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The Housing and Economic Recovery Act of 2008 (Pub.L. 110-289, 122 Stat. 2654, enacted July 30, 2008) (commonly referred to as HERA) designed primarily to address the subprime mortgage crisis, was passed by the United States Congress on July 24, 2008 and signed by President George W. Bush on July 30, 2008. It authorizes the Federal Housing Administration to guarantee up to $300 billion in new 30-year fixed rate mortgages for subprime borrowers if lenders write-down principal loan balances to 90 percent of current appraisal value. It's intended to restore confidence in Fannie Mae and Freddie Mac by strengthening regulations and injecting capital into the two large U.S. suppliers of mortgage funding. States will be authorized to refinance subprime loans using mortgage revenue bonds. It also establishes the Federal Housing Finance Agency (FHFA) out of the Federal Housing Finance Board (FHFB) and Office of Federal Housing Enterprise Oversight (OFHEO).
Through the powers granted to FHFA, created by the act, on September 7, 2008, FHFA director James B. Lockhart III announced he had put Fannie Mae and Freddie Mac under the conservatorship of the FHFA. The action is "one of the most sweeping government interventions in private financial markets in decades".[1][2][3]
Some provisions of the law were modified by the American Recovery and Reinvestment Act of 2009, which was signed into law by President Obama on February 17, 2009.[4]
[edit] Housing Assistance Tax Act of 2008
Includes a first-time home buyer refundable tax credit for purchases on or after April 9, 2008 and before July 1, 2009 equal to 10 percent of the purchase price of a principal residence, up to $7,500.
- Phases out the credit for taxpayers with incomes over $75,000 ($150,000 for joint returns).
- Requires taxpayers receiving the credit to repay it over 15 years in equal installments by imposing a surcharge on the taxpayers’ annual income tax.
The Act provides emergency assistance for the redevelopment of abandoned and foreclosed homes.
[edit] FHA Modernization Act of 2008
(Background: FHA stands for Federal Housing Administration. FHA loan is a federal assistance mortgage loan in the United States insured by the Federal Housing Administration.)
- Increases the FHA loan limit from 95 percent to 110 percent of area median home price up to 150 percent of the GSE conforming loan limit, or $625,000), effective January 1, 2009.
- Requires a down payment of at least 3.5 percent for any FHA loan.
- Places a 12-month moratorium on HUD (abbreviation for United States Department of Housing and Urban Development) implementation of risk-based premiums.
- Prohibits seller-financed down payments.
- Allows down payment assistance from family members.
[edit] Federal Housing Finance Regulatory Reform Act of 2008
[edit] HOPE for Homeowners Act of 2008
- Authorizes the FHA to insure up to $300 billion of 30 year fixed rate refinance loans up to 90% of appraised value for distressed borrowers.
- Covers mortgage commitments made on or before January 1, 2008[5].
- Requires existing mortgage holders to accept the proceeds of the insured loan as payment in full for all pre-existing indebtedness.
- Participation in this program is not required but voluntary for lenders.
As of February 2009, only 451 applications had been received and 25 loans finalized, far short of the estimated 400,000 homeowners who were expected to participate. This was attributed to high fees, high interest rates, the need for a reduction in principal on the part of the lender, and the requirement that the federal government receive 50% of any appreciation in value of the house. Congress began hearings on the program in February.[6]
[edit] Mortgage Disclosure Improvement Act of 2008
[edit] Secure and Fair Enforcement for Mortgage Licensing Act of 2008
The SAFE Act is part of the Act. SAFE is an acronym for "Secure and Fair Enforcement for Mortgage Licensing Act." It requires all states to have a loan originator licensing and registration system in place by August 1, 2009 (August 1, 2010 for legislatures that meet biennially). A state can participate in the Nationwide Mortgage Licensing System (NMLS), a registry operated jointly by the Conference of State Bank Supervisors/American Association of Residential Mortgage Regulators (CSBS/AARMR); if it does not meet the SAFE Act's requirements for licensing and registration of loan originators, the U.S. Department of Housing and Urban Development (HUD) will implement a loan originator licensing system for the state. The SAFE Act is intended to provide uniform licensing standards nationwide, as these licensing standards have been non-uniform from state to state for the past 20+ years. It is also designed to create a comprehensive licensing database so that all loan originators will be known and presumably, bad actors can be kept out of the industry. The national licensing system should enable government and consumers to track loan originators. Loan originators registered in the national database will be provided with a Unique Identifier number. Loan originators include those who take residential mortgage loan applications, assist borrowers to obtain or apply for mortgage loans, and those who negotiate residential mortgage loan terms. Persons who perform merely clerical or administrative tasks in connection with loan origination are not considered loan originators.
[edit] References
[edit] External links
[edit] Act summary
[edit] Enactment news
