Bush signs $300 billion Housing and Economic Recovery Act
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President Bush has signed the Housing and Economic Recovery Act after the US House of Representatives had passed the plan on 07/23. It provides aid to homeowners facing foreclosure and protects the country’s two largest mortgage finance companies from collapse.
Fannie Mae and Freddie Mac guarantee almost half the country’s $12 trillion in home mortgage debt. Over a million people have lost their homes in the worst housing crisis since the Great Depression.
The assistance includes broad authority for the Treasury Department to protect the nation’s two largest mortgage finance companies from collapse. It expands a line of U.S. Treasury credit for the companies, and gives the government the option to take equity stakes if they ran into trouble.
For home owners in trouble, the new law launches a $300 billion government initiative to refinance troubled mortgages. It also expands the number of families Fannie Mae and Freddie Mac (the enterprises) can serve by raising the loan limits in high cost areas (areas with median house prices that are higher than the regular conforming limit) to 150% of the conforming loan limit. Currently, this would be $625,000.
The full summary of the public release notice is available for download.
