Housing and Economic Recovery Act of 2008

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 …

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].

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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

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