Impacts of the Housing Recovery Act

While the first-time buyers tax credit was a significant part of the recently passed housing recovery act, the bill included several other elements that shouldn't be overlooked.

One that I believe is key is that it gives a boost to Energy Efficient Mortgages. While no changes are imminent, the act requires the Secretary of Housing and Urban Development (HUD) to develop recommendations to eliminate the barriers for using EEMs. One of the key concerns being the low usage of EEMs from underexposure and lack of awareness regarding the energy rating system.

Recommendations are due to Congress within six months of the signing of the bill. (You can view the full context here.)

Other provisions of this bill that could affect you include:

• Addition of a property tax deduction for homeowners who do not itemize their returns.
• A permanent change in FHA loan caps
• An increase of the down payment requirement to 3.5% of the purchase price
• Elimination of seller-funded down payment assistance on FHA loans.Help for refinancing problematic subprime loans into a fixed rate FHA loans
• Creation of municipal funding to purchase and rehab foreclosures

This is even beyond the potential funding for Fannie Mae and Freddie Mac that has its stockholders - and indeed the entire stock market - in turmoil. Whether this is ultimately good or bad remains to be seen, but it will nevertheless surely have an impact on mortgage interest rates and the general availability of mortgages in the near term.

For a fuller description of the housing act provisions, see the National Association of Realtors summary.