Tuesday, October 28, 2008

Mortgage Revenue Bonds

With much anxiety our nation has been experiencing over the economy, there will be relief for those who have suffered in the housing market with forclosures. Under The Housing And Economic Recovery Act of 2008, the legislation authorizes up to $11 billion in additional tax-exempt bonds for refinancing sub-prime loans, lending to first time homebuyers, and investment in affordable housing.

Additionally, it offers nearly $4 billion in federal grants to state and local governments for the purpose of buying foreclosed homes, rehabilitating them, and then selling them as affordable housing.

The act raises to $625,000 the limit for loans backed by FHA, Fannie Mae, and Freddie Mac. This increase is primarily geared toward markets with very high values such as California, allowing for more refinancing opportunities and lower interest rates on the loans. Additional changes include a one-year moratorium on risk-based pricing by the FHA and reforms to the HECM and manufactored housing programs. The act also raises the minimum down payment required on FHA-backed loans to 3.5 percent from 3 percent.

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