Great News for Florida Real Estate!
The President signed the “Housing and Economic Recovery Act of 2008″ on July 30th, 2008 after passing both the House and Senate by wide margins. Here is what this legislation means.
1. Government Sponsored Enterprises (GSE) Reform. Permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,000.
2. FHA Reform. FHA loan limits of $271,050. or 115% of local area median home price, capped at $625,000. Streamlining of processing for FHA condos. Reforms to the HEMC program and reforms to the manufactured housing program. Down payment requirement for FHA loans will go up to 3.5% (from3%).
3. Tax Credit for Home Buyer. A $7,500 tax credit available to any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years which in essence makes it is an interest free loan.
4. Rescue from FHA Foreclosure. A refinance program for home buyers with problematic sub prime loans. Lenders would write down the 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. Loan limit for this program is $550,440 nationwide and the program is effective October 1, 2008.
5. Seller Funded Down payment Assistance Programs. Existing FHA proposal to prohibit the use of down payment programs funded by those who have a financial interest in the sale. Program will not prohibit other assistance programs provided by nonprofits funded by other sources such as churches, employers, or family members. The prohibition does not go into effect until October 1, 2008.
6. VA Loan Limits. The VA home loan guarantee program limits to the same level as the economic Stimulus limits through December 31, 2008.
7. Risk Based Pricing. A moratorium on the FHA for using risk based pricing for one year, effective from October 1, 2008 through September 30, 2009.
8. GSE Stabilization. Language proposed by the Treasury Department to authorize the Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
9. Mortgage Revenue Bond Authority. This program authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
10. National Affordable Housing Trust Fund. A Trust Fund that will be funded from a percentage of the profits from the GSEs. In the early years the Trust Fund will cover any costs from defaulted loans in the FHA foreclosure program. In later years, The Trust Fund will be used for the development of affordable housing.
11. CDBG Funding. $4 billion will be provide in neighborhood revitalization programs for communities to purchase foreclosed homes.
12. Low Income Housing Tax Credit. Modernize the program to make it more efficient.
13. Loan Originator Requirements. State run nationwide mortgage origination is strengthened in the licensing and registration system.
