Newly signed Bill and how it relates to the Housing Market

On February 13, 2009, The “American Recovery and Reinvestment Act of 2009,” passed the House and later that day the Senate also passed the bill . The President signed the bill on February 17, 2009.
The bill is a $780 billion package, with roughly 35% of the package devoted to tax cuts (mostly for 2009) and the rest to spending intended to occur in 2009 and 2010.
Congress and the President have announced that a finance and housing package (including tax provisions) will be the next “big” initiative, so Congress has by no means finished its work as it affects the housing industry.

Following are some of the key points included in the Bill that affect the housing industry.

Homebuyer Tax Credit – The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
This approved credit is much less that the $15,000 tax credit that the senate had approved but is slightly higher than the previous $7,500. This tax cut did will only be available to first time home buyers and not to all homebuyers as originally hoped for.

FHA, Fannie Mae and Freddie Mac Loan Limits -The bill reinstates last year's 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans. These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750. For the few areas where the 2009 limits were higher, the higher limits will apply. In addition, the bill includes language providing the HUD Secretary with the discretion, if warranted, to increase the loan limit for any “sub-area”, i.e.an area smaller than a county. The Secretary's discretion is again limited by the $729,750 cap. These 2009 limits will expire December 31, 2009.

New FHA loan limit for San Diego County is $697,500. To check out the loan limits in any other speceific area go to http://www.realtor.org/wps/wcm/connect/059cbe004d06bea1b71ff7e634190075/government_affairs_2009_limits_arra.pdf?MOD=AJPERES&CACHEID=059cbe004d06bea1b71ff7e634190075


Neighborhood Stabilization – Division A, Title XII of the bill provides $2,000,000,000 in additional funding for the Neighborhood Stabilization Program (NSP). The NSP was created by the Housing and Economic Recovery Act of 2089 (Public Law 110–289) to provide grants through the Community Development Block Grant program (CDBG) to states and localities to address the problems that can be created when whole neighborhoods are decimated by foreclosures. The funds can be used to purchase, manage, repair and resell foreclosed and abandoned properties. In addition, the funds can also be used by states and localities to establish financing methods for the purchase and redevelopment of foreclosed properties. After purchase the homes must be used to assist individuals and families with incomes at or below 120% of area median income. Twenty-five percent of funds must be used for households with incomes at or below 50% of area median income.

For more information on this or any other questions please contact me through this blog.

Go have a great day!

Rina Podolsky
Realtor


Most of this information comes from NAR official website.