Jul 29 2008
Some Highlights of the New Federal Housing Bill
In case you missed it, part of the Fannie Mae/Freddie Mac bailout included some measures that will affect buyers and homeowners.
- A $7,500 tax credit for first-time homebuyers - note that this is based on 10% of the sale price, up to a maximum credit of $7,500. However, don’t get too excited - this money is more of a loan, in that it will have to be paid back over the course of 15 years. But at least it’s interest-free. This will apply to home purchases made between April 9, 2008 and July 1, 2009.
- A tax deduction for homeowners who don’t itemize deductions on their income tax returns - estimated deductions will be between $500 and $1,000.
- Higher limits on mortgages insured through Fannie Mae and Freddie Mac - up to $625,000 beginning January 1, 2009. The current temporary limit of $729,750 will stay in effect until the end of this year.
- Mortgage refinancing for distressed homeowners - allows homeowners facing foreclosure to apply for lower fixed-rate mortgages backed by the FHA. However, the original lenders would have to agree to potentially take a loss on their loans.
On the darker side of all this are provisions in the 600+ page bill that will require the fingerprinting of mortgage loan originators (broadly interpreted to include anyone who takes a mortgage loan application) and the requirement for payment systems nation-wide to report online transactions to the IRS. This includes eBay’s PayPal, Amazon.com, and Google Checkout, as well as the major credit card companies.
Some bloggers (you can Google the topics) are questioning these provisions, especially wondering what that last one is doing in a housing bill.
Based on some research I did, it does not appear that either of these provisions will be removed from the bill when it is finally signed by President Bush.
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