Included in the act are provisions to strengthen and to unify oversight of the housing government-sponsored enterprises (GSEs—Fannie Mae, Freddie Mac and the Federal Home Loan Banks). The act also contains housing related tax provisions. This authority expires December 31, 2009. The act creates a voluntary program with an authorization level of $300 billion in FHA-insured mortgages to refinance mortgages of homeowners unable to pay their current mortgages. Homeowners who meet certain conditions can refinance into a FHA-insured mortgage if the current lender(s) agrees to write-down the principal of the current loan to achieve a 90% loan-to-value ratio and to pay a 3% insurance premium. The act increases FHA loan limits, prohibits seller-funded downpayment assistance with FHA-insured loans, raises the loan limit on home equity conversion mortgages (HECMs) to the conforming and high cost loan limits, increases the minimum downpayment on FHA mortgages from 3% to 3.5%, and prohibits HUD from implementing risk-based insurance premiums. The Housing and Economic Recovery Act of 2008, P.L. 110 - 289 , increases the maximum mortgage that the VA can guarantee to the FHA's maximum until December 31, 2008. It increases the current stay of foreclosure for service members from 90 days to 9 months from the end of active duty. 110 - 289 appropriates $4 billion in community development block grants (CDBG) to state and local governments for the redevelopment of abandoned and foreclosed homes. The act allows homeowners who do not itemize on their tax returns to deduct up to $500 in property taxes (up to $1,000 for joint filers). (Sections 1113 and 1114)

				Treasury and Federal Reserve

In the event of a financial or mortgage market emergency, the Treasury is given the authority to stabilize the housing finance system by purchasing obligations and securities of the housing GSEs in unlimited amounts under terms and conditions determined by Treasury. This requirement expires December 31, 2009. For example, using 2009's conforming loan limit (which was unchanged from the 2008 limit) of $417,000, the maximum high-cost limit would be $625,500. There is a subgoal for units affordable to very low-income families. New loans must have a fixed interest rate and have a maturity of 30 years. The FHA high cost area loan limit is increased to the lesser of 115% of the median price of a single-family residence, as determined by the HUD Secretary, or 150% of the Freddie Mac conforming loan limit. In addition, the legislation
prohibits funds from being used in economic development projects involving the use of eminent domain; (Section 2303) limits the income of individuals and families who may benefit from assistance provided by the act to those whose incomes do not exceed 120% of the area's median income; (Section 2301) requires a state and local government to certify that at least 25% of the amount allocated by the bill will be used to purchase and redevelop housing for individuals and families whose incomes do not exceed 50% of the area's median income; (Section 2301) and requires that each state receives a minimum allocation of 0.5% of the amount appropriated. First-Time Home Buyer Credit

First time home buyers of a primary residence are eligible for a refundable, repayable tax credit of 10% of purchase price, up to $7,500.
The Housing and Economic Recovery Act of 2008, P.L. 110-289, is likely to affect most owner-occupied housing in the United States through a variety of channels.
The act creates a new, stronger, unified regulator for Fannie Mae, Freddie Mac, and the Federal Home Loan Banks (the housing GSEs). As a result of various provisions in the act, the secondary mortgage market is likely to be broadly affected. For example, the Secretary of the Treasury is given (until December 31, 2009) the authority to lend or invest in the housing GSEs on whatever terms the Secretary determines to be appropriate. Starting in 2009, the maximum high cost conforming loan limit is increased to 150% of the conforming loan limit; this will be $625,500 in 2009. For the first time, Fannie Mae and Freddie Mac can and have gone into conservatorship. The GSEs were placed under conservatorship on September 7, 2008, and Treasury used its new power to enter into a series of agreements to provide them with financial support.
The act also modernizes many aspects of the Federal Housing Administration (FHA). In high-cost areas, the maximum loan that the FHA can insure is identical to the maximum mortgage amount that the housing GSEs can purchase. The minimum downpayment on FHA-insured mortgages is increased from 3% to 3.5%, seller-assisted downpayment assistance is prohibited, and there is a moratorium until October 31, 2009, on the FHA's implementation of risk-based insurance premiums.
HOPE for Homeowners authorizes the FHA to insure up to $300 billion in mortgages that refinance homeowners who are unable to pay their current high interest rate mortgages. As a condition of the borrower being eligible for the program, the current lender must agree to write-down the principal of the existing mortgage to achieve a 90% loan-to-value ratio.
Other provisions lengthen from 90 days to 9 months the stay of foreclosure on service members' homes and provide additional support for disabled veterans with special needs. The act appropriates $4 billion for state and local governments to purchase and rehabilitate abandoned and foreclosed housing. This housing would be sold or rented to low- and moderate-income individuals and families.
Tax provisions in the act include a refundable tax credit based on 10% of the price of a home purchased by a first time homebuyer. The maximum tax credit is $7,500 and the homebuyer pays back the credit over 15 years. This is roughly equivalent to a price reduction to one-third of the amount of the credit ($2,500). Homeowners who do not itemize on their tax returns can deduct state and local property taxes up to $500 ($1,000 on joint returns).
This report will be updated.