Legislation Changes....

Moratorium on Risk-Based Pricing for mortgage insurance premiums based on credit score
This change does mandate that the Risk-Based pricing HUD implemented on FHA loans effective July 14,2008 must be stopped by October 1, 2008 at the latest.  This change does not prevent HUD from implementing risk-based pricing on criteria other than credit score (such as program type or LTV) and allows for upfront premiums to be as high as 3%.

Elimination of Seller-Funded Down Payment Assistance (DPA) Programs
This change does include all interested-party DPA programs, including AmeriDream and Nehemiah. This is likely to be effective with loans approved after September 30, 2008. However, Housing Finance Agency, approved Nonprofit Community Seconds, and any DPA provided by a government entity are not affected by this change and may still be used.  There is a chance that seller-funded DPA programs will be reinstated in the future, but if so it would likely be in a more restricted form. 

Simplification of Condominium Project Approvals
FHA now has the authority to dramatically streamline condominium project approval requirements.  The timing and details of implementation are yet to be confirmed.

Increase of the required borrower cash investment on FHA loans to 3.5% 
The timing and implementation details are still undecided - HUD will issue a mortgagee letter with additional detail and we will update the site as more is learned.

Implementation of new permanent Mortgage Loan Limits
The new limits will be effective Jan. 1, 2009 when the temporary limits of the Stimulus Bill Expire.  The limits will maintain the current floor limit of $271,050.  The ceiling loan limit will be reduced to $625,500 (which is 150% o fthe $417,000 GSE Limit).  The calculation factor for high cost areas (i.e. area median X's factor = Maximum mortgage amount) is lowered to 115% from 125%.

Implementation of a $7,500 tax credit for first-time homebuyers
This tax credit is actually more of an interest-free loan that is paid back with a recapture provision that requires payments of 6.67% of the amount to be made over a 15 year period, beginning in year 2 of the loan.  This tax credit will be available through July 2009.