The Housing & Economic Recovery Act of 2008

The Housing & Economic Recovery Act of 2008 (also known as H.R. 3221) is vital to address turmoil in the financial and housing markets and to bolster the economy.   The landmark legislation contains several provisions to help home buyers, stop the slide in home prices, provide a lifeline to borrowers facing foreclosure and bolster market confidence in mortgage giants Fannie Mae and Freddie Mac.  The key elements of the new law are:

1. A temporary first-time home buyer tax credit. The tax credit was created to stimulate home buying, reduce excess supply in housing markets and shore up home prices.  The American Recovery and Reinvestment Act of 2009 grants an even larger incentive to "first-time" homebuyers - to buy soon.  Learn about>> the details about how the credit works and how consumers can take advantage of it. 
2. 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. It includes 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).
   • View 2009 FHA and GSE loan limit estimates (PDF)
   • FHA Reform Chart (PDF)
3. FHA Foreclosure Rescue Plan - Authorizes a new FHA Hope for Homeowners Program to refinance existing borrowers into fixed rate FHA mortgage products.  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.
   • Learn more>>> to see if you may be eligible. 
4. Down payment assistant mortgage programs will be eliminated. This element could be overturned by October 1, 2008 which is the date of implementation. FHA reports that borrowers who take part in these arrangements go to foreclosure at nearly three times the rate of borrowers who put their own money down.
   • More about the seller-funded downpayment assistance provision
   • Tips to finding downpayment assistance programs  (PDF)
5. 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.
6. 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.
7. Low Income Housing Tax Credit. Enhancing this program will expand the supply of much-needed affordable rental housing

These changes make loans with favorable terms available to a new group of people.   Gorman & Gorman Home Loans is an FHA approved Mortgage Banker fully up to speed on all FHA guidelines.  Apply now, email us at mortgage@gorman-gorman.com, or call 800.917.8997 to see if you qualify for an FHA loan.