The Senate today (Saturday, 7/26) passed the Housing Bill that was submitted by the House on Wednesday. The vote was 72 for and 13 against, and President Bush is expected to quickly sign the legislation. Among the key provisions of the bill, the program that has allowed sellers to provide down payment assistance to buyers through a Down Payment Assistance (DPA) program such as Nehemiah and AmeriDream will be eliminated as of October 1, 2008. In addition, the bill increases the down payment requirement for borrowers getting FHA loans from 3.0% to 3.5%
Other provisions of the bill include:
- Allowing approximately 400,000 homeowners who cannot afford their monthly mortgage payments to refinance into a more affordable government-backed loan rather than losing their homes. The FHA will be allowed to insure up to $300 billion in new 30-year fixed-rate mortgages for at-risk borrowers in owner-occupied homes if their lenders agree to write down loan balances to 90% of the homes' current appraised value. The cost of the new FHA program - which would begin on Oct. 1 and be in place for just a few years - would be funded by fees from Fannie and Freddie, along with fees paid by both lenders and borrowers.
- Permantly increasing the cap on conventional and FHA mortgages in high cost areas from $417,000 to $625,500. Higher loan limits will make it easier for borrowers to get mortgages, because they're more likely to be traded if they are considered conforming;
- Creating a home-buyer credit. The bill includes a tax refund for first-time home buyers worth up to 10% of a home's purchase price but no more than $7,500. The refund, however, serves more as an interest-free loan, since it would have to be paid back over 15 years in equal installments. In addition, the bill provides for business tax breaks for home builders and other large corporations;
- Creating a permanent fund to promote affordable housing. The fund would be paid for by fees from Fannie Mae and Freddie Mac;
- Giving grants to states to buy foreclosed properties. The bill would grant $4 billion to states to buy up and rehabilitate foreclosed properties. The provision of the bill had been opposed by the White House which said it would benefit lenders and not homeowners;
- Granting the Treasury Department broad authority to safeguard Fannie Mae and Freddie Mac. The new regulator will have a greater say over how well funded the agencies are - a major concern in the markets that has sent stocks in both companies plunging; and
- Raising the national debt ceiling to $10.6 trillion, an increase of $800 billion.
East Bridgewater, MA 02333
Lew Corcoran, ASP®, IAHSP, IAHSP-CB