| The housing rescue bill signed into law last week | | | | and purchase loan opportunities. Other features of the |
| presents Bank of America with opportunities to | | | | law include enhanced oversight and new regulatory |
| expand its efforts to keep struggling borrowers in their | | | | guidelines for the government-sponsored enterprises |
| homes and to increase the bank’s production of | | | | (GSEs), including Fannie Mae and Freddie Mac. |
| various mortgage products. | | | | Bank of America was a longtime supporter of FHA |
| Key features of the Housing and Economic Recovery | | | | modernization and efforts to create a new regulatory |
| Act of 2008 include a new Federal Housing | | | | regime for the GSEs. Bank of America also worked |
| Administration (FHA) program to help distressed | | | | closely with legislators to ensure that the new FHA |
| homeowners obtain more affordable loans, | | | | refinance program was voluntary, targeted and |
| enhancements to traditional FHA loan programs and | | | | commercially viable. |
| other provisions to address America’s troubled | | | | To qualify for a loan under this program, at-risk |
| housing market. | | | | borrowers must meet at least three key criteria; they |
| How does the law affect Bank of America | | | | must: |
| customers? It provides lenders with another tool to | | | | - Currently be living in their home |
| help at-risk homeowners, offering those who qualify a | | | | - Have obtained their mortgage between January |
| way to refinance into low-cost, fixed-rate mortgages | | | | 2005 and June 2007 |
| backed by the FHA. The resulting increase in FHA loan | | | | - Be spending at least 31% of their gross monthly |
| production should create new growth opportunities for | | | | income on mortgage debt on their primary residence |
| Bank of America, already the nation’s leading | | | | |
| provider of FHA financing. | | | | Such loans will be pegged to the market value of a |
| Even before the housing bill was passed, Bank of | | | | borrower’s home at the time the loan is refinanced. |
| America had announced plans to modify or work out | | | | The new legislation also includes a tax credit for |
| at least $40 billion in troubled mortgage loans over the | | | | first-time buyers and a new standard deduction up to |
| next two years. The goal is to help an estimated | | | | $1,000 for joint filers ($500 for individuals) who are |
| 265,000 borrowers stay in their homes instead of lose | | | | unable to itemize deductions. |
| them to foreclosure. | | | | In addition, the law will create opportunities for Bank of |
| Overall, the new legislation is aimed at strengthening | | | | America to expand its leadership position in reverse |
| nationwide efforts to help struggling homeowners and | | | | mortgage production. As the Department of Housing |
| restore confidence in America’s home financing | | | | and Urban Development refines guidelines that will |
| system. | | | | raise the loan limits on FHA-insured Home Equity |
| The law will modernize the FHA by increasing its | | | | Conversion Mortgages, the product becomes a viable |
| maximum mortgage amount to $625,500 in high-cost | | | | solution for more customers. |
| areas, up from $417,000, thus offering more refinancing | | | | |