Housing and Economic Recovery Act of 2008

How will the law help struggling homeowners?

Borrowers can refinance via the FHA into a more-affordable mortgage if their lender will voluntarily reduce a mortgage for at-risk homeowners to a maximum of 90% of the property's current value.

When will the law be in effect?

The program begins on October 1, 2008 and is scheduled to end on September 30, 2011.

Who is Eligible?

How can you access this new program?

The homeowner or servicer of the current loan must use an FHA-approved lender. If the current lender agrees to write down the loan to make it more affordable, the FHA lender will pay off the existing mortgage and help create a new 30-year Fixed mortgage loan.

Is it mandatory for lenders to participate and help you out?

No.

How will the law help neighborhoods?

The law strengthens neighborhoods hit by the foreclosure crisis by providing 3.9 billion in Community Development Block Grants to help stabilize the market through the purchase of foreclosed homes.

Will this law become a bailout?

No. This law is specifically tailored to only assist people who live in their own homes. Lenders must agree to waive penalties, fees, and help pay for origination and closing costs. The FHA will also recover some of the future profits, to make sure the government recovers it's investment over the long-term.

Will the law reward families who bought homes they could not afford?

No, but it will assist in the prevention of unfair lending practices by creating a national licensing and registration system for all loan originators, setting minimum standards for all brokers and lenders to meet. Disclosure forms will also be strengthened. All of this is designed to prevent future abuses and ensure that borrowers understand their mortgage loan terms.

How will the law make it more affordable to own a home?

Does the law help low-income renters?

Yes. There are provisions to help create and maintain low-income housing in all areas.