President Bush's housing bill- What you need to know!

As many of you may have already heard, President Bush signed into law the Housing Bill that had been greatly debated in the House and Senate. There are a lot of details of the law that will ultimately affect how lenders can originate loans, but here are some bullet points as an overview that may help you. Many lenders are sending are us emails saying: “IF YOU HAVE BUYERS ON THE FENCE THAT NEED DOWN PAYMENT ASSISTANCE, GET THEM UNDER CONTRACT NOW!”
Here is what you need to know:

• Down Payment Assistance (DPA) programs such as Ameridream & Nehemiah have been eliminated. All loans with this type of DPA must be fully credit approved PRIOR to October 1, 2008. There is NO grace period. So if a buyer has a price change, an increase in an interest rate, employment change, incentive change, etc after 9/30/08 and they have DPA on their FHA loan, they WILL NOT be able to close with DPA. FHA buyers may still obtain a gift for their down payment, but it cannot come from any seller funded DPA programs. Gifts from family members & bond programs are still acceptable.


• Current FHA loan limits are still in place but must have their full credit approvals by December 31, 2008. The new FHA loan limits for Maricopa & Pinal counties will be based on 115% of the median sales price at that time or $271,050, whichever is less. Stay tuned for this update near the end of the year.

• The minimum FHA down payment is increasing from 3% to 3.5%. The effective date on this increase has not yet been determined, but it is estimated that it will be within the next 6 months.

• Conforming loan limit will remain at $417,000 and will NOT fall below this amount even if home prices continue to decline.

• The upfront MIP (UFMIP - the amount that gets financed in to the loan amount) will be increasing from 2.25% to 3%. The effective date of this change is yet to be determined, but will probably occur within the next 6 months.

• First time home buyers will be eligible for a tax credit up to $7500 for the 2008 tax year, however, if elected to use this credit, it also must be re-paid through their subsequent taxes over the next 15 years.

We will keep you posted on any other changes!


The Twins :)