The New Housing Law: What's In It?

How the housing bill signed into law Jul 30 by President Bush affects homeowners:

TAXES

All homeowners who do not itemize their income taxes can deduct between $500 and $1,000 from their 2008 federal taxes.

Anyone buying a first home between April 9, 2008, and July 1, 2009, will receive up to $7,500 in federal income tax credits.

The bill includes an estimated $15 billion in housing tax breaks, which became effective Aug. 1.

MORTGAGE TRANSFORMATION

Homeowners struggling to make payments on high-interest mortgages can contact their banks and transform their loans into government-backed, 30-year fixed-rate mortgages.

To qualify for the Hope For Homeowners plan, you must have a mortgage debt-to-income ratio greater than 31 percent.

To see if you qualify: Multiply your gross monthly salary by 31 percent.

A homeowner earning $75,000 a year, for example, must owe a monthly mortgage payments of at least $1,938.

The new loan cannot exceed 90 percent of the home's value and borrowers must prove they can repay the loan.

Congressional budget analysts project that this $300 billion program would help 400,000 homeowners facing possible foreclosure.

The program begins October 1, but its rules have yet to be issued, and many in Congress seem to have forgoten about it.

(You can find payment calculators here)

COMMUNITY REPAIR

Homeowners living in neighborhoods stricken by foreclosures, where vacant properties were left run down with overgrown yards, may see improvements.

The bill provides $3.9 billion in grants for governments in the hardest-hit communities to buy and fix up already-foreclosed property at a discount.

(Timeline and terms of measures of the plan.)

STATE LOANS

First-time buyers or homeowners with subprime mortgages in some states can qualify for low-interest loans or refinancing under a provision allowing states to offer an additional $11 billion in tax-free municipal bonds to pay for such housing projects.

The actual dollar amount and the criteria for who might qualify will vary by state.

The provision took effect Aug. 1.

COUNSELING

Homeowners strapped for cash will be able to receive preforeclosure financial counseling and legal services.

The bill allocated $180 million for these services and takes effect Oct. 1.

RENTALS, FANNIE AND FREDDIE

A new fund, paid for with profits from the mortgage companies Fannie Mae and Freddie Mac , will help build affordable rental housing.

The two companies will be allowed to buy pricier mortgages, up to $625,000, which would make stable loans available to buyers in expensive cities.

Also, Fannie Mae and Freddie Mac will be subjected to greater government oversight.

Regulators will have authority to approve pay packages for company executives.

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