House Passes Important Housing, Refinance and Foreclosure Avoidance Assistance in Economic Stimulus Bill
|February 1, 2008|
Washington, DC - The House of Representatives overwhelmingly passed provisions this week to help consumers take advantage of increased mortgage market credit, stabilize the housing market and help homeowners refinance out of bad loans. The legislation, passed as part the economic stimulus package, will allow the Federal Housing Administration (FHA) and the Government Sponsored Enterprises (GSE) of Fannie Mae and Freddie Mac to temporarily increase their loan limits to serve a greater number of areas of the country. In fact, by making these changes to the FHA and the GSE programs, Congress is making more financing available to a large number of moderately priced homes in many communities across the country. In addition, the bill raises artificial caps, which effectively prohibits the use of FHA and GSE loans in higher priced markets such as Massachusetts, California and New York.
"The temporary increase in FHA loan limits is an absolutely critical element of the House bill," said Rep. Maxine Waters (D-CA), Chairwoman of the Housing and Community Opportunity Subcommittee. "While I would have preferred the stimulus package to incorporate a permanent increase and other elements of the FHA Modernization bill passed by the House, this temporary measure will ensure that FHA can help distressed borrowers and new homeowners in high cost housing markets like California at this critical time."
“For years, Chairman Frank and I have worked to create affordable housing opportunities for families across the country by increasing the FHA and GSE conforming loan limits. With the average home price in high cost areas like California, New York, and Massachusetts, exceeding the current loan limit, homeowners and homebuyers in these areas have been unable to utilize these important federal housing programs. The loan limit increases included in the economic stimulus package will make safe, conforming mortgage loans available for entry-level homebuyers in all areas of the country,” said Rep. Gary Miller (R-CA).
“Increasing the loan limits is a very important step in stabilizing the mortgage market and helping consumers refinance,” said Chairman Frank. “I look forward to working with the Senate to make these changes permanent.”
A major cause of the credit crunch and the economic slowdown has been, and continues to be, losses by lenders in the subprime mortgage markets and declining property values. These losses caused a substantial tightening in the general mortgage markets, leaving borrowers seeking to refinance or purchase new homes – and lenders seeking financing to make new loans – with few options. Specifically, the changes passed will provide: