This past Saturday the Senate overwhelmingly passed a bi-partisan housing Bill that will offer FHA financing in new loans for troubled homeowners that can not make their current mortgage payments. This legislation is the largest government involvement in the housing market in decades and is aimed at curbing the foreclosures keeping homeowners in their primary residence and also an emergency rescue plan for mortgage giants Fannie Mae and Freddie Mac that will be taking on a larger roll.
Here are some of the major points of the 700 page Bill that authorizes the FHA to insure up to $300 billion in loans and will take effect in October with the White House saying President Bush will approve it:
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-Must be primary home
-For loans taken out January 2005 through June 2007
-Current Mortgage 31% or higher of monthly income
-Proof you cannot make payments
-Current Lender must approve (not Lender mandatory) and pay 3% fee
-New FHA loan will be the current appraised value minus 10%
-Homeowner will pay a 1.5% of new mortgage amount, annually
Other details of the bill:
-Permanently increase "conforming loan" limits from a maximum of $417,000 to
new $625,500.
-Establish a stronger regulator for the Government Sponsored Establishments
-First time home buyer tax refund of 10% of purchase price, limit $7,500 paid back
within 15 years.
-$4 billion to states to buy up and rehabilitate foreclosed properties
Because of the new role of Freddie and Fannie Mae and added responsibility the housing bill now includes provisions that let Treasury over the next 18 months offer Fannie Mae and Freddie Mac an unlimited line of credit and the authority to buy stock in the companies.
Update: July 30th President Bush signed the Bill into law today.
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