Landmark housing legislation was signed into law July 30 by President Bush to help end the current cyclical downturn in the housing industry, help home buyers and strapped borrowers, and strengthen the housing finance system, says the National Association of Home Builders.
“This milestone bill contains several provisions to get home buyers back into the marketplace, stop the slide in home prices, provide a lifeline to borrowers facing foreclosure, improve mortgage liquidity and bolster confidence in Fannie Mae and Freddie Mac,” said NAHB President Sandy Dunn in an NAHB statement. “We commend Congress and the President for taking this action to provide much-needed relief to the American people.”
For the past year, NAHB has been in the forefront in pushing for legislation to address the turmoil in the financial and housing markets and to bolster the nation’s faltering economy.
Key elements of H.R. 3221, the Housing and Economic Recovery Act of 2008, include:
- A temporary first-time home buyer tax credit. A $7,500 first-time home buyer tax credit for the purchase of any home bought between April 9, 2008, and July 1, 2009. It is expected to provide a significant - and temporary - financial incentive for home buyers. The tax credit will stimulate home buying, reduce excess supply in housing markets and shore up home prices.
- FHA modernization and expansion. A revitalized FHA will have greater flexibility to respond to the needs of borrowers, enable more working families to become home owners and play an important role in the mortgage markets. To address the foreclosure crisis, the FHA is given additional authority to insure up to $300 billion of mortgages to refinance loans headed for foreclosure.
- GSE (government-sponsored enterprise) reform. The law reforms the regulation of Fannie Mae and Freddie Mac and permanently increases the conforming loan limit to help buyers in high-cost markets. To reassure financial and global markets, the government will temporarily expand its line of credit to Fannie and Freddie and permit the U.S. Treasury to purchase an equity stake in the companies through the end of 2009.
- Mortgage Revenue Bond Program. The measure gives states the ability to issue an additional $11 billion in mortgage revenue bonds, which will help strapped borrowers seeking to refinance their home loans.
- Low Income Housing Tax Credit. Enhancing this program will expand the supply of much-needed affordable rental housing.