Housing and Economic Recovery Act of 2008

The Housing and Economic Recovery Act, signed on July 30, 2008, will begin on October 1, 2008. The act is geared to help an estimated 400,000 home borrowers that are in danger of losing their homes to foreclosure. The benefits will stimulate the economy and community growth across the country.

What is the Housing and Economic Recovery Act and how will it help you? The following explains how you can access the new program and possibly save you home.

How the Act Benefits You

Re-financing benefits will be offered via government insured mortgages. This will be offered to participating lenders who will voluntarily reduce mortgages for at-risk borrowers. It will reduce to at least 90% of the current value of the home. Tax credits that work like interest free loans will be offered in addition to other tax benefits.

Time Span

The program will run from October 1, 2008 through September 30, 2011. You can begin contacting lenders immediately to learn if they will be participating in the new program. If the lender is participating, you can begin applying for the federally insured mortgages.

Eligibility

In order to participate in the program you must meet the following criteria:

• You must be a primary resident of your home. The program does not apply to home buyers that have purchased homes as investment property or own more than one home.
• Your monthly mortgage payment must be greater than 31% of your total monthly income. This is as of March 1, 3008.
• You must not have intentionally defaulted on an existing mortgage or have obtained a loan under fraudulent circumstance. In addition, you can not have any conviction of fraud.

Accessing the Program

You will need to contact an FHA (Federal Housing Administration) approved lender. You will work with the lender to determine the size of loan that will fit your financial situation. The loan will be a 30-year fixed rate loan.

Understandable Loan Information

In order to avoid misleading a borrower, the law has set forth a nationwide originators licensing and registration system. This system sets standards for brokers and lenders. It requires that mortgage disclosures be understandable to the potential borrower. It is important to note that lenders are not required to participate. When you start investigating a potential lender, be sure to ask if they will be participating in the Housing and Economic Recovery Act. When searching for a lender, it is important to investigate the lenders who will be participating. Finding the right lender who is participating in the new program will help you in maintaining an affordable loan, and potentially avoid a foreclosure to your home.