In case you haven't heard this. Part of the package deal that the House of Representative passed last night 'Housing and Economic Recovery Act 2008' HR 3221 (by a margin of 272 to 152) among others are 1) elimination of down-payment assistance, 2) new FHA loans for subprime borrowers, and 3) Feds backdrop for Fannie and Freddie. Previous posts about down-payment assistance or DAP, here, and here.
This bill now heads to the Senate. So expect that they'd pass this legislation with no sweat. Via Housingwire.
The House bill also adopts language from the Senate version of the package that would ban so-called seller-funded down-payment assistance programs; this was a hotly-contested area of difference when the Senate volleyed its version of the bill back to the House.
“We’re going to yield to the Senate on that,” House Financial Services Committee Chairman Barney Frank (D-MA) is quoted as saying in the Washington Post. “There are a lot of trade-offs in the bill.”
Seller-funded downpayment assistance allows property sellers, including largely home builders, to donate funds to a non-profit agency, which then “gifts” the funds to a borrower as a down payment on a new home. The non-profits make a tidy processing fee, while critics — and even government agencies such as the IRS — have for years blasted the practice as a legalized scam.
Some items inside the bill (incl. Senate version).
- SUBPRIME 'primary' borrowers (only owner-occupants no investors or lenders, 2nd or 3rd home) will get the chance to refinance their loans at 'significant' discount using FHA insured 30 years fixed-rate loans based on a) borrower's ability to repay or b) 90% of CMV (current market value) of the home.
- EQUITY sharing. What that means. Borrowers will share new equity and appreciation - hear this: with FHA! - which technically make 'Uncle Sam' your lender/ shareholder whatever you call it.
- SECOND lien holders will get incentive to kiss goodbye their share of the loans.
- A bag of tax incentives: for buyers (up to $7500 tax credit), $15B tax benefits, increase low income housing tax credits and help builders build affordable housing alternatives.
- Fannie, Freddie and FHA loans cap lifted up from $417,000 to $625,500 (permanent).
- $4B for community stabilization.
- It's a voluntary program. Program runs from next fiscal year October 1, 2008 to September 30, 2011.
For other goodies read here and here.
News Elsewhere:
FDIC Faces Mortgage Mess After Running Failed Bank
House Approved Housing Bill Could Send Some Relief to Valley
Bill Gross: The Housing/ GSE Bill is the Best Way Out of Credit Crisis
