The Housing and Economic Recovery Act of 2008 is a hot topic and is expected to be signed by the President this week. So what will the bill do? Here's a look at some key points to help understand the bill.
— Give the Treasury Department the power to extend Fannie Mae and Freddie Mac an unspecified line of credit and to buy their stock, if necessary, to prop up the mortgage companies. The two companies back or own $5 trillion in U.S. mortgages — nearly half the nation's total.
— Allow qualified homeowners facing foreclosure to apply for lower fixed-rate, 30-year mortgages backed by loan guarantees from the Federal Housing Administration. The original lenders would have to agree to take a loss on their loans.
— Create an independent regulator to oversee Fannie Mae and Freddie Mac. The regulator could establish minimum capital requirements for the two companies and limits on their portfolios. It would also have approval power over the pay packages of Fannie Mae and Freddie Mac executives.
— Provide $3.9 billion in grants to communities with the highest foreclosure rates to buy foreclosed and abandoned properties.
— Give about $15 billion in housing tax breaks, including a credit of up to $7,500 for first-time homebuyers who bought homes between April 9, 2008, and July 1, 2009.
— Put a cap of $625,500 on the loans Fannie Mae and Freddie Mac can buy in certain high-priced areas, and a cap in other areas of up to 15 percent above the median home price.
— Count any federal infusion for the mortgage giants under the debt limit, essentially capping how much the government could spend to stabilize the companies without further approval from Congress. As of Tuesday, the national debt that counts toward the limit stood at about $9.5 trillion, roughly $360 billion below the statutory ceiling.
— It also includes important changes that will dramatically affect senior citizens through modifications to the standard Federal Housing Administration HECM reverse mortgage product.
Labels: fannie mae, foreclosure, Foreclosure Prevention Act of 2008, freddie mac, housing bill, stimulus, The Housing and Economic Recovery Act of 2008
