Friday, July 11, 2008: The U.S. Senate passed a housing stimulus bill today. Among other things the bill increases the Low Income Housing Tax Credit, which supports building affordable rental housing for low income families.
The bill also creates a new regulator for Fannie Mae and Freddie Mac, while at the same time removing some of the more draconian measures which would have severely limited those Government Sponsored Enterprises from purchasing mortgage loans.
The Senate, probably wisely, barred zero-down (100% loan-to-value) mortgages from being purchased by Fannie and Freddie. The recent trend of foreclosures has been three times higher with 100% financing than with loans with a down payment. In fact, the new bill raises the minimum down payment to 3.5% from the previous 3%.
This provision will affect down payment programs like Nehemiah and AmeriDream, which helped hundreds of thousands of low income families achieve the American dream of home ownership through seller-financed down payments. That said, in today's credit climate it probably makes good sense not to subsidize 100% financing.
The bill now goes to the House of Representatives.
Brian Schulman offers expert real estate representation to Lancaster County, PA home buyers and home sellers. To learn more, visit http://www.FindLancasterHomes.com/
Brian Schulman offers expert real estate representation for buyers and sellers of homes in Lancaster County, PA. To learn more, visit http://www.FindLancasterHomes.com/
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