New Housing Law Passed!

Yesterday President Bush signed off on the housing rescue law. This easily passed the House and the Senate and then was passed on to the President. He initially had indicated he would veto this, but announced recently he had lifted this threat. This is a controversial measure, but one that looks to be necessary during these tough times. It remains to be seen whether this will work, but it surely can't put us in a worse position that we currently are in. It is obvious that the government, the financial sector, and economists are pulling out all stops to try to help. As an example recently we have the passing of this housing rescue bill, Project RESTART, and news of a mortgage plan in the works that will try to utilize covered bonds in a shift away from the normal securitization method. These are 2 big steps. Like I said before, we will have to wait and see if they work. Since we are not yet at the bottom of the housing crisis, it will more than likely awhile before we actually know the answer.
Since the big news is yesterday's housing rescue bill, I wanted to highlight the key components for you. They are as follows:

• The FHA will be allowed to insure up to $300 Billion in new 30 year Fixed rate mortgages for at -risk borrowers in owner-occupied homes if their lenders agree to write down loan balances to 90% of the homes current appraised value.

• A Stronger Regulator for Government Sponsored Enterprises

• A permanent Increase in Conforming Loan Limits. This will permanently increase the loan size cap on Fannie and Freddie guaranteed mortgages to $625,500 .

• A New Home-Buyer Credit. This includes a tax refund for the first time home buyer worth up to 10% of purchase price, but not to exceed $7500. This actually looks like this must be paid back interest free over the course of the next 15 years. So keep that in mind.

• A ban on down-payment assistance from sellers.

• An increase in the down payment requirement for FHA loans. Now 3.5% instead of 3%.

• A new affordable housing trust fund will be established and paid for by fees from Fannie & Freddie.

• Grants to Stated to buy foreclosed properties. This allows states to buy and rehabilitate foreclosed properties.

• The Treasury will lend a temporary financial hand to Fannie and Freddie as long as they deem it necessary to stabilize the market.
  
  
• These are the highlights of this new bill that was passed into law.
  
  Your comments are welcomed.
  
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