House Approves Housing Rescue Bill, Senate Next
The House approved a sweeping housing rescue bill today which the Senate will now review and then get to the president as soon as Friday. Below are some provisions of both versions that may or not make it through the final stages:
- Fannie and Freddie will have their loan limits permanently raised (expect somewhere between $630,000.00 to $729,750.00),
- U.S. government will either invest into Fannie and Freddie or make it law that the U.S. Government will guarantee the loans made by Fannie and Freddie,
- FHA will guarantee loans to a maximum of 120 CLTV (based on current appraisal) provided that the existing lender lowers the existing loan payoff to 85 % of current loan balance (which does not include late fees, etc.) for a total of $300 billion in additional stimulus,
- The FHA borrower will have to prove that they cannot afford to make the old payment and that they can qualify for the new FHA loan amount (30 year fixed),
- FHA will receive a portion of any appreciation on the property for 18 months provided that the borrower sells the existing property.
Some close versions of these provisions are widely expected to be signed into law as soon as this Friday and will begin September 1st and end in 2012.
One residual benefit is that rates on conforming stimulus to improve to the same rates as normal conforming.