House Passes Housing Stimulus Legislation

The U.S. House of Representatives has passed H.R.3221, which the House Financial Services Committee calls ‘the most comprehensive response yet to the American mortgage crisis.’

The American Housing Rescue and Foreclosure Prevention Act combines a number of bipartisan bills, including measures to modernize the Federal Housing Administration (FHA) and reform the government-sponsored enterprises (GSEs).

Specifically, the FHA modernization measures are intended to provide mortgage refinancing assistance that provides FHA guarantees on mortgages in exchange for a reduction of loan principal. Borrowers must share any profit from the resale of a refinanced home with the government. In addition, the FHA program would expand affordable mortgage loan opportunities for families (many of whom would otherwise turn to subprime lenders) and for seniors.

The GSEs would see increased regulation, along with raised loan limits, expanded liquidity and a new fund for affordable rental housing. Also, to improve the loan-modification process and help shield servicers from legal action, the legislation would ‘provide mortgage servicers with clarity and certainty for their actions, and protection from such lawsuits for specified loan modifications,’ the House Financial Services Committee adds.

The package would also increase the Veterans Affairs home loan limit for high-cost areas, as well as provide $11 billion in tax benefits, including tax credits to first-time home buyers, a real property tax deduction for non-itemizers, an additional $10 billion in mortgage revenue bonds for states, and improved access to low-income housing.

An additional amendment ‘protects the right of states and cities to regulate the foreclosure process and the treatment of foreclosed property’ by ensuring that the National Bank Act and the Home Owner's Loan Act do not preempt state foreclosure laws for national banks or federally chartered thrifts, the committee notes.

Source: House Financial Services Committee

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