The Housing Economic and Recovery Act (HERA)

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On July 30, 2009, the new Housing and Economic Recovery Act (HERA) laws will go into effect. They require all mortgage lenders and mortgage brokers to help prevent deceptive lending practices and protect customers by helping them become more informed.

In addition, there has been a new agency created to overview and regulate organizations like Fannie Mae, Freddie Mac and the Federal Home Loan Banks. This overview, regulatory agency is called the Federal Housing Finance Agency. The main purpose of this agency is to regulate and ensure that these entities operate within certain, strict guidelines to make sure that they maintain enough capital to operate healthy national housing finance markets.

FHA revised – FHA has changed its policy’s, the FHA loan limit for conforming loans has now increased to $625,000, relative to how expensive the particular market is.
The Hope For Home Owners Program – as mentioned briefly on a previous blog, created a new FHA program that allows eligible homeowners that are in danger of foreclosure to pay off their original loan with a 30-year fixed rate and up to 90% of the appraised value. Certain restrictions apply for example; the borrower must currently be spending at least 31% of their income on their mortgage payments.

This new act also protects the men and women in the U.S. Armed Forces. Foreclosure protection for these servicemen has increased temporarily the loan guarantee the VA will give. Lenders must now wait 9 months before starting foreclosure as opposed to the previous 90 days.

In an effort to stimulate the real estate markets first time home buyers can also take advantage. If you purchased a home after April 8, 2008 but before July 1, 2009 first time home owners may receive a refundable tax credit for up to 10% of the purchase price (or a maximum of $7,500). However, the borrowers who receive this credit must repay it in equal installments over 15 years (Max. $500/year) and will appear as a surcharge on their annual income tax return.

In addition to the above mentioned changes other programs have been altered either permanently or temporarily in an effort to boost spending, and save home owners from possible repossession of their home. Such programs that will receive a change are; the rehabilitation credits given, tax-exempt housing bonds, and interestingly enough – liberation of rules for real estate investment trusts to be allowed to earn foreign currency income associated with real estate activities. (To promote international investment and spending into the market)

For more information on new programs being implemented and South Florida real estate market trends check back weekly for another blog update!