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Approximately 400,000 Americans are expected to benefit from the “Housing and Economic Recovery Act of 2008,” which President Bush yesterday signed into law. One of the most significant provisions of the bill is that it allows homeowners facing foreclosure to refinance their current mortgages with a Federal Housing Administration (FHA)-backed loan. The bill also will permanently increase FHA, Fannie Mae, and Freddie Mac loan limits in high-cost areas. Additionally, the legislation requires lenders to show how high a borrower’s payment could get under the terms of a new mortgage and provides $180 million in pre-foreclosure counseling for struggling homeowners. A low-income housing tax credit is also expanded and first-time home buyers will receive a tax credit of up to $7,500 for homes purchased between April 9, 2008 and July 1, 2009. The credit serves as an interest-free loan and the homeowner is required to repay it in equal installments over 15 years.
