What’s Really in the Housing Bill?
Wednesday, August 6th, 2008Congress passed the “Housing and Economic Recovery Act of 2008” and President Bush signed the legislation July 30, 2008. The bill, which can be read in it’s entirety at
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h3221eas2.pdf
establishes the Federal Housing Finance Agency.
The newly created agency is an independent agency of the Federal Government with authority over the Federal National Mortgage Agency (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal Home Loan Banks and Office of Finance. The Director will be selected by the President with the consent of the Senate and serve for a five year term.
A Federal Housing Oversight Board is created consisting of the Secretary of the Treasury, the Secretary of the Department of Housing and Urban Development, the Chairman of the Securities and Exchange Commission, as well as the Director. The Board reports to Congress not less than once every three months. An Ombudsman will be appointed by the Director to hear complaints and appeals.
Oversight guidelines and standards will be created by the new Agency including regulation of capital requirements, portfolio monitoring, reporting fraudulent loans, compensation, and golden parachutes.
Section 1124 increases the Fannie Mae and Freddie Mac conforming loan limits to $417,000 for a single family home, $533,850 for a two family home, $645,300 for a three family home and $801,950 for a four family home.
Each year, housing prices will be adjusted according to an index determined by the Director of the Federal Housing Finance Agency. If the index shows a decrease in value, no adjustment will be made.
In areas of higher property values, the amount will be adjusted to the lesser of 150% of the limit or an amount equal to the median price of that type of housing within that area.
The annual housing price index will be determined by annual housing reports which contain; demographic information, types of loans, creditworthiness of borrowers, loan to value ratios including second liens, race, gender, income levels, underserved markets, and the purchase price of the property. Comparision of characteristics of all loans including sub prime and jumbo loans will be included.
The Director will report by October 30 the the Committee on Banking, Housing and Urban Affairs in the Senate and the Committe on Financial Services in the House to apprise legislators as to how Fannie Mae, Freddie Mac, the federal home banks and the Office of Finance are achieving the goals set forth by the housing goals of this legislation.
Next: Housing Goals- Low Income, Very Low Income, Families residing in Low Income Areas
