This Bill synopsis was provided to us by Lenders One. See bottom of article for full credits. Dated 7/23/08.

The House and Senate reached agreement on a massive housing bill that affects FHA, Fannie and Freddie, tax policy and many changes involving the housing market. We have previously briefed you by conference call and email on the progress of several separate measures, but the housing and mortgage crisis has caused Congress to combine these provisions into a bill exceeding 400 pages. The House will vote on the measure tomorrow, with the Senate to follow by next week. The White House has supported much of the measure but has criticized some components. Despite a prior veto threat, we expect the President will sign this bill, with final action before the August congressional recess.  (Shortly after this was written, the House voted on and passed the Bill)

Here are the major components:

1. FHA Changes

Mortgage limits for high cost areas will be increased to $625,000 on a permanent basis (115% of the current conforming limit).

The FHA floor will go from 48% to 65% of the current conforming limit. This will put the new permanent floor at $271,000.

Cash downpayment is set at 3.5%.

The seller funded downpayment assistance program (DPA) will be terminated on September 30.

The risk based premium established by HUD last week will be suspended on September 30. The ceiling on upfront premiums will go to 3%.

2. Fannie and Freddie

The conforming loan limit will be increased to 115% of area median up to $625,000.
The bill provides for a federal "backstop" for Fannie and Freddie which allows the Treasury to capitalize the companies by taking an equity stake.

A new regulator with enhanced powers is created.

The bill creates an affordable housing trust fund paid for by assessments on Fannie and Freddie to help prevent foreclosures and facilitate affordable housing

3. FHA Rescue Fund

The bill creates a special FHA refinance program designed to allow the refinance into fixed rate FHA products of up to $300 billion in distressed mortgages.

4. Licensing

Encourages a nation wide licensing and registry system for loan originators by setting minimum qualifications and assigning responsibility to HUD for establishing new rules for those states that do not enact licensing laws.

5. Redevelopment of Foreclosed Properties

Provides $4 billion in funds for local governments to purchase and redevelop foreclosed properties.

6. Tax Incentives

Establishes a range of housing incentives, including a first time homebuyer tax credit and expands the Low Income Housing Tax Credit.
There is a great deal of detail in this complex bill and we will update you as more information is available.

Howard Glaser
The Glaser Group
1399 New York Ave, NW
Washington, DC 20005
202 277-2336
hglaser@glasergroup.net