WASHINGTON NEWS FLASH: THE HOUSING AND ECONOMIC RECOVERY ACT OF 2008

Mason Pruner, Branch Manager of Wells Fargo on Glades Road in Boca Raton recently sent me this update from Washington on The Housing and Economic Recovery Act of 2008. If you haven’t already heard, I’m sure you would like to know the new facts.

The House and Senate passed a broad-based housing legislation that President Bush signed into law on July 30th. Heralded as the most sweeping housing reform since the “New Deal”, this legislation includes the creation of a strong regulator for Fannie Mae and Freddie Mac, changes in conforming and FHA loan limits, a comprehensive modernization plan for FHA, and the Hope for Homeowner’s plan, which may help distressed homeowners by refinancing them into FHA loans. Most lenders view these reforms as beneficial to return stability to the mortgage markets.

Key Provisions of the Housing and Economic Recovery Act:

Higher permanent loan limits!
• For conventional conforming and FHA
• Effective January 1, 2009
• Varies by metropolitan area

Note: The temporary limits established in March will expire in Dec 31, 2008.

Other FHA Highlights:

• Floor limits will remain at $271,050
• Condo processing will be streamlined
• Minimum down payment by buyers will increase to 3.5%; maximum LTV cannot exceed 100% with MIP included in the LTV cap
• Moratorium on risk-based pricing with new case numbers ordered on or after Oct. 1, 2008.
• Elimination of seller-funded Down Payment Assistance Programs with FHA loans for credit approvals issued on or after Oct 1, 2008.

Reverse Mortgages (HECM):

• Higher loan limits
• Ability to use for home purchase transactions
• Limits to origination fees

VA Loans:

• The guaranty will increase up to $156,250

If Mason can answer any questions for you regarding this new legislation, please call him directly at 954.857.3502 or email Mason.Pruner@WellsFargo.com.