. Senator Jack Reed (D-RI), a senior member of the Senate Banking Committee, who helped shepherd the bipartisan bill through the process and negotiated critical components to end Republican obstructionism of the bill's progress. The U.S. House of Representatives passed the measure on Wednesday, 272 to 152.

"This legislation will help stabilize the housing market and begin to revive our economy," said Reed.

Included in the legislation is Reed's initiative to dramatically expand Fannie Mae's and Freddie Mac's affordable housing mission by creating a new Housing Trust Fund and Capital Magnet Fund, financed by annual contributions from the companies, which will be used for the construction of affordable rental housing. These programs are expected to generate hundreds of millions of dollars annually for the building and preservation of affordable housing. The bill also demonstrates Congress's commitment to ensuring that the companies have to support affordable housing in exchange for the aid the companies receive under the bill.

"The housing crisis is perhaps the most significant economic issue that we face and this bill will go a long way toward bringing stability and confidence back to the markets," said Reed. "For the first time in over a generation, we are passing legislation to update, modernize, and strengthen the institutions that undergird both our mortgage and housing markets. I believe it will help stabilize our economy by ensuring access to decent, safe, and affordable housing for millions of American families."

The Housing and Economic Recovery Act of 2008 will strengthen and improve the regulation of Fannie Mae and Freddie Mac; modernize and update the Federal Housing Administration (FHA); enable struggling homeowners at risk of foreclosure to refinance into 30-year, fixed-rate conventional mortgages; and require licensing standards for mortgage brokers.

The bill also includes almost $4 billion in new Community Development Block Grant (CDBG) funding to help communities impacted by foreclosures purchase and rehabilitate foreclosed properties; $150 million in grants for homeownership counseling; assistance for returning soldiers; and tax benefits for homeowners, homebuyers, and homebuilders aimed at helping the housing market recover.

Senator Reed authored several key provisions in the Housing and Economic Recovery Act of 2008, including:

Affordable Housing Trust Fund
For years Reed has been working to create a national affordable housing trust fund. This legislation creates a fund to build and maintain affordable housing without costing tax payers a dime. The affordable housing contributions will be obtained by requiring Fannie Mae and Freddie Mac to set aside less than half a cent on each dollar of unpaid principle balance of the enterprises' total new business purchases. This new fund is projected to provide approximately $325 million to $585 million per year for the building, preservation, and rehabilitation of housing for low-income families.

Capital Magnet Fund
Part of the money collected from Fannie Mae and Freddie Mac will also be allocated to a new program run by the Secretary of the Treasury called the Capital Magnet Fund. This fund is going to provide $175 million to $315 million annually to create and support financial programs that dramatically increase investment in low-income housing such as revolving loan funds, risk-sharing loan programs, loan-loss reserves, and affordable housing trust funds.

Affordable Housing Goals for Fannie Mae and Freddie Mac
This legislation will require Fannie Mae and Freddie Mac to purchase more mortgages made to qualified low-income families so they have access to safer 30-year, fixed rate conventional mortgages.

Improved Truth-in-Lending Disclosures
This legislation includes the text of a bill Reed introduced called the Mortgage Disclosure Improvement Act. The act ensures that consumers are provided with timely and meaningful information regarding the terms of their loan, including loans that refinance a home or provide a home equity line of credit.

Expanded Access to Homeownership Counseling
This legislation includes language Reed authored to expand access to HUD-approved counseling programs by allowing more low- or moderate-income homeowners to be eligible for financial counseling services. This will help ensure that these families get the advice and assistance they need to keep their homes.

Removal of Reverse Mortgage Cap
The Federal Housing Administration also insures reverse mortgages that can be used by homeowners age 62 or older to convert their home's equity into monthly streams of income or a line of credit to be repaid when they no longer occupy the home. This legislation includes language Reed helped author to expand this successful FHA program for seniors.

FHA Technology and Staffing Improvements
This legislation includes language Reed authored to use $25 million in FHA savings every year for the purpose of improving FHA's technology, processes, and program performance. This funding is critical to ensuring the success of the FHA modernization proposal since it will allow FHA to access cutting-edge mortgage insurance industry practices and procedures.