Housing bill highlights

The housing bill Congress is preparing to send President Bush would:

• Give the Federal Housing Administration $300 billion in new lending authority and relax standards to provide affordable, fixed-rate mortgages to debt-ridden homeowners. Any losses would be covered by an affordable housing fund financed by Fannie Mae and Freddie Mac, government- sponsored companies that finance mortgages.
  • Allow the Treasury Department temporary authority to lend money to Fannie and Freddie or buy their stock to avert their collapse. The authority expires Dec. 31, 2009.

• Create a new regulator and tighten controls on Fannie and Freddie, including power for the regulator to approve pay packages for executives. Create an affordable housing fund drawn from their profits. Permanently raise the limit on the loans they may buy -- set to revert to $417,000 by the end of the year -- to $625,000 in the highest-cost areas. Allow them to buy loans 15 percent higher than the median home price in certain cities.
  • Give $3.9 billion in grants to the hardest-hit communities for buying and fixing foreclosures.
    • Modernize the FHA and allow it to back loans for riskier borrowers. Permanently increase the size of loans it may insure -- set to revert to $362,790 by the year's end -- to $625,000 in the highest-cost areas. The agency could buy loans 15 percent higher than the median price in certain cities.
      • Bar the FHA from insuring mortgages in which the down payment is paid by the seller, beginning Oct. 1.
        • Place a one-year moratorium to bar the agency from charging premiums based on the riskiness of the homeowner, until Oct. 1, 2009.
          • Provide $15 billion in housing tax breaks, including low- income housing. Give a credit of up to $7,500 for first-time home purchases from April 9, 2008, to July 1, 2009. Allow people who don't itemize taxes to claim a $500 to $1,000 deduction on 2008 property taxes.
          • Give states an extra
          $11 billion in tax-free municipal bond authority for low-interest loans to first-time buyers, construction of low-income rental housing and refinancing subprime mortgages.