House Bill HR3221 Summery

House Bill HR3221 Summary
Limits subject to change without notice. Subject to FHA qualifications.

(Source: Mortgage Bankers Association Press Release 7/28/2008)
This week, President Bush signed Federal Housing Bill HR3221.
This is a summary of some of the items included in that bill and how it will affect consumers.

LOW INCOME AND AFFORDABLE HOUSING: Encourages
the development of low-income and affordable housing by
harmonizing multi-family FHA mortgage insurance programs
with the low income housing tax credit. Allowing these two
programs to work together will result in more effective uses of
both programs.

GOVERNMENT SPONSORED ENTERPRISE BACKSTOP: Authorizes
the Treasury Secretary to temporarily increase the GSEs’ line
of credit and to, if necessary, buy equity in the GSEs in order to
provide confidence to credit markets. Also provides a role for
Treasury and the Federal Reserve in GSE oversight to ensure safety
and soundness.

TRUTH IN LENDING ACT REFORM: Requires TILA disclosures
to be delivered seven days prior to loan closing, requires that
disclosures include examples of how payments would change
based on rate adjustments in addition to disclosing the maximum
possible payment under the loan terms and mandates that the
consumer receive early disclosures before paying anything more
than a nominal fee that covers the cost of a credit report.
EMPOWERING STATES: Raises the cap by $11 billion on tax-free
bonds that state housing finance agencies may use to help at-risk
homeowners by refinancing troubled loans and appropriates
$4 billion for states to purchase and renovate abandoned and
foreclosed properties.

LICENSING: Encourages state officials to create a national
licensing system for residential loan originators, allows HUD
to create its own national licensing system if the states fail,
establishes minimum qualifications for all loan originators and
requires federal regulators to create a registry for banks and thrift
employees who originate loans.

FHA CHANGES INCLUDE: Modernization: $25 million
appropriation to improve technology, processes, program
performance, eliminate fraud and provide appropriate staffing.
LOAN LIMITS: Effective January 1, 2009, it also increases the
FHA loan limit to the lesser of 115 percent of the local median
home price or $625,500 with a floor for lower priced markets
of $271,000, establishes a 12-month stay on FHA’s proposal for
risk-based premiums, sets the down payment requirement at 3.5
percent and prohibits seller-funded down payment assistance
(both direct or through a third party).

GSE (Government Sponsored Enterprise) OVERSIGHT REFORM: A
new regulatory position is created (five-year term, appointed by
the President, confirmed by the Senate) with oversight authority
similar to that of bank regulators. This person establishes a new
affordable housing fund and capital magnet fund to be funded
by a 4.2 basis point fee on all new loans, significantly changes the
affordable housing goals and raises the conforming loan limit to
the higher of $417,000 or 115% of the local median home price,
not to exceed $625,500 (effective January 1, 2009).

FHA RESCUE: Creates a voluntary program for lenders to lower
the loan balance in exchange for an FHA guaranteed loan not
to exceed 90 percent of the newly appraised value of home. The
lender pays a 3 percent FHA loan origination fee. To qualify, the
borrower must have a debt-to-income ratio above 31 percent on
the original loan. Program is capped at $300 billion.

TAX INCENTIVES: Creates a $7,500 refundable tax credit for firsttime
homebuyers. Expands the volume cap for the low-income
housing tax credit. Allows for tax-exempt treatment of bonds
guaranteed by the Federal Home Loan Banks and exempts the
low income housing tax credit from the alternative minimum tax.
Ask Your Axiom Mortgage Consultant about this information and other
government sponsored lending programs for your clients.