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Scott Jagow: The buzz in Washington this morning is that Congress may be close to finishing a housing bailout bill. This bill in the Senate Banking committee would let the government insure $300 billion in refinancing, and mortgage lenders Fannie Mae and Freddie Mac would come under tighter control. Dan Grech has more.

Dan Grech: The Senate proposal would assist borrowers who owe more than their homes are worth. The government would insure the mortgages if the lender cuts the amount owed. That could help between 500,000 and 1 million people refinance into more affordable loans.

Economist Peter Morici is with the University of Maryland. He says Congress must act soon.

Peter Morici: If we get a freefall in housing prices, a lot of people who have made prudent decisions, who have good mortgages and good incomes will start to panic. It has a negative effect on consumer psychology and the economy. It causes people to stop spending money, and we could get into one of those downward spirals.

If borrowers default on their government-insured loans, taxpayers wouldn’t be on the hook.
In a compromise, government-backed lenders Fannie Mae and Freddie Mac would be forced to foot the bill for the losses.

Backers of the bill hope it will clear Congress and reach the White House by July 4.

I’m Dan Grech for Marketplace.