Specific areas of the Housing Reform act of 2008 will affect the Lake Powell Real Estate market on both the Utah and Arizona sides.
The FHA lending cap which was set to reset to a much lower rate at the end of the year, will now be permanent.
- For Kane County, Utah including Big Water, Church Wells, Clark Bench and Paria, our limit will stay at $383,750 up from $291,129 last year.
- Coconino County including Page and Greenehaven, Arizona, will stay at $450,000 instead of reverting back to $324,000.
In general there are a lot of mixed emotions on the Housing Reform Act which was signed in to law last week by President Bush. The most visible change has been the temporary authority granted until the end of 2009 to the Treasury Department to lend money to Fannie Mae and Freddie Mac, or purchase their stock, in order to avoid a potential collapse of these government-sponsored enterprises (GSEs).
A new regulator will also now oversee Fannie and Freddie. The two government-sponsored enterprises (GSEs) hold roughly $5 trillion in mortgages, representing nearly half of the total mortgage backing in the nation.
The Housing bill is intended to provide mortgage relief for 400,000 struggling homeowners and stabilize the financial markets.
Here are a few highlights:
- One important thing to talk about is the first time home buyer credit. The credit can be up to 10% of the purchase price but not more than $7,500. After year two the credit will need to be repaid in annual installments over 15 years at zero interest. On a $200,000 home purchase in 2008 the credit would be $7,500. Beginning in 2010 and once a year there after for 15 years, a $500 repayment would be made. The credit is good from now to July 1, 2009.
- The Housing Reform act also provides $300 billion in new lending authority to the Federal Housing Administration (FHA) while making permanent the $625,000 cap on loans the agency can back in some costlier areas, which had been set to revert $362,790 by the end of the year.
- The bill provides $3.9 billion in grants for buying and fixing up foreclosed property in the hardest-hit communities.
- People who don’t itemize their taxes will be allowed to claim a $500 to $1,000 deduction on their 2008 property taxes
- States will be given an additional $11 billion in tax-free municipal bond authority for low-interest loans to first-time home buyers, construction of low-income rental housing and refinancing subprime mortgages.
- In a concession to the banking industry, mortgage holders will be given protection from investor lawsuits in relation to the modification of loans to borrowers in default or about to default.
- a $180 million provision will be created for pre-foreclosure counseling and legal services for struggling borrowers.
For a bill of this magnitude and with such far reaching change, it was signed into law with no ceremony at all on a quiet Wednesday morning.
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