Housing & Economic Recovery Act summary

Housing and Economic Recovery Act of 2008

On July 30, 2008, President Bush signed a bill passed by Congress which is intended to rejuvenate the national housing market and thereby stimulate the economy. Here is a recap of a few of the bill’s major provisions.

· GSE (Government Sponsored Enterprises, e.g. Fannie Mae & Freddie Mac) Reform– ensures that the increased conforming loan limits, enacted several months ago, will remain in effect after the previous Dec. 31, 2008 expiration.

· FHA Reform– including permanent FHA loan limit increases. The downpayment requirement on FHA loans will increase from 3% to 3.5%.

· Homebuyer Tax Credit– a $7500 tax credit that would be available for any qualified purchase between April 8 through June 30, 2008. 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.

· Seller-funded Downpayment Assistance Programs– prohibits the use of downpayment assistance programs funded by those who have a financial interest in the sale. Effective October 1, 2008.

· GSE Stabilization– authorizes the Treasury to make loans & buy stock from the GSE’s to ensure that Freddie Mac and Fannie Mae will not fail.

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