President Bush on Wednesday signed into law a sweeping housing bill that aims to boost the struggling housing market and bolster mortgage finance giants Fannie Mae and Freddie Mac. The Senate voted 72-13 in favor of the bill on Saturday, after the House passed it three days earlier.
- The cost of the program - which would begin on Oct. 1 and be in place for just a few years - will be funded by fees from Fannie and Freddie, along with fees paid by both lenders and borrowers
- The law authorizes FHA to insure up to 300 billion in loans.
- 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.
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- A new home-buyer credit. The new law includes a tax refund for the first time home buyers worth up to 10% of a home's purchase price but no more than $7500
- 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.
Grants to states to buy foreclosed properties. The law grants $4 billion to states to buy up and rehabilitate foreclosed properties.
- Fannie and Freddie guarantee the purchase and trade of mortgages and own or back to $5.2 trillion in mortgages.