The Housing and Economic Recovery Act provides assistance to those facing foreclosure.
Last week President Bush signed into law The Housing and Economic Recovery Act. Most people know that the act is designed to help Fannie Mae and Freddie Mac, as well as help homeowners who are facing foreclosure. But the new law reaches much farther than that. It includes provisions for a first time homebuyer’s tax credit, an update to the FHA loan program, help for our nation’s veterans, and much more.
Does The Housing and Economic Recovery Act affect you? Here are the key changes enacted by the new legislation.
The HOPE for Homeowners act will make it possible for certain homeowners to refinance their existing mortgages with a 30 year, fixed-rate FHA loan of up to 90% of their home’s value. The conditions of the HOPE for Homeowners act are:
Congress will make available $3.92 billion in block grants for communities hit hard by foreclosures. The block grants will be used to buy empty, foreclosed homes and rehabilitate them, so other property owners in the area aren’t devastated by a significant loss in property value.
$180 million will be made available to provide families in need with pre-foreclosure counseling. Additionally, $30 billion will be made available for legal services to help those facing foreclosure.
In order to prevent foreclosure for veterans returning from overseas, The Housing and Economic Recovery Act of 2008 makes provisions to help our veterans. Highlights of this section of the act include:
With FHA being the primary loan program people are using to buy new homes right now, the program will receive some necessary updates to make home ownership more accessible to those in areas where housing prices are high.
Mortgage lenders will be required to present potential homeowners/those refinancing their loans with disclosures within 3 days of applying for a loan on some types of loans. Disclosures will also be required no later than 7 days before closing, so buyers can shop for a new mortgage, if they don’t like the terms. Lenders are also required to inform potential borrowers of the maximum mortgage payment possible under the loan.
Currently, only those homeowners who itemize their tax deductions are able to deduct state and property taxes on their federal return. The Housing and Economic Recovery Act of 2008 will create a standard deduction of $500 for single filers, and $1000 for married taxpayers who own their homes, but do not itemize their tax deductions.
I use the term “tax credit” lightly, because it’s really a loan. First time homeowners will be able to take a $7500 tax credit (or 10% of the purchase price of the home…whichever is lower) on their 2008 returns, which must be paid back, interest free, over the course of 15 years. Here are the details:
There are more aspects to The Housing and Economic Recovery Act of 2008, but these are the main areas where consumers will see the effects of the act.
We will be eligible to take the first time homebuyer’s tax credit, though I’m not sure if we’ll do it. Will you be affected by the new housing act?
Photo by respres.
If you like this article, please sign up for free weekly email updates.
I'm just an average mom, trying to live a frugal life and get out of debt. I write about things that have (and haven't) worked to improve my family's financial situation. What works for me may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
In accordance with FTC guidelines, I state that I have a financial relationship with companies mentioned in this website. This may include receiving access to free products and services for product and service reviews and giveaways.
Any references to third party products, rates, or websites are subject to change without notice. I do my best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.