The Housing and Economic Recovery Act was passed into law to help homeowners who are facing foreclosure. Eligible homeowners can cancel their current mortgage and get a fixed-rate loan. Congressional budget analysts project that the program would help 400,000 homeowners [1]. The program will take effect on October 1st and is due to end on September 30th, 2011 [1].

Increase in FHA Insurance
The FHA will be allowed to insure up to $300 billion in new 30-year fixed rate mortgages under the law [2].

Increase in Cap for Guarantee by Fannie and Freddie
The law permanently increases cap on the size of mortgages guaranteed by Fannie and Freddie to $625,000 [2].

Ban on Down Payment Assistance
Sellers are no longer allowed to provide down payment assistance on FHA loans [2].

New home-buyer credit
The law allows a tax refund for first-time home buyers for up to 10% of purchase price with a limit of 7.5% [2].

Grants to States
The law grants $4 billion for states to buy foreclosed properties [2].

Source:
1. "Bush signs bill providing mortgage relief to homeowners". National Report. 18 August 2008.
2. "Bush signs housing rescue law". CNN Money. http://money.cnn.com/2008/07/30/news/economy/housing_bill_Bush/index.htm?eref=rss_topstories