The Housing and Economic Recovery Act of 2008 is Signed into Law!

Recently, the House and Senate passed broad-based housing legislation, which was signed into law by President Bush this morning. Heralded as the most sweeping housing reform since the “New Deal”, it includes the creation of a strong regulator for Fannie Mae and Freddie Mac, changes in conforming and FHA loan limits, a comprehensive modernization plan for FHA, and the Hope for Homeowners plan, which may help distressed homeowners by refinancing them into FHA loans. 

Key Highlights of the Housing and Economic Recovery Act

· Effective Jan. 1, 2009, higher permanent loan limits for conventional conforming and FHA; limits to increase to a maximum amount or ceiling of $625,500, depending on the formula for each metropolitan area.  Note: The temporary limits established in March will expire on Dec. 31, 2008.

· FHA floor limits will remain the same at $271,050.

· The VA guaranty will increase.

· Minimum cash investment for FHA loans will increase to 3.5%.

· A moratorium on risk-based pricing for FHA loans, effective Oct. 1, 2008, as indicated in the Act.

· Elimination of Seller-funded Down Payment Assistance Programs with FHA loans, effective Oct. 1, 2008, as indicated in the Act.

· Condo processing for FHA loans will be streamlined (timeline TBD).

· FHA reverse mortgages (HECM): changes, among others, include higher loan limits, availability with purchase transactions and a modification to the origination fee.

Best,

Mark Shandrow
Real Estate Agent for Short Sales and Foreclosures