The Mortgage Report

Act Will Help, But How Much?

The Housing and Economic Recovery Act of 2008, passed by the house and expected to be approved by the Senate and signed by the president, is designed to stimulate the housing market by providing first time homebuyers with a $7,500 tax credit. As I understand it, first time homebuyers (defined is someone who hasn't owned a home in the last three years) will get a credit on their tax bill of $7,500. Actually it's an interest free loan, since the money is then repaid over a period of fifteen years, but hey, interest free loans with long term payback are usually good things.

The act also is designed to encourage delinquent mortgage borrowers to refinance their homes using FHA mortgage loans. This gets a little more complicated, in that it may require current mortgage holders to accept less that they are owed (which they may decide they aren't ready to do), but it does ease the credit requirements that would normally preclude such a refinance.

There are also provisions in the act that shore up Fannie Mae and Freddie Mac, the two quasi-governmental agencies that facilitate the funding of mortgage loans.

These measures will surely promote some improvement in the real estate market by making it more attractive for first timers to get into a home and reducing the number of foreclosures coming into an already flooded market.

Carl Trawick is a Mortgage Specialist and Licensed Mortgage Broker with the firm Access e*Mortgage. He can be reached at 904-343-1145 or ctrawick@nefcom.net