Whether your company supplies materials to the building industry or has simply been affected by the overall downturn in the economy caused, in part, by the housing crisis, the new housing legislation signed today by President Bush is certainly cause for hope. “This milestone bill contains several provisions to get home buyers back into the marketplace, stop the slide in home prices, provide a lifeline to borrowers facing foreclosure, improve mortgage liquidity, and bolster confidence in Fannie Mae and Freddie Mac,” said Sandy Dunn, president of the National Association of Home Buildings (NAHB, www.nahb.org
) and a home builder from Point Pleasant, W.Va. “We commend Congress and the President for taking this action to provide much-needed relief to the American people.”
According to the NAHB, “key elements of H.R. 3221, the Housing and Economic Recovery Act of 2008, include:
- A temporary first-time home buyer tax credit. The tax credit will stimulate home buying, reduce excess supply in housing markets and shore up home prices.
- FHA modernization and expansion. A revitalized FHA will have greater flexibility to respond to the needs of borrowers, enable more working families to become home owners and play an important role in the mortgage markets. To address the foreclosure crisis, the FHA is given additional authority to insure up to $300 billion of mortgages to refinance loans headed for foreclosure.
- GSE (government-sponsored enterprise) reform. The law reforms the regulation of Fannie Mae and Freddie Mac and permanently increases the conforming loan limit to help buyers in high-cost markets. To reassure financial and global markets, the government will temporarily expand its line of credit to Fannie and Freddie and permit the U.S. Treasury to purchase an equity stake in the companies through the end of 2009.
- Mortgage Revenue Bond Program. The measure gives states the ability to issue an additional $11 billion in mortgage revenue bonds, which will help strapped borrowers seeking to refinance their home loans.
- Low Income Housing Tax Credit. Enhancing this program will expand the supply of much-needed affordable rental housing.
I don’t think anyone expects this legislation to stop the current economic crisis in its tracks, but hopefully it’s a big step in the right direction.