President Bush signed the Housing and Economic Recovery Act of 2008 into law, helping homebuyers and strapped borrowers and strengthening the housing finance system, according to the National Association of Home Builders (NAHB).
“This milestone bill contains several provisions to get homebuyers back into the marketplace, stop the slide in home prices, pro-vide a lifeline to borrowers facing foreclosure, improve mortgage liquidity and bolster confidence in Fannie Mae and Freddie Mac,” said Sandy Dunn, NAHB president.
Senate Banking Committee Chairman Chris Dodd (D-Conn.), a chief architect of the bill, called it “the most important piece of hous-ing legislation in a generation.”
Aimed at ending the current cyclical downturn in the housing industry, the Housing and Economic Recovery Act of 2008 includes a temporary first-time homebuyer tax credit. The tax credit will stimulate home buying, reduce excess supply in housing markets and shore up home prices. It also will aid the Federal Housing Administration (FHA). A revitalized FHA will have greater flexibility to re-spond to the needs of borrowers, enable more working families to become homeowners and play an important role in the mortgage markets. To address the foreclosure crisis, the FHA is given additional authority to insure up to $300 billion of mortgages to refinance loans headed for foreclosure. The act seeks government-sponsored enterprise (GSE) reform. The law reforms the regulation of Fannie Mae and Freddie Mac, which are mortgage finance systems, and permanently increases the conforming loan limit to help buyers in high-cost markets. To reassure financial and global markets, the government will temporarily expand its line of credit to Fannie Mae and Freddie Mac and permit the U.S. Treasury to purchase an equity stake in the companies through the end of 2009. The act proposes a Mortgage Revenue Bond Program, which would give states the ability to issue an additional $11 billion in mortgage revenue bonds. Fi-nally, the act features an enhancement to the low-income housing tax credit. Enhancing this program will expand the supply of afford-able rental housing.
The centerpiece of the housing bill is a temporary, $7,500 first-time homebuyer tax credit for the purchase of any home. The tax credit can be used for homes purchased between April 9, 2008, and July 1, 2009, and is expected to provide a significant financial incen-tive for homebuyers.
“The tax credit is the best stimulative measure,” Dunn said. “It will increase housing demand, get homebuyers back into the market-place and fight falling home prices, which threaten the -economy as a whole.”
The original eligibility period expired in April 2009, but following a major grassroots campaign from NAHB members, the period was extended to June 30, 2009, to enable home builders to include the credit in their sales and marketing next spring and into the early summer—the peak home-buying season.
For more information, visit www.federalhousingtaxcredit.com. The Web site includes a set of comprehensive questions and answers about how the credit works and how consumers can put it to their advantage.