President Bush just signed the new bills passed by Congress.
Essentially it will:
Provide FHA $ 300 billion authority. Standard requirements for FHA lending will be relaxed. Fixed rate mortgages and affordable mortgages will be the focus of the Federal Housing Administration, to assist at least 400,000 distressed homeowners.
Relief to Fannie Mae and Freddie Mac by the Treasury Department will be allowed, in the form of loans or buying stocks in these government-sponsored corporation. Concurrently it will put in place regulations and tight controls on both corporations, as authority to approve pay packages for their executives. A new fund will be created called the "affordable housing fund" which will be drawn from their profits.
Loan limits will be raised up to $ 625,000 in many high-cost areas. FNMA and Freddie Mac will be allowed to buy loans up to 15% more than the median home prices in some cities.
Up to $3.9 billion to some of the most troubled communities will be granted with the purpose of buying and reconditioning foreclosed properties.
$15 billion in tax breaks for housing. Credits of up to $7,500 to first-time-homebuyers will be granted for home purchases till July 1, 2009. A deduction of $500 to $1,000 on property taxes will be allowed on returns which do not itemize.
$ 11 billion in additional tax-free municipal bonds are allowed to States so that they can provide low-interest loans to first time homebuyers.
Protect mortgage holders from investors' lawsuits when they accept to modify the terms of their loans to troubled borrowers.
$ 180 million aid for pre-foreclosure counseling to distressed borrowers.
One of real estate's major problems is the tightening of loan standards by most lending banks and institutions.
One can expect that these new rules will help establish new standards in lending and facilitate the financing of home purchases that has been a major factor in real estate downturn.
Henry B. Nathan is a Florida Realtor at United Realty Group Inc. and a Florida Licensed Mortgage Broker.
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