Congress passed a housing bill at the end of July and it was signed into law by President Bush. The new law will make many needed changes. It will provide mortgage relief for more than 400,000 US homeowners facing foreclosure.  The law will also provide $300 billion in federal guarantees to help refinance problem mortgages and will also assist US mortgage giants  Freddie Mac and Fannie Mae.   The bill will give the Federal Housing Administration the authority to help homeowners refinance with mortgages backed by the federal government.  Current lenders, however, will have to agree to take a loss on their loans. 

Those who opposed the bill have said it will end up taking money out of the pockets of the taxpayers and putting it in the pockets of the stockholders.  At this time there is no limit to the amount of help Freddie Mac and Fannie Mae will receive.  The two companies own or back nearly half of the country's total mortgages.  The bill puts a cap of $625,500 on Freddie Mac and Fannie Mae in certain higher priced markets and up to 15% over median prices in other areas.

In addition to FHA-insured mortgages the bill will offer a number of other incentives.  One such incentive is the $15 billion in tax breaks such as a $7500 tax credit for first time homebuyers.  This credit is retroactive to April 9, 2008 and is valid until July 1, 2009.  Another incentive is $3.9 billion in grants for communities with the highest foreclosure rates.

Although there are some very good things in the bill there is one major item that will affect many new Homeowners. This bill will totally eliminate down payment assistance as of Sep .30 2008.

With that said several people in Congress have pledged to do everything the can to keep these programs.  It’s estimated that the down payment assistance programs have helped over 700,000 Americans purchase a home.  Many consumers would not be able to get a Home Loan without down payment assistance.