President Bush signed into effect one of the most robust housing legislation bills in history yesterday. Designed to give another shot in the arm to the country’s ailing housing market, this bill is MASSIVE.
Some of the highlights of this bill are tax credits for first-time home buyers, mandatory refinancing options for certain individuals, increases to fed-backed jumbo mortgage allowances in certain markets such as Boston, increases of property tax breaks for home owners, and $4 Billion in federal aid to the primary mortgage providers Freddie Mac and Fannie Mae, in order to support, rehabilitate, and stabilize low-income housing projects in certain areas. So, yes, this bill is HUGE.
Perhaps one of the most amazing aspects of the bill is the mandatory refinancing options. In order to help those homeowners facing foreclosure, $300 billion in funding will be available to the FHA in order to help mortgagees whom are locked into upside-down, high interest mortgages, allowing them to refinance into more affordable loans. An estimated 400,000 sub-prime and other high-cost mortgages will be eligible for this program. This is unprecedented. Under the bill, mortgagors will have to accept losses on new loans and which can be no more than 90 percent of a home’s current market price. What a country! In return, the borrowers will eventually have to forgo a portion of any future appreciation when they sell. How about that?
It is a monumental day for the slumping housing market in the U.S. Hopefully the impact of this ground breaking bill will be felt immediately and help to stabilize those markets that have been hit hardest by the recent mortgage meltdown and subsequent real estate downturn.