White House Promises Veto of Foreclosure Prevention Bill

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White House (AP) The White House is promising to veto a bill seeking to follow up the recent economic stimulus package with several proposals to shore up the struggling housing market and reduce foreclosures.

Senate democrats had hoped to begin debate on the housing bill but action has been put off until later in the week.

The democratic bill would change bankruptcy laws to allow judges to cut interest rates and reduce what's owed on troubled borrowers' mortgages. It would also provide 4 billion dollars to communities to purchase and rehabilitate foreclosed homes and improve disclosure of subprime mortgage loans.

The white house says the provision rewriting the bankruptcy code would allow borrowers to effectively rewrite their mortgage contracts, leading lenders to tighten their standards and raise interest rates.