Silicon Valley Realtors hailed the president's signing of the Housing and Economic Recovery Act of 2008 (H.R. 3221) last week, and said it will be give the state's housing market the shot in the arm it needs.
The Housing and Economic Recovery Act of 2008 will assist an estimated 400,000 homeowners facing foreclosure, many of whom reside in California, by allowing them 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.
Realtors welcomed the passage of the landmark bi-partisan housing legislation. For the past several years, the California Association of REALTORS® and the National Association of REALTORS® have aggressively lobbied for Congress to pass numerous provisions found in this historic bill.
"This action shows government at its best," said Julia Keady, president-elect of the Silicon Valley Association of REALTORS®. "The federal housing bill will provide stability in our economy and help boost home buyer confidence. It will also help many deserving homeowners who are facing foreclosure keep their homes."
Keady, who is a Realtor with Alain Pinel Realtors in Palo Alto, said although Realtors would have liked Congress to make permanent the current $729,750 loan limit, they are pleased with the new permanent loan limit of $625,500. In February, the Economic Stimulus Act of 2008 was signed, temporarily raising the conforming loan limit in high-cost areas to $729,750 from $417,000 until December 31, 2008.
"For high cost areas like California, the new permanent loan limit of $625,500 will enable California homeowners to refinance their homes and allow first-time home buyers to enter the market," Keady said.
The new loan limits for Fannie Mae and Freddie Mac are the greater of either $417,000 or 115 percent of an area's median home price, up to $625,500. The new FHA loan limit will be the greater of $271,050 or 115 percent of an area's median home price, up to $625,500. Both new loan limits will be effective at the expiration of the economic stimulus limits on December 31, 2008
Realtors also support the following bill provisions:
• A temporary increase in mortgage revenue bonds to refinance subprime mortgages.
• New regulator for Government Sponsored Enterprises to restore investor confidence in GSE loans and help the market and economy stabilize.
• First-time home buyer tax credit, which allows first-time home buyers to receive a tax refund worth up to 10 percent of a home's purchase price, up to a maximum of $7,500. The refund serves as an interest-free loan and the homeowner is required to repay it in equal installments over 15 years.
• Temporary raise in the loan limit for the Veterans Affairs home loan guarantee program to the same level as the economic stimulus limits until the end of 2008.
• Adjustment to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), allowing sellers to provide the non-foreign affidavit to a qualified closing entity and not just the buyer.
• The setting of minimum requirements for mortgage originators, which mandates fingerprinting of loan originators and establishes a nationwide loan originator licensing and registration system. The requirements do not apply to those only performing real estate brokerage activities unless they are compensated by a lender, mortgage broker, or other loan originator. States will have the ability to implement more stringent laws.
• The creation of a National Affordable Housing Trust Fund to help cover the cost of the FHA rescue plan for the first five years and develop affordable housing in subsequent years.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.