Business Digest

HOUSING

Anti-Foreclosure Effort Becomes Law

President Obama signed housing legislation yesterday to revamp a government foreclosure prevention program and bolster prosecution of mortgage fraud.

The bill had initially been stalled by a provision that would have allowed bankruptcy judges to modify the mortgages of troubled homeowners. The Senate stripped that language after the financial services industry complained it would raise costs and increase their losses.

Instead, Congress passed legislation allowing the Department of Housing and Urban Development to make significant changes to a failed government program to allow delinquent borrowers to refinance into new loans. The Hope for Homeowners program has helped just one borrower since it was launched in October. The legislation would ease eligibility requirements and lower the cost for both borrowers and lenders.

The legislation includes new protections for renters potentially displaced when their landlords fall into foreclosure. Renters' leases would be honored or, if they are on a month-to-month lease, they would get at least 90 days notice. The Justice Department also gains expanded authority to prosecute mortgage fraud, including fraud by mortgage brokers and others not directly regulated by federal officials.

In addition, the legislation raises the Federal Deposit Insurance Corp.'s borrowing authority, a measure favored by banks hoping to avoid an increase in the fees they pay. Also, the ceiling on bank deposits guaranteed by the government would remain at $250,000 through 2013.

-- Renae Merle

AUTOMOTIVE

U.S. Set to Announce Investment in GMAC

The Treasury is expected to announce as early as today that it is investing more than $7 billion to GMAC, the troubled auto lender.

The additional funds for GMAC, first reported by the Post earlier this month, would come as part of the Obama administration's attempt to revive the nation's financial system. Combined with future investments, it means that the government could end up owning a majority stake in the firm.

GMAC, which is separate from the Detroit automaker, is considered critical to the success of the U.S. auto industry because it provides money to GM and Chrysler customers and dealers.