Foreclosure Prevention Act of 2008
Last April the Senate proposed legislation to prevent foreclosure from happening so quickly. Here are some benefits of the Act:
FHA Modernization – Ensures that more families can access the FHA program which provides safe, fixed-rate mortgages. The FHA loan limit under this bill is increased from 95% to 100% of median home prices with a cap of 132% of GSE limit. Downpayments of 3.5% are required for FHA loans and counseling requirements are enhanced to provide a stable homeownership.
Assisting Communities – Vacant foreclosures can pose a problem to neighboring home values, crime and disinvestment. $4 billion is provided to communities hit hardest by foreclosures and delinquencies. The funds will be used to purchase foreclosed homes at a discount, rehabilitate and redevelop the homes to stabilize neighborhoods.
Providing Pre-Foreclosure Counseling – To help families avoid foreclosure, the bill has provided $100 million in additional funding for housing counseling and will be distributed by the Neighborhood Reinvestment Corporation by the end of 2008.
Enhancing Mortgage Disclosure – The bill requires disclosures be provided no later than 7 days prior to closing so borrowers can shop for another loan if not satisfied with the terms.
Preserving the American Dream for Veterans – To assist returning soldiers avoid foreclosure, the bill lengthens the time a lender must wait before starting foreclosure from 3 to 9 months after the soldier has returned.
Standard Property Tax Deduction – To give tax relief to everyone, the bill provides a standard deduction of $500 to single filers and $1,000 for joint filers for non-itemizers who pay property taxes.
Mortgage Revenue Bonds – To provide refinancing of subprime loans for first time homebuyers and multifamily rental housing, the bill exempts interest earned on the bonds from the alternative minimum tax.
Extension of Net Operating Loss Carryback – To aid homebuilders and other businesses hit hard, the bill will extend a law allowing corporations to apply excess net operating losses to tax returns from prior profitable years and receive refunds.
Tax Credit for Purchase of Homes in Foreclosure – The bill gives a $7,000 tax credit to buyers who purchased homes of foreclosures and to be claimed over 2 years. Since foreclosures bring down neighborhood property values, purchasing a foreclosure will restore property values for homeowners in the area.
