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Summary of the “Housing and Economic Recovery Act of 2008
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President Bush signed the “Housing and Economic Recovery Act of 2008”, or H.R. 3221, on Wednesday, July 30, 2008. The bill: aims to provide tax relief for first-time homebuyers; assist troubled homeowners and help avoid foreclosures; creates a new regulator and stronger regulation for Fannie Mae and Freddie Mac; and increases GSE and FHA loan limits. The following is a summary of the bill:
Tax Relief for First Time Homebuyers
The following table summarizes H.R. 3221’s tax relief for first time homebuyers.*
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FEATURE
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H.R. 3221
Housing and Economic Recovery
Act of 2008
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Amount
of Credit
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Ten
percent (10%) of the sales price, not to exceed $7,500.
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Eligible
Property
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Any
single-family residence (including condos, co-ops)
that will be owner occupied, your primary residence.
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Refundable
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Yes. Reduces income tax liability for the year of purchase. Claimed on tax return for that tax year. For example, if
you purchase your home in 2008 you can claim this on your 2008 taxes filed in
April 2009.
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Income Limit
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Yes. Individuals
with adjusted gross income of no more than $75,000 ($150,000 on a joint
return) can receive the full allowable credit. Individuals
or joint filers with income exceeding those amounts will be subject to a phase
out; filers with income in excess of $95,000 (individual) and $170,000 (joint)
do not qualify.
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First-time
Homebuyer Only
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Yes. Purchaser (and purchaser’s spouse) may not have owned a
principal residence in the 3 years prior to this home purchase.
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Recapture
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Yes. Portion (6.67 % of credit) to be repaid each year for 15 years.
If home is sold within 15 years from the purchase, then remainder of credit is
subject to recapture or repayment.
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CHFA
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No. CHFA loans are NOT eligible for tax credit.
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Effective
Date
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Purchases
on or after April 9, 2008
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Termination
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July 1,
2009
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* Please contact your tax preparer for more detailed information.
Homeowner Rescue
• Allows the FHA to insure up to $300 billion of refinanced loans, thereby helping troubled borrowers avoid foreclosure.
• Requires current holders of the loans to write down the loan balance.
• Among the requirements for borrowers to qualify – they must have a DTI ratio of at least 31 percent.
Fannie/Freddie Regulation/FHA Modernization
• Temporarily increases the existing GSE line of credit with Treasury.
• Creates a new regulator for GSEs (and FHLBs).
• Raises the limit on the size of GSE and FHA loans in high cost areas to $625,500 (effective at year end when current increases enacted as part of stimulus bill expire).
• Imposes a 12-month moratorium on FHA risk based pricing (beginning October 1, 2008)
• Promotes nationwide standards for licensing mortgage loan originators
About the McCue Mortgage Company
The McCue Mortgage Company, with headquarters in New Britain, CT, is a leading provider of mortgage lending services in Connecticut. Founded in 1949, McCue Mortgage has a long history of helping Connecticut home buyers at every level of the financing spectrum, from first time homebuyer to those refinancing their mortgages. The Company caters to the needs of all borrowers, providing conventional, adjustable rate, FHA, VA, CHFA, jumbo and construction loans. McCue Mortgage closes over $500 million in loans annually, making it one of the leading mortgage lenders in Connecticut. For more information on McCue Mortgage please visit www.mccuemortgage.com or call 800-382-0017.
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