Thursday, May 28, 2009

Obama Signs Bill to Help Families Refinance Mortgages

From NAHB:

President Barack Obama last week signed into law legislation that will help struggling borrowers refinance into 30-year, fixed-rate mortgages insured by the Federal Housing Administration.

S. 896, the Helping Families Save Their Homes Act of 2009, received strong bipartisan support in both chambers of Congress. The measure cleared the Senate earlier this month by a vote of 91 to five and passed the House by a comfortable 338 to 52 margin on May 18.

The newly enacted law will revamp the Hope for Homeowners program to permit the reduction of excessive fee levels, provide greater incentives for mortgage servicers to engage in modifications under the program and reduce administrative burdens to loan underwriters. The aim is to make it easier for strapped home owners to refinance into more affordable loans.

Omitted from the final bill was a controversial “cramdown” provision to allow bankruptcy judges to modify the terms of mortgages on a primary residence.

The newly enacted law will increase the Federal Deposit Insurance Corporation's line of credit from the U.S. Treasury to $500 billion through 2010 and $100 billion thereafter. In addition, the higher FDIC deposit insurance coverage limit of $250,000 per account was extended through Dec. 31, 2013 after which it will revert back to $100,000.

The legislation contains a provision of concern to NAHB that would require investors who are buying foreclosed properties to allow Section 8 renters to remain in the property for up to one year. NAHB had sent a letter to Congress questioning the fairness of this requirement.

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