FANNIE MAE, FREDDIE MAC, AND FHA REFORM
The new law
permanently sets
the conforming
loan limit for
FHA and
government-sponsored
enterprises (GSE)
Fannie Mae and
Freddie Mac at
115% of an
area's median
home price, not
to exceed
$625,500. The
new loan limits
take effect
after the
current $729,750
loan limit
expires on
December 31,
2008.
The new law
also authorizes
the Treasury
Department to
bail out Fannie
Mae and Freddie
Mac if necessary
by increasing
their lines or
credit or
purchasing their
stock. A new
governmental
agency, the
Federal Housing
Finance Agency,
will be created
to oversee GSE
operations.
Other FHA reform
includes an
increase in the
minimum down
payment
requirement from
3% to 3.5%, and
effective
October 1, 2008,
the elimination
of seller-funded
down payment
assistance
programs.
Some of the
other provisions
of the new
Housing Act are,
without
limitation, $4
billion in
assistance to
stabilize
neighborhoods
hurt by the
foreclosure
crisis, $180
million for
pre-foreclosure
counseling, Home
Equity
Conversion
Mortgage (HECM)
reverse mortgage
reform,
assistance for
veterans, and
the creation of
a nationwide
loan originator
licensing and
registration
system. The
appropriate
governmental
agencies will
establish new
regulations as
needed to carry
out and enforce
the new Housing
Act.
