Thursday, August 7, 2008

HR-3221: Housing and Economic Recovery Act of 2008

Here are the highlights of the Act. Please call me if you have questions or would like additional details explained:

  • $7500 First Time Home Buyer Tax Credit-Credit is repayable over the next 15 years, making it, in effect, an interest free loan. Time frame to take advantage of tax credit will be April 8, 2008-June 30, 2009
  • Down Payment Assistance Programs (DAP) will be prohibited-Loan must close by October 1, 2008 to still have sellers pay down payment and closing cost (for 100% financing) through a DAP.
  • Minimum Cash investment for FHA loan to be 3.50% (was 3.00%). Sources of down payment that will still be allowed: Gift from a relative, Loan from a Relative (with loan payment amount included in borrowers debts), sale of real property (with proper documentation), loan against real property with inclusion of new debt payment in debt to income ratios, approved city and county grants, and Utah Housing Down Payment Loan. Sellers can still pay closing costs and prepaids for the buyer.
  • FHA risk based pricing moratorium to be permanently in place October 1, 2008-September 30, 2009 (temporary risk based pricing went into effect July 14, 2008). Lower upfront and monthly Mortgage Insurance Premium for better credit scores and higher down payements. This risk based pricing also allows buyer's with lower credit scores to get FHA financing (at higher upfront and monthly Mortgage Insurance Premium).
  • Mortgage Revenue Bond Authority-Authorizes $10 Billion in Mortgage Revenue Bonds for refinancing Sub-Prime Mortgages. If you or someone you know has a subprime loan, give me a call and I can go over the new options for refinancing the loan into an FHA loan!
  • GSE Stabilization from Treasury Department to Authroize Treasury to make loans to Fannie Mae and Freddie Mac to insure that they don't fail.

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