With a new President and new Congress running Washington, what can we expect in terms of housing and mortgage-related moves early in the new term?

Last week we talked about what's coming in the big $825 billion economic stimulus package, including an improved, $7,500 home purchase tax credit. So let's turn to some of the other top items on the immediate agenda.

Number one: Foreclosure relief. In comments on CNBC, Barney Frank, the House Financial Services committee chairman, predicted that Congress and President Obama would devote as much as $100 billion of bailout money to help financially-stressed home owners out of foreclosure.

Under one option, the government plans to encourage lenders to reduce delinquent borrowers' principal balances and payments in exchange for a federal guarantee that they'll incur no additional losses, even if the borrowers default again.

Another approach will be mass modifications not only of delinquent loans but for non-delinquent borrowers heading for payment problems because of job loss or income declines.

A second high priority: Passing legislation allowing bankruptcy judges to step in to prevent foreclosures by unilaterally reducing the monthly payments, interest rates and principal balance for owners who file for bankruptcy.

A third item that's likely to be passed quickly: A return to last year's higher mortgage limits for high-cost areas around the country. That would be welcome news to borrowers, Realtors and builders in California and along the East Coast, where Fannie Mae, Freddie Mac and FHA limits could return to as high as $729,750 -- up from the current $625,500.

Several other items on the agenda that you can expect to see during the early months of the new Congress: Passage of long-stalled anti-predatory lending legislation that would toughen penalties for lenders or brokers who put home buyers into mortgages they couldn't afford.

A key part of the bill creates a suitability test for new mortgages. Loan originators would have be able to document how the terms of a new mortgage serve the best interests of the borrowers.

A little farther down the road: The Obama administration is expected to consider reforms for the federal financial regulatory agencies, and to figure out what to do with Fannie Mae and Freddie Mac, which are both now in federal conservatorship.

The banking regulators have been widely criticized for being too passive during the excesses of the housing boom years. Rather than reining in banks with large subprime and Alt-A production and exposure - Indy Mac and WaMu among others -- they did little to intervene and avoid what turned out to be multi-billion dollar losses.

Published: January 26, 2009

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.