For Better or Worse

The Housing bill is now close to passage. The Senate is about ready to approve their version and the House is planning for conference committee meetings to reconcile differences between their version and the Senate’s version. The President is indicating that he is leaning toward approval, even though he has reservations about certain elements of the bill.

What does it all mean? Opinions on the bill range from “we should do nothing and let the market self-correct” to “it is a gigantic bailout for reckless lenders and borrowers” to “it is probably not enough and we will need to do more.” The fact is that there is no one right answer or solution.

The major provisions of the bill are:

1) A key element would allow for “qualified” homeowners to refinance their existing loans (in their primary residence) to a new 30 year fixed rate mortgage with the federal guarantee. The lender would have to agree to reduce the balance of existing loans as a precondition of the refinance.
2) Another provision would allow first time borrowers to a refundable tax credit of up to $8000 or 10% of the value of a home on unoccupied housing.
3) The bill would also allow a permanent increase from $417,000 to $625,000 loan limits that Fannie and Freddie can finance on jumbo loans.


As more information on the bill becomes available, we will pass it on to you.