WASHINGTON (AP) – May 20, 2008 – Two powerful senators announced Monday they had reached an agreement for a homeowner rescue package that could help a half-million strapped borrowers get government-backed mortgages.

Sen. Christopher J. Dodd, D-Conn., the Banking Committee chairman, and Sen. Richard C. Shelby of Alabama, the panel’s senior Republican, said the committee will move forward with bipartisan legislation on Tuesday after completing their negotiations.

“This legislation is good news for both the markets and homeowners,” Dodd said. Added Shelby: “I’ve long said that we should do what we can to help struggling homeowners, short of asking the taxpayer to foot the bill.”

Dodd’s committee was scheduled to vote last week, but the vote was canceled in hopes that the two senators could come up with a bipartisan measure to bring to the Senate floor.

A White House spokesman said President Bush did not have a position on the proposed bill yet. However, Bush said earlier Monday that he remains opposed to any homeowner rescue legislation that would be a bailout for lenders.

“Laws shouldn’t bail out lenders,” Bush said after getting an economic update from Treasury Secretary Henry Paulson. “Laws shouldn’t help speculators. The government ought to be helping creditworthy people stay in their homes.”

The compromise bill allows the Federal Housing Administration to back up to $300 billion in new loans for debt-ridden homeowners facing foreclosure, who would otherwise be considered too financially risky to get a fixed-rate, government-insured loan.

Money for the plan would be drawn from an affordable housing fund that will be funded through profits from government-sponsored mortgage giants Fannie Mae and Freddie Mac.

To qualify for the proposed FHA program, borrowers would have to show they could afford the new loans, while mortgage holders would have to agree to take a substantial loss on the existing loan in exchange for avoiding a costly foreclosure. The FHA would share at least half of any proceeds if the homeowner refinanced again or profited from selling the home.

The bill would also tighten regulations on Fannie Mae and Freddie Mac.

“It doesn’t include everything we would have liked, but it is a significant step forward and ought to become law,” said Sen. Charles Schumer, D-N.Y.

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TALLAHASSEE, Fla. – May 20, 2008 – About 100,000 Florida homeowners are facing the 2008 hurricane season with a different insurer.

Many were dropped by larger companies and now have policies with smaller, newer insurance companies with unfamiliar names.

But the state insurance-regulation office insists it has imposed such stringent requirements that policyholders are not at a disadvantage if one of the smaller insurance companies holds the policies. Regulators say, in fact, that there’s not much difference between being insured by a large company or a small one.

Many homeowners turned to Citizens Property Insurance, the state-backed insurer of last resort, but even Citizens has allowed upstart companies to assume some of its policies.

When a new company wants to sell policies in Florida, it has to give state officials information about its management team and shareholders, as well as detailed financial information.

Prospective property-and-casualty insurers are required to prove to the Florida Office of Insurance Regulation that they have on hand either $5 million or 10 percent of their total liabilities – whichever is the greater amount.

“The statutory requirement is $5 million, but since 2006, we have sometimes internally required companies to have almost double, sometimes triple [that amount],” said Tom Zutell, a spokesman for the regulation office.

Since 2006, 27 new companies have met the requirements to be licensed in the state, including six since Jan. 1, while an additional 13 either added or were eligible to add property-and-casualty or surplus-lines coverage. The new companies represent nearly $5.3 billion in new capital in the state, according to Office of Insurance Regulation figures.

Agents also say new companies’ robust bank accounts are one of the main reasons policyholders shouldn’t worry too much when hurricane season begins June 1.

“From my own experience, when we had the storms a couple of years ago, I thought [the smaller companies] handled the claims quite well. We did not have any complaints from our customers,” said Toni DeToma, an agent with Mid-Florida Insurance Services in Winter Park.

If policyholders are worried about a new company, they can do a little detective work to find out whether the company is worth their money and time, DeToma said.

But despite DeToma’s confidence, there’s no real way to know how the new companies will perform until another damaging storm comes to the state. After Hurricane Andrew in 1992, 10 companies determined they didn’t have the cash reserves to pay claims and were declared insolvent, according to the Insurance Information Institute. And after two consecutive years of damaging storms, the Poe insurance companies, collectively the state’s third-largest insurer, were declared insolvent in 2006.

“I can sympathize with consumers,” said Michael Gold, CEO of Boca Raton-based People’s Trust Insurance.

Gold said he and his wife hesitated to go with an unknown name when they decided to switch insurance companies a few years ago.

The advantage to their wallets helped them overcome their fears.

“The pricing was interesting enough,” he said.

But when his insurance premiums rose more than 400 percent – and he heard Gov. Charlie Crist call for a change in the way insurance companies do business in Florida – Gold decided to start his own insurance company.

Before he started, Gold had to show the Florida Office of Insurance Regulation that his company had $6 million on hand to pay claims.

What’s different about People’s Trust is that when it started accepting policies a few weeks ago, it took them only via the Internet, cutting out middlemen: agents. People’s Trust now has about 500 policies. He expects the company to have about 100,000 policyholders 18 months from now.

While some companies begin by “taking out” policies from Citizens, Gold said People’s Trust will count on word of mouth and an advertising campaign it plans to launch to gain customers.

But he will be facing people who are reluctant to put themselves and their homes in the hands of companies they don’t recognize.

“It’s like a Catch-22; you want a big company, but on the other hand the big companies are not there,” DeToma said.

Copyright © 2008 The Orlando Sentinel, Fla., Anika Myers Palm. Distributed by McClatchy-Tribune Information Services.