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It’s official. The $300 Billion Housing Bill Passes. Landmark housing legislation signed into law yesterday by President Bush is aimed at ending the current cyclical downturn in the housing industry, helping home buyers and strapped borrowers and strengthening the housing finance system, according to the National Association of Home Builders (NAHB). “This milestone bill contains several provisions to get home buyers back into the marketplace, stop the slide in home prices, provide a lifeline to borrowers facing foreclosure, improve mortgage liquidity and bolster confidence in Fannie Mae and Freddie Mac,” said NAHB President Sandy Dunn, a home builder from Point Pleasant, W.Va. Prudential California/Nevada/Texas President Ed Krafchow agreed, saying the passing of the bill signifies an important turning point in the real estate industry. “I think [the passing of the bill] is indicative of us coming through the storm,” Krafchow said. “The best part of this is, that this is a rebuilding process and now we’re on the other side of the perfect storm that hit the industry and certainly damaged the financial part of the business and greatly impeded doing real estate transactions. I’m not suggesting we’ve hit smooth sailing, but the majority of the storm is over and we’re starting to move forward in the business and the industry as it grows. That’s the most positive piece of the signing of this bill.”
Key elements of H.R. 3221, the Housing and Economic Recovery Act of 2008, include: - FHA modernization and expansion. A revitalized FHA will have greater flexibility to respond to the needs of borrowers, enable more working families to become home owners and play an important role in the mortgage markets. To address the foreclosure crisis, the FHA is given additional authority to insure up to $300 billion of mortgages to refinance loans headed for foreclosure. - GSE (government-sponsored enterprise) reform. The law reforms the regulation of Fannie Mae and Freddie Mac and permanently increases the conforming loan limit to help buyers in high-cost markets. To reassure financial and global markets, the government will temporarily expand its line of credit to Fannie and Freddie and permit the U.S. Treasury to purchase an equity stake in the companies through the end of 2009. - Mortgage Revenue Bond Program. The measure gives states the ability to issue an additional $11 billion in mortgage revenue bonds, which will help strapped borrowers seeking to refinance their home loans. - Low Income Housing Tax Credit. Enhancing this program will expand the supply of much-needed affordable rental housing.
Tax Credit Centerpiece of Housing Bill “The tax credit is the best stimulative measure,” said Dunn. “It will increase housing demand, get home buyers back into the marketplace and fight falling home prices, which threaten the economy as a whole.” Will buyers come out to play? What’s
it mean to you and me? It all depends on where you live and what your
situation is. One sure thing, although we are silly-putty pounded by
media reports referring to the “National Housing Market”, there is no
such thing. For example, the Phoenix, Arizona housing market in not like the Austin, Texas market. Real estate sales and listing inventory in Stockton, California is not similar to San Francisco, California. Miami Beach, Florida is not comparable to Houston, Texas. Las Vegas is not the same as Hilo. Hyper-Local means that in an area like the Puna District, real estate market activity will be different that the entire Big Island. Inside Puna, the real estate market statistics are different from subdivision to subdivision, sales velocity, listing inventory, Days On Market and months supply of inventory also varies from individual neighborhood to neighborhood, street to street and even house to house. What’s the take away? If you want to know where you stand, what your property is worth, how long would it take to sell, are prices going up or down, you will want to consult with your favorite, trusted Realtor. They can research and create an up to the minute hyper-local statistical report (called a CMA or Comprehensive Market Analysis) and share their real-time perspective, what the data means and what their interactive experiences are with the real clients and customers in today’s market place. Back to the Housing Bill. It’s signed and it’s official. In my opinion it’s a big deal for citizens buying and selling real estate. Why? Because it bolsters Fannie and Freddie Mac, which provides consumer and institutional confidence and the assurance of mortgage money availability. It also raises the conforming loan limits from $417,500 to $625,500, providing lower interest rate loans to more people. It provides a Tax Credit for first time home buyers. Bottom line, it provides confidence, security and cheaper mortgage money to more people, ergo consumers can buy homes at less expensive rates. All good and positive. Read the whole CNNmoney.com article - Click Here Here’s the summary A stronger regulator for the Government Sponsored Enterprises (GSEs). The new regulator will have a greater say over how well funded the two government sponsored enterprises (GSEs) are - a major concern in the markets that has sent stocks in both companies plunging in the past two months. A permanent increase in “conforming loan” limits. The law will permanently increase the cap on the size of mortgages guaranteed by Fannie and Freddie to a maximum of $625,500 from $417,000. The FHA maximum loan limits for high-cost areas would also increase to a maximum of $625,500. Higher loan limits will make it easier for borrowers to get mortgages, because those mortgages are more likely to be traded if they are considered conforming. A new home-buyer credit. The new law 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. A ban on down-payment assistance from sellers. The new law eliminates a program that has allowed sellers to provide down payment assistance for FHA loans. The law would also increase to 3.5% from 3% the down payment requirement for borrowers getting FHA loans. A new affordable housing trust fund. The law establishes a permanent fund to promote affordable housing. The fund will be paid for by fees from Fannie and Freddie. Bolstering Fannie and Freddie's late and controversial addition to the
new housing law provides temporary authority for the Treasury to lend a
financial hand to Fannie Mae and Freddie Mac if the Treasury deems it
necessary to help stabilize markets.
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