The Senate overwhelmingly passed legislation last Friday that will expand the nation's biggest federal home ownership program. The move may aid struggling subprime borrowers to avoid or altogether stop foreclosure.

The bill will aid in loosening the strict underwriting standards of the FHA (Federal Housing Administration) and is guided towards helping some 200,000 troubled borrowers from losing their homes.

In 1934 the FHA was put together as a result of the depression to insure the mortgage payments of low-income borrowers who may have difficulties in winning a loan.

The US House of Reps has already passed its version of the FHA loan reform and now lawmakers will take the two different versions of the bill to a conference where they will attempt to work out the differences. The bill will then be passed to President Bush to be signed into law.

Supporters of the new reform believe that it has the possibility of helping hundreds of thousands of borrowers avoid foreclosure as a result of the recent mortgage crisis.

The FHA reform legislation would raise the loan limit from 362k to at least 417k, which by the way is the same cap on loans that binds finance companies Fannie Mae and Freddie Mac. The final vote was 93 lawmakers in favor and only one against.