What does this new Housing bill do?

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According to the National Association of REALTORS, the key provisions of this housing stimulus package will provide:

GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% 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 (December 31, 2008).

FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% 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 downpayment requirement on FHA loans will go up to 3.5% (from 3%). 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 (December 31, 2008).

Homebuyer Tax Credit - a $7,500 tax credit that would be would be available for any qualified purchase between April 8, 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% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 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 non-profits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.

VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008. Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 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, visit http://www.realtor.org/governmentaffairs.

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Comments

[David]

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[Home Loans]

Really very good that the loan limits will not go into effect until the expiration of the Economic Stimulus limits.

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Thanks for the info. That's the most comprehensive description about Housing bill I'd seen on the web.

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Staying informed about the new bills passing through Congress is crucial to understanding what kinds of loans will be offered in the future and which will be most applicable for you, the consumer.  As holds true when searching for an auto refinance loan, a housing loan, or a personal loan, research is crucial.  Do not jump at the first opportunity that passes by--there may be something better out there.  So, research the opportunities, scan some blogs, talk to lenders, and weigh your options before committing to something.

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Stimulus funds are not that clear to help the financial status.

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Home buyer or builder can obtain financing (loan) is to buy or to protect the financial assets, such as a bank, directly or indirectly through intermediaries. Features such as the size of the mortgage loan, interest rate, a way to repay the loan and other characteristics can vary considerably.

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Housing bills must be regulated in a bad real estate market.

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Now, due to lack of good employment and just enough source of income, more people are inclined getting mortgage. However, when not taken care of, borrowers would really suffer headache. This is because of the high interest.

[FHA Rates]

Another change for home buyers - one of the benefits of an FHA mortgage has been the option of a home seller to pay the buyer's closing costs. The previous guideline limit allowed a maximum of 6% of the purchase price. In order to reduce potential loan defaults, home seller contributions have now been reduced to a maximum of 3% of the purchase price.