| The president has just signed the Federal Housing and | | | | financial stability for the mortgage giants. |
| recovery Act of 2008. Legislation that will overhaul the | | | | Modernization of FHA |
| Depression-era FHA and provide mortgage relief for | | | | The law increases the FHA loan limit to 115% of area |
| 400,000 homeowners struggling with foreclosure | | | | median home price with a cap at $625,000. |
| woes. | | | | Down payments of 3.5% will be required for any FHA |
| This bill is also designed to quiet the jitters on Wall | | | | loan |
| Street by offering some financial relief and additional | | | | Seller assisted down payment programs (such as |
| accountability for the troubled, government-sponsored | | | | Nehemiah) will end October 1st |
| mortgage companies Fannie Mae and Freddie Mac. | | | | The FHA mortgage insurance premium will increase to |
| While the bill started with a battle between the White | | | | 3%. |
| House and the Democrats in Congress, bi-partisan | | | | The FHA's program for reverse mortgages is |
| support eventually led the President to withdraw his | | | | expanded with higher mortgage limits. |
| veto threat. Below are some highlights of this far | | | | Tax Credits |
| reaching legislation. | | | | Provides new first-time home buyer tax credit which is |
| Homeowner Relief Measures (Hope for Homeowners | | | | equivalent to an interest free loan of 10% of the |
| Act of 2008) | | | | purchase price of the home (up to $7500) to be repaid |
| The law creates a new program to back FHA-Insured | | | | over the course of 15 years. It will be available through |
| mortgages for debt-laden homeowners. Up to $300 | | | | July 2009 for taxpayers who meet adjusted gross |
| billion will be available through the voluntary program | | | | income levels. |
| operated by a board consisting of the HUD and | | | | Rules relating to the Low Income Housing Tax Credit |
| treasury secretaries, and a chairman of the Federal | | | | will be simplified and states will see increased housing |
| Reserve Board and the Federal Deposit Insurance | | | | tax credit in 2008 and 2009 depending upon the size |
| Corporation. (FDIC) | | | | of the state. |
| In exchange for new mortgages, homeowners will | | | | Allows a new standard deduction for homeowners |
| share future appreciation with the FHA. Borrowers | | | | who do not itemize on their tax returns. |
| must also meet a payment burden test to determine if | | | | Other Provisions |
| they can afford a new mortgage. | | | | The bill lengthens the time a lender must wait before |
| Banks must agree to relinquish their claims for a | | | | starting foreclosure after a sooldier returns from |
| payment equal to 85% of the current value of the | | | | service (from 3 to 9 months) and also provides |
| home. | | | | returning soldiers with one year of relief from |
| The homeowner relief program begins Oct. 1st 2008 | | | | increases in mortgage interest rates. |
| and ends on Sept. 30th 2011. | | | | Enhances mortgage disclosures requirements to |
| New regulator for FHA | | | | require lenders to inform borrowers of the maximum |
| The law creates a new, independent regulator called | | | | monthly payments possible under their loans. |
| the Federal Housing Finance Agency to govern GSE's | | | | Provides additional funding for housing counseling and |
| (government sponsored enterprises). It will oversee | | | | legal services to distressed borrowers. |
| Fannie Mae, Freddie Mac and the Federal Home Loan | | | | 44 billion will be provided for emergency Community |
| Banks. | | | | Development Block Grant money to purchase and |
| The Treasury Department has been granted | | | | clean up abandon homes in areas blighted by |
| temporary authority to purchase debt and equity of | | | | foreclosures. |
| Fannie Mae and Freddie Mac through 2009 to provide | | | | |