The government is beginning to step in and help out with the housing market, even if some areas don’t need the help.  We saw it last week with the help of struggling Fannie Mae and Freddie Mac, and we see it this week with the passing of the Housing Rescue Bill.

What exactly does the Housing Rescue Bill do?

The Senate on Saturday overwhelmingly passed a landmark housing bill that will offer up to $300 billion in loans for troubled homeowners and establish a government rescue plan for mortgage finance giants Fannie Mae and Freddie Mac.

• The FHA will be allowed to insure up to $300 billion in new 30-year fixed-rate mortgages for at-risk borrowers in owner-occupied homes if their lenders agree to write down loan balances to 90% of the homes’ current appraised value. (will lenders be willing to do this?)
• The bill would permanently increase the conforming loan limits to a maximum of $625,500 from $417,000. (these amounts are higher in Hawaii)
• The bill includes a tax refund for first-time home buyers worth up to 10% of a home’s purchase price but no more than $7,500.
• The bill eliminates a program that has allowed sellers to provide down payment assistance.
• The bill would also increase to 3.5% from 3% the down payment requirement for borrowers getting FHA loans.
• The bill would grant $4 billion to states to buy up and rehabilitate foreclosed properties.The funding had been opposed by the White House, which said it would benefit lenders and not homeowners.  (Great! Just what we need, State Owned Housing. They have been screaming for more “Affordable Housing”.  Maybe they will do it with the taxpayer money this way? Hope your neighbor doesn’t foreclose.)

Any thoughts?  You first time homebuyers could have a nice benefit there.  Especially if you qualify for an FHA loan as well as qualify for the tax credit.