On May 8, the U.S. House of Representatives passed a comprehensive housing package that includes a new source of grant funds for legal aid programs working to help low-income Americans save their homes from foreclosure.

The American Housing Rescue and Foreclosure Prevention Act of 2008, H.R. 3221, would give the Neighborhood Reinvestment Corporation $35 million to distribute in grants to organizations or attorneys that can provide legal assistance related to home ownership preservation, home foreclosure prevention, and tenancy associated with home foreclosure. Priority will be given to organizations providing assistance in the 100 metropolitan areas with the highest rates of foreclosure and that can begin utilizing the funds 90 days after receiving them. No funds can be used for class action litigation. Counseling agencies approved by the Department of Housing and Urban Development can also apply for the funds, but 60 percent of the $35 million must be used specifically to provide legal assistance.

The measure was sponsored by Representatives Melvin Watt, D-N.C., Nydia Velazquez, D-N.Y., and Al Green, D-TX, and was added to the bill during a markup in the House Financial Services Committee, led by Reps. Barney Frank, D-Mass., and Spencer Bachus, R-Ala.

"Increasing numbers of foreclosure victims are turning to legal services programs for assistance," said Rep. Green. "The Watt-Velazquez-Green amendment will provide a helping hand and provide legal assistance to those homeowners and renters in areas struggling with the biggest foreclosure problems. Borrowers and homeowners are trying to do what is right, but they often do not have and cannot afford the legal advice they need-legal advice that can make a meaningfully positive difference."

The Senate approved similar legislation in April, but Senator Barbara Mikulski's, D-Md., effort to include the legal assistance funding was rejected on procedural grounds. The House and Senate will have to reconcile differences in the two bills before sending a final version to the President, who has threatened to veto both versions.