Last week, the United States Congress approved a major housing bill. President George Bush signed it into law on Wednesday.

The plan could help an estimated four hundred thousand homeowners late in their payments and in danger of losing their homes.

The government will guarantee up to three hundred billion dollars in lower-cost refinancing of loans. In return, lenders must agree to forgive part of the original loan.

Prices for homes, like this one in Denver, Colorado, are falling in many parts of the country

But experts say as many as three million owners are in trouble. With falling prices, many people owe more than their homes are worth.

The new law also includes help for the mortgage finance companies Fannie Mae and Freddie Mac. They guarantee or own almost half of the nation's twelve trillion dollars in housing debt.

They buy high quality loans but have also invested in risky mortgages. In recent months they have reported eleven billion dollars in losses, and their stock prices have collapsed.

Congress created the Federal National Mortgage Association, or Fannie Mae, in nineteen thirty-eight. In sixty-eight it became a shareholder-owned company financed with private capital. Then Congress created a competitor: the Federal Home Loan Mortgage Association, or Freddie Mac.

Fannie Mae and the smaller Freddie Mac buy loans from banks and other lenders, then sell them as securities to investors worldwide. This secondary market provides money for lenders to make new loans.

Now, few investors are interested in mortgage-backed securities without government guarantees.

Investors always believed that if Fannie and Freddie needed help, the government would intervene. Now, it has. The new law lets the Treasury, until the end of next year, offer them unlimited credit and even buy their stock.

Some critics say Fannie and Freddie should be replaced by truly private companies. Their government connection has lowered their borrowing costs. But many economists say homeowners get little of that savings. And critics have deplored their spending on political campaigns, lobbying activities, and pay for their executives.

The plan does create new supervision over both companies.

The Congressional Budget Office says the rescue plan could cost taxpayers twenty-five billion dollars. But it also says there is probably better than a fifty percent chance that no money will be needed.

And that's the VOA Special English Economics Report, written by Mario Ritter. I'm Steve Ember.