President Signs Housing Bill

Bush signs housing bill to provide mortgage relief
By JENNIFER LOVEN, Associated Press Writer1 hour, 55 minutes ago
President Bush on Wednesday signed a massive housing bill intended to provide mortgage relief for 400,000 struggling homeowners and stabilize financial markets.
Bush signed the bill without any fanfare or signing ceremony, affixing his signature to the measure he once threatened to veto, in the Oval Office in the early morning hours. He was surrounded by top administration officials, including Treasury Secretary Henry Paulson and Housing Secretary Steve Preston.
"We look forward to put in place new authorities to improve confidence and stability in markets," White House spokesman Tony Fratto said. He said that the Federal Housing Administration would begin right away to implement new policies "intended to keep more deserving American families in their homes."
The measure, regarded as the most significant housing legislation in decades, lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than losing their homes.
It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae and Freddie Mac and tightens controls over the two government-sponsored businesses.
The House passed the bill a week ago; the Senate voted Saturday to send it to the president.
Bush didn't like the version emerging from Congress, and initially said he would veto it, particularly over a provision containing $3.9 billion in neighborhood grants. He contended the money would benefit lenders who helped cause the mortgage meltdown, encouraging them to foreclose rather than work with borrowers.
But he withdrew that threat early last week, saying hurting homeowners could not wait — and even blaming the Democratic Congress' delays in action for forcing an imperfect solution.
Meanwhile, many Republicans, particularly those from areas hit hardest by housing woes, were eager to get behind a housing rescue as they looked ahead to tough re-election contests. Paulson's request for the emergency power to rescue Fannie Mae and Freddie Mac helped push through the measure. So did the creation of a regulator with stronger reins on the government-sponsored companies, as Republicans long have sought.
Democrats won cherished priorities in the bargain: the aid for homeowners, a permanent affordable housing fund financed by Fannie Mae and Freddie Mac, and the neighborhood grants.
The bill takes several approaches to curing the ailing housing market.
It aims to spare an estimated 400,000 debt-strapped homeowners, many of whom owe more their houses are worth, from foreclosure by allowing them to get more affordable mortgages backed by the Federal Housing Administration.
The FHA could insure $300 billion in such mortgages, which would be available to homeowners who showed they could afford a new loan. Banks would first have to agree to take a large loss on the existing loans in exchange for avoiding an often-costly foreclosure.
The plan also is designed to relieve a broader credit crunch that has taken hold because of rising defaults and falling home values. To free up safer and more affordable mortgage credit, the bill permanently would increase to $625,000 the size of home loans that Fannie Mae and Freddie Mac can buy and the FHA can insure. They also could buy and back mortgages 15 percent higher than the median home price in certain areas.
It goes far beyond addressing the current crisis, however.
The legislation overhauls the Depression-era FHA. It requires lenders to show how high a borrower's payment could get under the terms of his mortgage. It provides $180 million in pre-foreclosure counseling for struggling homeowners.
The Treasury Department gains unlimited power, until the end of 2009, to lend money to Fannie Mae and Freddie Mac or buy their stock should they need it. The Federal Reserve takes on a new "consultative" role overseeing the companies.
The measure includes $15 billion in tax cuts, including a significant expansion of the low-income housing tax credit and a credit of up to $7,500 for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.
Democratic leaders, recognizing that the measure could be one of the last items to become law during what's left of their abbreviated election-year schedule, tacked on an $800 billion increase, to $10.6 trillion, in the statutory limit on the national debt.
Conservative Republicans were vehemently opposed to the bill, particularly the help for Fannie Mae and Freddie Mac. Critics charge the companies enjoy lavish profits in good times and wield their outsized political clout to resist regulation while depending on the government to bail them out should they falter.

HR 3221

HR 3221, the Housing and Economic Recovery Act of 2008 National Association of REALTORS® Summary (as of 7/24/08)
H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23rd by a vote of 272-152. The Senate must now approve the language adopted by the House. The Senate is expected to approve the bill on Friday, July 25th or Saturday, July 26th. The President has said he will sign the bill. It includes: GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision does will be effective from October 1, 2008 through September 30, 2009.GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.For more information, visit www.realtor.org/governmentaffairs

Springfield Update

Illinois Association of REALTORS
Quorum Call Week in Review
Friday, July 18, 2008
Quorum Call is distributed Fridays when the Illinois General Assembly is in session. For more information, contact Greg St. Aubin, Director of IAR Governmental Affairs, gstaubin@iar.org, or Julie Sullivan, Assistant Director, Legislative and Political Affairs, jsullivan@iar.org. Full text of legislation cited in this newsletter can be found at www.ilga.gov. “Baseball is almost the only orderly thing in a very unorderly world. If you get three strikes, even the best lawyer in the world can’t get you off.”~Bill Veeck- The Illinois House of Representatives convened this week in a shortened schedule for consideration of overrides of item and reduction vetoes made by the Governor to the Fiscal Year 2009 State budget (HB 5701). There were 33 separate motions filed by members of the House on the $1.4 billion in cuts made by the Governor. Ultimately only 6 motions were approved which restored $480 million in cuts. However, the Senate must also take action on these six motions in order for these funds to be restored. Senate President Emil Jones has previously indicated that he did not intend to call the Senate back until the regularly scheduled fall session in November. - No action occurred on the issue of fund sweeps from State dedicated funds. You may recall that the Senate approved legislation in the spring (SB 790) that authorized the Governor to make sweeps from these funds but did NOT specify what funds or amounts but it was reported that the amount would total $530 million. SB 790 did list 29 funds that were exempt from the sweep. The House removed all substantive provisions from SB 790 last week with the intention of amending the bill to authorize specified funds and amounts totaling about $300 million. However, the House adjourned on Wednesday afternoon without any legislative activity on the issue. The General Assembly is currently not scheduled to be back in session until November 12, 2008. For more information, contact Greg St. Aubin, Director of IAR Governmental Affairs, gstaubin@iar.org, or Julie Sullivan, Assistant Director, Legislative and Political Affairs, jsullivan@iar.org.

Springfield Update

Illinois Association of REALTORS
Quorum Call Week in Review
Thursday, July 10, 2008
“Our political institutions work remarkably well. They are designed to clang against each other. The noise is democracy at work.”
~Michael Novak
- The General Assembly was called back into session this week by the Governor “to fix the shortfall in the Fiscal Year 2009 budget passed by the General Assembly in May” with the hope that the House would enact revenue enhancements previously approved by the Senate in May. On Wednesday, the Governor ratcheted up pressure on the House by issuing reduction and item vetoes in the budget totaling $1.4 billion.

- The House had a lengthy “Committee of the Whole” hearing on Wednesday afternoon on the capital bill, the gaming expansion bill, the sweeps authorization bill, the lottery lease bill and bonding bills. On Thursday, the House had an extensive debate on the gaming expansion bill – HB 2651 – which was the funding source for the $34 billion capital projects proposal. HB 2651 was voted down on a roll call vote of 47-55-3. However, the House of Representatives did approve amendments to SB 1130 to authorize work to be restarted on construction projects throughout the State that had been halted by the Capital Development Board (CDB). The Senate concurred with this action later in the day on a roll call vote of 42-0-0.

- On Wednesday evening the House Executive Committee amended the fund sweeps authorization legislation (SB 790) to remove all substantive provisions. The bill was sent to the full House where it was held with further action likely next week.
- This week the Senate took action on other measures besides budget bills including final legislative action on Senate Bill 2287. On Thursday, the Senate Judiciary–Criminal Law Committee unanimously concurred with the House Amendment added to Senate Bill 2287. The full Senate approved the concurrence motion on a roll call vote of 41-0-0. As you recall, this legislation sponsored by Senator Kwame Raoul and Representative Pat Lindner, seeks to expand the Safe Homes Act to allow tenants to recover a minimum of $2,000 plus attorney’s fees from a landlord if the landlord shares “any information provided by the tenant” in exercising his/her rights under the Act to a prospective landlord. The IAR had pointed to a number of concerns with the original legislation including the fact that a tenant would not have to actually incur any damages in order to recover the $2,000. Representative Pat Lindner, amended the bill to hold the landlord liable for actual damages up to $2,000 resulting from the disclosure- instead of liable for any damages resulting from the disclosure or $2,000, whichever is greater.

- The Illinois House of Representatives will return to Springfield next week for three days to consider the item and reduction vetoes issued by the Governor. The Senate President indicated that it was not his intention to call the Senate into session.




For more information, contact Greg St. Aubin, Director of IAR Governmental Affairs, gstaubin@iar.org, or Julie Sullivan, Assistant Director, Legislative and Political Affairs, jsullivan@iar.org.

Contact information for members of the House and Senate, notice of committee hearings, text of legislation and roll call votes are all available on the Illinois General Assembly’s Web site, www.ilga.gov.