President Signs Mortgage-Relief Bill

WASHINGTON - The giant housing rescue plan President Bush signed Wednesday with little fanfare might help stanch the bleeding in the housing market, but experts on both sides of the political divide worry that it is, at best, only an emergency step.

"Is it going to resolve everything? No, we were hemorrhaging. This a good bandage," said Paul Bertsche, vice president and general counsel at CA Development.

The measure gives some first-time home buyers a better shot at the American dream and it may help some homeowners stave off financial ruin. But Mark Zandi, chief economist of Moody's Economy.com, estimates that there will be 3 million more mortgage loan defaults by year's end. "It's not a miracle cure," Zandi said. "It's one modest, positive step."

No 'silver bullet' expected

About 400,000 qualified homeowners can seek to have their mortgages canceled and replaced with a 30-year fixed rate, FHA-backed loan, and for as much as 90 percent of the home's value. However, it is up to lenders to decide whether they will participate and which homeowners they will help. Mortgage companies would wind up having to write off a portion of the existing loans.

The program, available Oct. 1 through September 2011, is designed to benefit borrowers who spent more than 31 percent of their monthly incomes on their mortgages as of March 1 on loans that were written before Jan. 2 of this year.

Consumer advocates say they think the housing act doesn't go far enough to help homeowners in peril. They said help may not arrive for months after the Oct. 1 start date and that individual homeowners have no assurances they will be among those rescued.

The Department of Housing and Urban Development, which oversees the FHA, already is trying to fend off suggestions of inevitable delays. HUD Secretary Steve Preston said the government plans to have the program in place by its start date, but criticized lawmakers for not including funding to implement it.