Landmark housing legislation signed into law today by President Bush is aimed at ending the current cyclical downturn in the housing industry, helping home buyers and strapped borrowers and strengthening the housing finance system, according to the National Association of Home Builders (NAHB).
“This milestone bill contains several provisions to get home buyers back into the marketplace, stop the slide in home prices, provide a lifeline to borrowers facing foreclosure, improve mortgage liquidity and bolster confidence in Fannie Mae and Freddie Mac,” said NAHB President Sandy Dunn, a home builder from Point Pleasant, W.Va. “We commend Congress and the President for taking this action to provide much-needed relief to the American people.”
For the past year, NAHB has been in the forefront in pushing for legislation to address the turmoil in the financial and housing markets and to bolster the nation’s faltering economy.
Senate Banking Committee Chairman Chris Dodd (D-Conn.), a chief architect of the bill, calls it “the most important piece of housing legislation in a generation.”
Key elements of H.R. 3221, the Housing and Economic Recovery Act of 2008, include:
– A temporary first-time home buyer tax credit. The tax credit will stimulate home buying, reduce excess supply in housing markets and shore up home prices.
– FHA modernization and expansion. A revitalized FHA will have greater flexibility to respond to the needs of borrowers, enable more working families to become home owners and play an important role in the mortgage markets. To address the foreclosure crisis, the FHA is given additional authority to insure up to $300 billion of mortgages to refinance loans headed for foreclosure.
– GSE (government-sponsored enterprise) reform. The law reforms the regulation of Fannie Mae and Freddie Mac and permanently increases the conforming loan limit to help buyers in high-cost markets. To reassure financial and global markets, the government will temporarily expand its line of credit to Fannie and Freddie and permit the U.S. Treasury to purchase an equity stake in the companies through the end of 2009.
– Mortgage Revenue Bond Program. The measure gives states the ability to issue an additional $11 billion in mortgage revenue bonds, which will help strapped borrowers seeking to refinance their home loans.
– Low Income Housing Tax Credit. Enhancing this program will expand the supply of much-needed affordable rental housing.
Tax Credit Centerpiece of Housing Bill
The centerpiece of the housing bill is a temporary, $7,500 first-time home buyer tax credit for the purchase of any home. The tax credit can be used for homes purchased between April 9, 2008 and July 1, 2009. It is expected to provide a significant — and temporary — financial incentive for home buyers.
“The tax credit is the best stimulative measure,” said Dunn. “It will increase housing demand, get home buyers back into the marketplace and fight falling home prices, which threaten the economy as a whole.”
The original eligibility period expired in April 2009, but following a major grassroots campaign from NAHB members, the period was extended to June 30, 2009 to enable home builders to include the credit in their sales and marketing next spring and into the early summer — the peak home buying season.
NAHB has launched a new Web site, www.federalhousingtaxcredit.com, which includes a set of comprehensive questions and answers about how the credit works and how consumers can put it to their advantage.
Further resources to help NAHB members promote consumer awareness about the credit are also available at www.nahb.org/mythbuster.