FHA Seller Financed Downpayment Reform and Risk Based Pricing Authorization Act of 2008

This new bill was proposed on August 1st.  It is a new bill might bring life back to down payment assistance and non-profit companies such as Nehemiah and Ameridream. The bill is H.R. 6694 and currently looks like the only hope to keep down payment assistance around after October 1st, 2008.

Who Did It?

The bill was sponsored by U.S. Representative Al Green (from Texas).  This new legislation was also co-sponsored by U.S. Representatives Gary Miller (of California), Maxine Waters (also of California) and Christopher Shays (Connecticut).

What Would This New Bill Do?

The Main Objective

This new bill would again allow Down Payment Assistance (a.k.a. DPA) be an allowable gift source for FHA loans.  Currently, the recent passing of H.R. 3221 has left down payment assistance discontinued as of October 1, 2008.

The Big Obstacle

Obviously down payment assistance was included in the recent housing bill because it has been the source of many foreclosures.  Specifically, loans with down payment assistance were 3-4 times more likely to be foreclosed on.  Kind of wild.

Also, this doesn’t take into consideration many of the loans that have been originated after the popular Fannie Mae and Freddie Mac programs disappeared (it wasn’t long ago!).

Major Changes

In order for down payment assistance to even be considered to be reinstated, I think it’s obvious that there would have to be some changes to the way.  Here’s what I read so far (actual numbers will likely change if this bill makes it through):

Down Payment Assistance:

• FICO Scores over 680 get a ‘free pass’ to use Down Payment Assistance.
• FICO Scores between 620-680 mortgage insurance is required (at least that’s how I read it)
• They would like to allow borrowers with less than 620 FICO score, but they have to determine the mortgage can be insured without ‘resulting in need for an appropriation for a credit subsidy’.

Risk Based Pricing:

• In all, the bill is requesting the authorization for risk-based pricing.  This is the same type of risk-based pricing that Fannie Mae implemented in the first quarter of this year.  If a borrower has less than a 680 FICO score (or 720 in some cases), you will pay a higher interest rate.

This goes back to risk vs. return.  Basic rules of business.

Interpretation

Remember, this bill was just released over the weekend.  I believe I’m the first person to write anything on it, so I’m interpreting the legal speak at my best.  I’m not an attorney, I’m a mortgage guy.  If you’re looking for an attorney’s summary, I can recommend someone

Ultimately, this bill will probably see some changes before it moves through and would be passed.

Who Cares?

You should. But if you know anyone who’s been looking at buying a home and cannot come up with the 3% required down payment.  Many Americans (that are still managing to make their house payments) have purchase their home with little to no money down.  If programs like seller down payment assistance disappear, you’re going to shore up a lot of potential buyers and kick them right out of the market.

Over the past year, over 32,000 Americans have called on Congress and the Bush Administration to keep downpayment assistance around.  Some of the large supporters include:

• National Association of Homebuilders
• Labor Council for Latin American Advancement
• U.S. Conference of Mayers
• Congressional Black Caucus
• Congressional Hispanic Caucus

Talk about a diverse group of supporters.  It’s obvious that this impacts many Americans and I encourage YOU to take action and do what you can to support this bill.  It’s a very big deal.

Want To Help Keep Downpayment Assistance Around?

Contact your local state representatives and let them know why you feel it’s good for Americans.

In the Meantime

If you or someone you know is looking at purchasing a home, let them know that they have until October 1st to close on a loan with down payment assistance.  If they need help in getting qualifed of need a second opinion, let me know.  My team and I would be glad to help!

Heavy Reading

If you’d like to see the actual bill, it can be seen here: Copy of HR 6694

Photo Kudos

Mortgage Market and Rate Watch For Week of August 4th, 2008

What To Watch This Week?

The Fed meeting is this week!  Nobody really sees the Fed making any move to cut or hike to the fed funds rate.  The big news will be what they say.

Inflation is the big concern.  I guess we’ll just wait and see!  Remember, if inflation is bad news for mortgage rates.

There are also some important Personal Consumption Expenditures (PCE) reports coming out on Monday.  This also happens to be the Fed’s favorite way to measure inflation.  If the numbers increase signinficantly from 2.1% (last year’s report), count on mortgage rates worsening.

You Can Stay Updated!

I’ll be following things as they happen with live bond quotes and do what I can to keep everyone informed through Twitter. My clients always get the advice first, so I’ll try to filter though as quickly as I can.

Here’s this week’s economic calendar:

(Click to Hugisize)

As a Consumer, How Do You Keep Posted on the News?

I’ll do my best to keep you posted throughout the week via Twitter. If you’re interested in finding out more about what effects mortgage rates and which direction they’re headed, feel free to follow me!

Work With Mortgage Professionals In The Advice Business

It’s important to recognize that advice is extremely valuable when looking for a mortgage. The right advice can literally save you thousands of dollars, while the wrong advice can cost you the same.  Some mortgage professionals really don’t know what mortgage rates are based on, period.  If you want to get the best deal, having a professional that can give you that type of advice is extremely important.

Why Am I Posting A Calendar?

I provide this weekly news update because too often when we’re shopping around, we ask the wrong questions. The first thing you’ve got to have your antenna up on is economic news if you want to have any idea what direction rates are moving.

So You Say, What Are Mortgage Rates Currently?

I get this question all too often. If I’m being fair.. and honest (which is my policy). I would be doing you a huge disservice to just quote a rate.

Truth be told, there are literally 27 different factors that go into a custom rate quote. There are also thousands of programs (constantly changing as well). It’s extremely important that you are educated on what is available and most importantly what is the best mortgage plan for you to personally implement.

It’s natural to have a list of questions. I’d love to help work through them with you and educate you on what you need to know about the mortgage process. I can help with everything from how to pre-qualified to what to do after closing (where I will continue working for you)!

It’s what we do, and it would be my honor to add you to our list of raving fan clients. If you’re currently looking for a mortgage loan or know someone that might have questions about one, please have them contact me. I’d be happy to assist them. It’s literally what I love doing! I promise to take great care.

Original Photo Kudos.

Mortgage Rate and Market Recap for the Week of July 29th - August 3rd, 2008

Employment Brings Concerns

This last week had a ton of economic information.  The week kicked off with President Bush singing the Housing Bill on Monday.  This in itself helped jump start the week.  Overall, economic news was weak - but not as horrible as the market had expected (yes, seriously).

What Did Those Reports Say?

Each week, I put up an economic calendar of news coming out that following week.   Here’s the results from last week:

(Click to Hugisize)

What Impacts Mortgage Rates?

If you’re looking to purchase or refinance a home, it’s important to know what moves mortgage rates.  There are normally two major things that impact the direction:

1. Economic News.  (That’s these calendars).
2. International News. (major events, war related, etc).
3. Stock Market. (Money flows from equities (stocks) to bonds when it seeks shelter).

What Are Rates Based On?

It’s been mentioned before, but as a common reminder - mortgage rates are only based on one thing. Mortgage Backed Securities (MBS).  The only way you have access to these is through live bond quotes.

Looking For Mortgage Rates?

If you’re looking for specifically what mortgage rates are doing, I’d be happy to help with a custom rate quote.  Each scenario is different (there are 27 different factors a mortgage rate is determined by).  If you or someone you currently know are looking for a mortgage, I’m here to help!

Information without obligation.  That’s my policy.  If you like what you hear, my team would love to help!

So, you remember that rule that capital gains exclusion rule that has become pretty much common knowledge?

Go ahead and get ready to change it.

The rule where if you sell a home after living in it for two years you could carry $250,000 (single person) or $500,000 (jointly filing) without getting hammered on capital gains.  Well, throw that out the window.  This new piece of legislation (694 pages) changes that tax code.

Sneaking It Under The Radar

The Housing and Economic Recovery Act of 2008 had a lot of great (highly publicized) components:

• Increased funding for Fannie Mae and Freddie Mac.
• Expanded loan limits in high cost areas.
• Tax credit of $7,500 for first time home buyers (Haven’t owned a home in 3 years) - more on this later.

In a huge piece of legislation like this, it’s easy for things to roll under our radar.

This piece of legislation has a great example.

New Rules

So, the new rules are targeted at the savvy investors who  were buying a property, living in it for two years, then moving on to the next property and keeping the old one as a rental.

Here’s the new formula (courtesy of Dan Green @ The Mortgage Reports & US Government):

As Dan Green put it, the new rule takes into consideration the actual usage as a primary residence over it’s qualified life.

An Example of Before Vs. After

Say you bought a home for $200,000 5 years ago.  You moved out of it three years ago so you could buy your new home.  You’re now selling the home you bought 5 years ago for $225,000.

Your Profit is $25,000.

Before:

• You have no capital gains tax liability on this profit.  It didn’t matter if you moved away from that property after two years and turned it into an investment property.

After:

• Since you lived in the home 40% of the time, you’ll be responsible for capital gains on $15,000 of that profit.  Big change huh?

Again….

That’s $0 considered capital gain vs. $15,000.   Big change.  This could cost a lot of investors some serious cash.

Now What?

Well, this new rule doesn’t mean that it’s no longer a great idea to buy a home and move every two years.  What it does mean is that if you are planning on buying a home every two years, that when you sell it - you’re tax liability just increased big time.

When Does This Kick In?

If there is any good news in this post, it is that you’ll have until January 1st, 2009 until this comes into play.  I can only suggest that if you’re falling into the large category of Americans that this effects, that you take action and implement a strategy that works for you.  Is it the right time to sell?  Only a real estate professional and tax professional can help you determine if now is the right time.

Wouldn’t you rather say you had the conversation and made a strategic decision instead of saying you had no idea?

Need Help?

If you need to connect with a professional for advice, I’d be happy to help!

Some of the advantages of being an active blogger is that I’ve accumulated connections not only in Iowa, but across the entire country!

Let me know what my team can do for you.

What’s The Real Estate Market Doing?

Do you ever wonder how our real estate market is here in Des Moines? Unfortunately, we spend a lot of time listening to how rough things are in other cities around the country, but too often we don’t really consider what our real estate climate is like.

I’m a fan of having as much information available before I take action on any big decisions. I don’t know about you, but I think buying or selling a home is a pretty big deal.

As a blogger and mortgage professional, when I receive good information - I pass it on. Home listings and sales are an interesting set of information most of us don’t have super easy access to. Thankfully, I have a Realtor that hammers me with e-mails (Just kidding, I don’t mind them) on market updates and her opinion on where things are at.

Why Should You Care?

Whether you’re looking to purchase, sell or refinance a home - this stuff matters. These statistics are compiled from the Multiple Listing Service and cover the Des Moines, Iowa residential real estate market.

With her permission, I post the facts here so you can come up with your very own market opinion. Here’s this week’s market commentary:

“Sales were a little slow last week, but our total inventory remains below where it was a year ago at this time.  It is no secret that sales have been slow, we are down 24% in the first half of the year compared to the same time last year.  However, the Des Moines Register reported last Saturday that sales prices dropped only 1.4% in June.  If you look at the numbers below the average price per square foot over the past 2 months has fallen only $1/ft to where it was last year at this time.  Many other areas of the country are hurting much worse than this, but Des Moines is still doing ok.

Like I say every week, if you are thinking of selling, don’t be discouraged, there are people still out there buying.  It is important though that you price your house in line with the market to get the best possible sales price.” - Heather Barglof, RE/MAX Real Estate Concepts

(Click to Hugisize)

What Does This Report Cover?

I really enjoy this chart because it gives a breakdown of:

• Days on the Market
• Price Per Square Foot
• Number of New Listings
• Number of Expired Listings
• Number of Price Reductions
• Pending Home Sales (by price)
• New Home Sales (by price)
• All Active Home Sales (by price)
• Best of all, it compares this week vs. last week and last year!

This is a great chart.  I’m not a Realtor and would never try to take the place of one.  If you’re looking for statistics in your specific neighborhood (because your neighborhood is the only one that matters when you’re selling), I can help connect you with the right Realtor for the job!

We Love Great Information and Love to Give Great Information!

If you’re a super cool person and have any market statistics you think our readers would find valuable, please feel free to contact me. If it’s relevant, It’ll show up here!

If you’re looking for my professional opinion or looking for a comment (press related), please contact me here.

The Fed announced today (Wednesday, July 30th) that they will be extending their discount window terms.

They will be increasing the now 28 days repay loans to 84 days for banking institutions.  The first auction offering these terms is on August 11th.

Just another sign that the goverment is willing to do what it takes to releave as much stress on the financial system as possible!

More found on MarketWatch.com!

The Door is Closed on Down Payment Assistance Programs.

The News Is In

It’s official.  Bush signed the Housing Rescue and Foreclosure Prevention Act of 2008.  Not a big surprise, but it does mean that we’ll (hopefully) be hearing more about how lenders will phase out down payment assistance.

My guess.. and it’s a guess, is that if you don’t close your home loan before October 1st, 2008; you’ll be ineligible.

Two Quick Comments

First, if you’re looking for updates on this bill, you won’t find them in this post (in the future).  Just search (in the top right corner of this website) for ‘3221′ and you’ll see all of the posts on the site.  Cool?

Second, there are plans to propose a bill bringing down payment assistance back.  That will be news to watch in the future.  They’d try to get things passed before the October 1st date ever even happens.

No Politics Here

I just want to say that I don’t care if you paint your face with red paint, blue paint or paint thinner (okay, that was a little uncalled for)… my point is, this bill will do a lot of good.  Even though some people don’t agree with some parts of it.

I’m not an avid supporter or basher of anyone.  I know good ideas when I see them and I know bad ideas when I see them.  I’ll just leave it at that.  No politics here.

That is really an unfortunate situation with the photo, isn’t it?

Photo Kudos

Mortgage Market and Rate Watch For Week of July 28th, 2008

What To Watch This Week?

Employment!  There are five reports related to employment this week.  One of the best ways to measure how the economy is doing is the employment figures.

Here’s the interesting part though, if unemployment is higher than expected, rates tend to fall.  If it looks like things are better than before (or expectations), rates tend to rise.  Crazy, huh?   The big reason is because stocks tend to react well to positive news and money moves from bonds to stocks.

You Can Stay Updated!

I’ll be following things as they happen with live bond quotes and do what I can to keep everyone informed through Twitter. My clients always get the advice first, so I’ll try to filter though as quickly as I can.

Here’s this week’s economic calendar:

(Click to Hugisize)

As a Consumer, How Do You Keep Posted on the News?

I’ll do my best to keep you posted throughout the week via Twitter. If you’re interested in finding out more about what effects mortgage rates and which direction they’re headed, feel free to follow me!

Work With Mortgage Professionals In The Advice Business

It’s important to recognize that advice is extremely valuable when looking for a mortgage. The right advice can literally save you thousands of dollars, while the wrong advice can cost you the same.  Some mortgage professionals really don’t know what mortgage rates are based on, period.  If you want to get the best deal, having a professional that can give you that type of advice is extremely important.

Why Am I Posting A Calendar?

I provide this weekly news update because too often when we’re shopping around, we ask the wrong questions. The first thing you’ve got to have your antenna up on is economic news if you want to have any idea what direction rates are moving.

So You Say, What Are Mortgage Rates Currently?

I get this question all too often. If I’m being fair.. and honest (which is my policy). I would be doing you a huge disservice to just quote a rate.

Truth be told, there are literally 27 different factors that go into a custom rate quote. There are also thousands of programs (constantly changing as well). It’s extremely important that you are educated on what is available and most importantly what is the best mortgage plan for you to personally implement.

It’s natural to have a list of questions. I’d love to help work through them with you and educate you on what you need to know about the mortgage process. I can help with everything from how to pre-qualified to what to do after closing (where I will continue working for you)!

It’s what we do, and it would be my honor to add you to our list of raving fan clients. If you’re currently looking for a mortgage loan or know someone that might have questions about one, please have them contact me. I’d be happy to assist them. It’s literally what I love doing! I promise to take great care.

Original Photo Kudos.

I read a lot of mortgage industry blogs.  A lot.

After finally cleaning out my feed reader, I found a great post from Alex Stenbeck’s “Behind The Mortgage“.  I provided the entire breakdown of the new bill, but Alex does such a great job of cutting through the language and picking out the few points that really impact Americans.  Here’s his original post and here’s what he covered:

1.  Raises FHA required investment (down payment + costs) to 3.5%, from 3%.

2.  Abolishes seller-funded down payment assistance on FHA loans credit approved on or after October 15, 2008.

3.  Abolishes FHA risk based pricing (higher rates or fees for lower credit scores) on or after October 15, 2008.

4.  Provides $7500 tax credit for first time homebuyers on homes purchased between April 9, 2008 and July 1, 2009.

The other thing he pointed out (which I had not heard anywhere else…) was that Nancy Pelosi, Barney Frank, and Maxine Waters are planning on introducing a seperate piece of legislation that would bring back seller funded down payment assistance AND the risk based pricing (lower credit score = higher rate).  Wow.  How did that slide past everyone’s radar?

Still Waiting…

We’re still waiting for the Senate to pass the bill.   Then it goes to Mr. Bush for his signature.  There still aren’t many people thinking this won’t pass.  But it’s not as much of a rush as everyone else thought before (apparently).

Say What?

You may have heard about the new bill designed to ‘rescue the current housing market’.  This bill is known as The American Housing Rescue and Foreclosure Prevention Act of 2008. There’s a lot of confusion of what all this bill covers.  Instead of re-inventing the wheel, I found an extremely thorough explanation on House Committe of Financial Services website.  Here’s what I found on how the bill currently stands:

FHA Housing Stabilization and Homeownership Retention Act

• Provides mortgage refinancing assistance to keep at least 400,000 families from losing their homes, to protect neighboring home values, and to help stabilize the housing market at no cost to American taxpayers.
• Expands the FHA program so many borrowers in danger of losing their home can refinance into lower-cost government-insured mortgages they can afford to repay.
• Protects taxpayers by requiring lenders and homeowners to take responsibility.  This is not a bailout; in order to participate, lenders and mortgage investors must take significant losses by reducing the loan principal.  In exchange for an FHA guarantee on the mortgage, borrowers must share any profit from the resale of a refinanced home with the government.
• Contains critical protections for taxpayers’ dollars, including higher refinancing fees that establish a new FHA reserve to cover possible losses from defaults on these government-backed mortgages.
• Only primary residences are eligible: NO speculators, investment properties, second or third homes will be refinanced.
• According to CBO, this three-year program, starting October 1, 2008, will not cost taxpayers a dime, as it is more than paid for by using funds in the first few years from the Affordable Housing Trust Fund.
• Provides $180 million for financial counseling and legal assistance to help families stay in their homes.

Strengthening Regulations of the GSEs

• Puts a strong independent regulator in place with real teeth, with real responsibilities and powers so that Fannie Mae and Freddie Mac can safely and soundly work to provide our nation’s families with affordable housing, as Democrats have been calling for since 2004.
• The new regulator will have enhanced authority to raise capital standards, set strict prudential standards, including internal controls, audits, and to enforce these new standards and promptly take corrective action.    The new regulator will oversee, and can directly restrict, executive compensation at Fannie Mae and Freddie Mac.
• Raises the GSE loan limits for single family homes to create affordable mortgage loans for moderately priced homes by allowing GSE loans up to 115% of the local area median home price, and to make GSE loans effective in high cost areas by raising the permanent loan limit from $417,000 to $625,500,.
• Creates a new permanent affordable housing trust fund – financed by the GSEs and not by taxpayers – to fund the construction, maintenance and preservation of affordable rental housing for low and very low-income individuals and families nationwide in both rural and urban areas.

Backstopping Fannie Mae and Freddie Mac To Shore Up the Housing Market

• Gives the Secretary of the Treasury the authority to increase the already existing line of credit to Freddie and Fannie for the next 18 months, as well as giving the Treasury Department standby authority to buy stock in those companies to provide confidence in the GSEs and stabilize housing finance markets.
• Includes meaningful taxpayer protections directing the Treasury Department to take the following into account, when using these authorities:
• Taxpayers should be first in line for being paid back, before other shareholders.
• There should be restrictions on dividends for shareholders and on compensation for the executives of the GSE’s until taxpayers are fully reimbursed.
• Strengthens oversight by requiring the Federal Reserve and Treasury to consult with the new regulator on issues concerning the safety and soundness of the GSEs and use of the standby authority.
• While Fannie Mae and Freddie Mac both now meet the capital and liquidity requirements set by their regulator, given the severe turmoil in the markets, the standby authority is needed to increase market confidence and enable both enterprises to continue to raise capital and maintain the availability of mortgage credit.
• The non-partisan Congressional Budget Office says “There is a significant chance — probably better than 50 percent — that the proposed new Treasury authority would not be used before it expired at the end of December 2009.”  CBO estimates that, if used, the federal budgetary cost of this proposal would be $25 billion over fiscal years 2009 and 2010.
• Because CBO estimates that these provisions could increase direct spending, we need to waive PAYGO rules in order to consider it.  The bill requires the Treasury Secretary to make an emergency designation before using the authority — certifying that he is acting to provide stability to financial markets, prevent disruptions in the availability of mortgage finance, protect the taxpayers, and facilitate an orderly restoration of private markets.  No spending would occur unless the Secretary certifies that there is an emergency that requires immediate action.  However, if those conditions are not met, there would not be any increase in the deficit as a result of this legislation.

Stabilizing Neighborhoods Hurt by the Foreclosure Crisis

• Provides $4 billion in emergency assistance (CDBG Funds) to communities hardest hit by the foreclosure and subprime crisis to purchase foreclosed homes, at a discount, and rehabilitate or redevelop the homes to stabilize neighborhoods and stem the significant losses in home values of neighboring homes.
• Foreclosed and rehabilitated homes would be sold or rented to moderate-income individuals and families — whose incomes do not exceed 120 percent of the area median income.  At least 25 percent of the funds would be targeted to house low-income and very low-income persons and families — whose incomes do not exceed 50 percent of area median income.
• Any profit from the sale, rental, rehabilitation or redevelopment of these properties must be reinvested in affordable housing and neighborhood stabilization.
• Provides $180 million for pre-foreclosure counseling, to be distributed in grants by the Neighborhood Reinvestment Cooperation (NeighborWorks) – with 15 percent targeted for low-income and minority homeowners and neighborhoods, and $30 million in grants for legal counseling to assist homeowners in foreclosure.

Preventing Future Abuses and Crises

• Establishes a nationwide loan originator licensing and registration system that will set minimum standards for loan originator licensing substantially improving the oversight of mortgage brokers and bank loan officers.
• Establishes improved mortgage disclosure requirements that will help ensure that mortgage borrowers understand their mortgage loan terms.

FHA Modernization

• Expands affordable mortgage loan opportunities for families (many of whom would otherwise turn to subprime lenders) and for seniors through expanded access to reverse mortgages through Federal Housing Administration reform.
• Raises FHA loan limits to create affordable mortgage loans for moderately priced homes by allowing FHA loans up to 115% of the local area median home price, and to make GSE loans more available in high cost areas by raising the permanent loan limit from $362,790 to $625,500.
• Expands opportunities for seniors to tap into equity in their home through FHA reverse mortgage loans, by increasing the loan limit for the program, reducing and capping lender fees for such loans, and strengthening consumer protections limiting the sale of other financial products in conjunction with FHA reverse mortgage loans.
• Prevents HUD from raising single family loan fees on lower- and middle-income borrowers, and from raising loan fees on FHA rental housing loans.

Preserving the American Dream for Our Nation’s Veterans

• Increases VA Home Loan limit, as was done in the stimulus package, for high-cost housing areas so that veterans have more homeownership opportunities.
• Helps returning soldiers avoid foreclosure and stay in their home by lengthening the time a lender must wait before starting foreclosure, from three months to nine months after a soldier returns from service and providing returning soldiers with one-year relief from increases in mortgage interest rates.
• Requires the Department of Defense to establish a counseling program for veterans and active service members facing financial difficulties and provides a moving benefit to servicemen and women who are forced to move out because their rental housing was foreclosed on.
• Increases benefits paid to veterans with disabilities, such as blindness, to adapt their housing and allows the Veterans Administration to provide for improvements to homes of veterans with service-connected disabilities.

Tax Provisions to Expand Refinancing Opportunities and Spur Home Buying (H.R. 5720)

• Provides $15 billion in tax benefits, including tax credits to first-time homebuyers, a real property tax deduction for non-itemizers, an additional $11 billion in mortgage revenue bonds for states, and improves access to low-income housing.
• Gives first-time homebuyers a refundable tax credit that works like an interest-free loan of up to $7,500 (to be paid back over 15 years) to spur home buying and stabilize the market.  The credit will begin to phase out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return).
• Provides taxpayers that claim the standard deduction with up to an additional $500 ($1,000 for a joint return) standard deduction for property taxes in 2008.
• Temporary increase in mortgage revenue bond authority to allow for the issuance of an additional $11 billion of tax-exempt bonds to refinance subprime loans, provide loans to first-time homebuyers and to finance the construction of low-income rental housing.
• Temporary increase in low-income housing tax credit and simplification of the credit to help put builders to work to create new options for families seeking affordable housing alternatives.
• The cost of the bill (except for the Fannie Mae/Freddie Mac provisions) is fully offset with a tax compliance provision from the President’s Budget (requiring credit card companies to report more information to the IRS about credit card transactions) and by delaying the effective date of a tax benefit for multinational companies that has not yet taken effect.

Debt Limit Increase

• Increases the debt limit to $10.6 trillion, as requested by the Bush Administration.  This $800 billion increase is identical to provision the House automatically passed as part of the budget resolution conference report.  The Senate has not yet enacted this provision, which is critical to ensure that the federal government can effectively manage its finances through next year.

Oh, And Then There’s That One Part….

The one thing that happens to be overlooked in this summary is the elimination of down payment assistance.  I mentioned yesterday how that would really impact things.  My opinion hasn’t changed.  If you’re on the fence, you better get off.  You (potentially) have until October 1st, 2008 to close on a home.  Again, POTENTIALLY.  I still have many questions and too few answers on how lenders will handle everything.

Still Two Steps Left

The bill is still being discussed at the Senate level.  There have already been many, many ammendments to the bill.   Once it passes the Senate, it goes to President Bush for his signature.  Bush has already commented that he would now (before he was planning on a Veto) sign the bill into law.

How Does This All Work?

Just for a refresher on how a bill comes a law, here’s an oldie but a goodie: