As a result of the passage of the American Recovery and Reinvestment Act of 2009, on February 25 HUD published changes to FHA's single family loan limits. In the Lehigh Valley, limits will revert to the higher 2008 mortgage limit of $402,500 immediately. The new loan limits, which are effective for any loan closed in calendar year 2009, are in effect through December 31, 2009.
American Recovery and Reinvestment Act of 2009
H.R. 1, the “American Recovery and Reinvestment Act of 2009,” passed the House on February 13, 2009, by a vote of 246 - 184. The Senate also passed the bill later that day by a vote of 60 - 38. The President is expected to sign the bill soon. The bill is a $780 billion package, with roughly 35% of the package devoted to tax cuts (mostly for 2009) and the rest to spending intended to occur in 2009 and 2010.
The mix of provisions of interest to REALTORS® changed frequently throughout the legislative process, with changes continuing to be made just hours before the measure was released prior to the vote. In the end, the major elements of NAR’s housing agenda were included. Congress and the President have announced that a finance and housing package (including tax provisions) will be the next “big” initiative, so Congress has by no means finished its work as it affects the housing industry and REALTORS®. Here is a summary of key housing provisions:
Homebuyer Tax Credit – $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
FHA, Fannie Mae and Freddie Mac Loan Limits - The bill reinstates last year's 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans. These limits were equal to the greater of 125% of the 2008 local area median home price. Lehigh Valley loan limits are estimated to be set at $402,500 (FHA) and $417,000 (Fannie/Freddie). These 2009 limits will expire December 31, 2009.
Foreclosure Mitigation & Neighborhood Stabilization – $2,000,000,000 in additional funding for the Neighborhood Stabilization Program (NSP) to provide grants to states and localities to address the problems that can be created when whole neighborhoods are decimated by foreclosures. The funds can be used to purchase, manage, repair and resell foreclosed and abandoned properties. In addition, the funds can also be used by states and localities to establish financing methods for the purchase and redevelopment of foreclosed properties.
Energy Efficient Housing Tax Credits & Grants - Through 2010, homeowners will be able to claim a 30% tax credit (up from 10%) for purchases of new furnaces, windows and insulation.
Read more