NAR offers key provisions of Housing Stimulus Bill
The “Housing and Economic Recovery Act of 2008,” H.R. 3221, passed the House on July 23 by a vote of 272-152. On July 26, the Senate passed the bill by a vote of 72-13. The President signed the bill July 30. It includes the following provisions:
GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115 percent local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (Dec. 31, 2008).
FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115 percent of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The down payment requirement on FHA loans will go up to 3.5 percent (from 3 percent). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (Dec. 31, 2008).
Homebuyer Tax Credit – a $7,500 tax credit that would be available for any qualified purchase between April 9, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).
FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85 percent of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90 percent of appraised value. Borrowers would have to share 50 percent of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on Oct. 1, 2008.
Seller-funded down payment assistance programs – codifies existing FHA proposal to prohibit the use of down payment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until Oct. 1, 2008.
VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through Dec. 31, 2008.
Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from Oct. 1, 2008 through Sept. 30, 2009.
GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
National Affordable Housing Trust Fund – develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.
CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.
LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.
Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.
For more information, and to view supporting explanations, PDF documents and frequently-asked questions about the provisions, please see
http://www.realtor.org/gapublic.nsf/pages/hr_3221_key_provisions?OpenDocument
Copyright National Association of REALTORS®, Reprinted from REALTOR.org with permission.
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