Senate Passes Financial Reform Bill
May 21, 2010
The Senate on Thursday approved the most extensive overhaul of the banking system since the 1930s.
The legislation must still be reconciled with the House bill passed in December.
Measures in both bills that directly affect property transactions include:
Limits on the ability of mortgage lenders to penalize borrowers who pay off loans early.
Source: The New York Times, Gregg Hitt and Damian Paletta (05/20/2010
Stated-income loans would be effectively eliminated.
Lenders would be required to obtain proof from borrowers that they can pay for their mortgages. Buyers would be required to provide tax returns, payroll receipts, or bank documents.
Lenders and brokers will be prohibited from pushing borrowers to accept loans with higher interest rates or with risky features.
Stockton, July 30, 2008
This morning President Bush signed the "Housing and Economic Recovery Act of 2008." For the past several years, C.A.R. and the
NATIONAL ASSOCIATION OF REALTORS® have aggressively lobbied for Congress to pass numerous provisions found in this historic bill. Many of you participated in these efforts by communicating with your Members of Congress.
The California Association of Realtors wishes to thank all of you who responded to these Calls-for-Action. These efforts have made a difference. This federal housing bill is a significant move in the right direction for California homeowners. It will aid in stabilizing our economy and help stem foreclosures, while also providing support to first-time homeowners.
The legislation 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.
The bill permanently increases the conforming loan limit to $625,500. C.A.R. has long advocated for higher conforming loan limits. 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.
Although C.A.R. would have liked Congress to make permanent the current $729,750 loan limit, C.A.R. is pleased with the new permanent loan limit of $625,500. It will allow California homeowners to
refinance their loans into safe affordable loan products and allow first-time home
buyers to enter the
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.
C.A.R. also supports the following bill provisions:
A temporary increase in mortgage revenue bonds to refinance
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
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.
Other provisions in the legislation:
The Treasury Department’s proposal to create a federal backstop program to insure the financial well-being of Fannie Mae and Freddie Mac.
The FHA’s inability to insure loans that utilize a seller-funded down-payment assistance program.
Down-payment assistance from family, employers and other nonprofits is still allowed.
The Community Development Block Grant Programs’ $4 billion allotment for communities to purchase and refurbish foreclosed homes.
C.A.R. wishes to thank those California Members of Congress who supported the bill:
Senator Barbara Boxer, Senator Diane Feinstein, and Representatives Joe Baca, Xavier Becerra, Howard Berman, Mary Bono Mack, Ken Calvert, John Campbell, Lois Capps, Dennis Cardoza, Jim Costa, Susan Davis, David Dreier, Anna Esho, Sam Farr, Bob Filner, Elton Gallegly, Jane Harman, Mike Honda, Duncan Hunter, Barbara Lee, Jerry Lewis, Zoe Lofgren, Dan Lungren, Doris Matsui, Howard "Buck" McKeon, Jerry McNerney, Gary Miller, George Miller, Grace Napolitano, Nancy Pelosi, Laura Richardson, Lucille Roybal-Allard, Linda Sanchez, Loretta Sanchez, Adam Schiff, Brad Sherman, Hilda Solis, Jackie Speier, Pete Stark, Ellen Tausher, Mike Thompson, Maxine Waters, Diane Watson, Henry Waxman and Lynn Woolsey.
"Used with permission from The California Association of Realtors."
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