The Housing and Economic Recovery Act of 2008 (HERA)
revised the National Housing Act to include the
following provisions:
FHA Reform: including permanent FHA loan limits
at the greater of $271,050 or 115% of local area median
home price, capped at $625,500; streamlined processing
for FHA condos; reforms to the HECM program, and reforms
to the FHA manufactured housing program.
The down
payment requirement on FHA loans will go up to 3.5%
(from 3%). The effective date for reforms is
January 1, 2009, but the loan limits will not
go into effect until the expiration of the Economic
Stimulus limits (December 31, 2008).
Homebuyer Tax Credit: a $7500 tax credit that
would be would be available for any qualified purchase
between April 8, 2008 and June 30, 2009. The credit is
repayable over 15 years (making it, in effect, an
interest free loan).
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Seller-funded down payment assistance programs:
codifies existing FHA proposal to prohibit the use of
down payment assistance programs funded by those who
have a financial interest in the sale; does not prohibit
other assistance programs provided by nonprofits funded
by other sources, churches, employers, or family
members. This prohibition does not go into effect until
October 1, 2008.
VA loan limits: temporarily increases the VA home
loan guarantee loan limits to the same level as the
Economic Stimulus limits through December 31, 2008.
Risk-based pricing: puts a
moratorium on FHA using risk-based pricing for one
year. This provision is effective from October 1, 2008
through September 30, 2009.
Mortgage Revenue Bond Authority: authorizes $10
billion in mortgage revenue bonds for refinancing
subprime mortgages.
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