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Key Points in the Housing and Economic Recovery Act of 2008
Passed By the House on July 23, 2008
BACKGROUND: On Wednesday, July 23, the U.S. House of Representatives passed major housing legislation, H.R.
3221, the “Housing and Economic Recovery Act of 2008.” The legislation includes several initiatives which MBA has long
advocated, such as reform of government sponsored enterprise (GSE) regulation and modernization of the Federal
Housing Administration (FHA). The contours of the legislation generally follow the Senate bill which was passed earlier
this month but there are several significant additions and changes notably including GSE “rescue” provisions. It is
expected that the bill passed by the House will be passed by the Senate and signed by the President very shortly. This
is an overview and summary based on the bill that passed the House. It will be updated, as necessary,
following final passage by the Senate and signature by the President.
OVERVIEW – The bill is broken into three Divisions designated A, B and C and each has several Titles. The major
subjects covered include:
• Higher Loan Limits – Raises the GSE, FHA and VA single-family loan limits on a permanent basis;
• GSE Regulatory Reform – Increases regulation of Fannie Mae, Freddie Mac and the Federal Home Loan Banks (the
GSEs) by creating a new regulator and regulatory requirements;
• GSE Stabilization – Establishes several new powers and authorities to stabilize the GSEs in the event of financial crisis;
• Affordable Housing Trust Fund – Creates, from assessments on the GSEs’ businesses, a fund to help prevent
foreclosures and facilitate affordable housing;
• FHA Rescue Plan – Authorizes a new FHA “Hope for Homeowners Program” to refinance existing borrowers into fixed
rate FHA mortgage products;
• Licensing – Encourages a nation-wide licensing and registry system for loan originators by setting minimum
qualifications and assigning HUD responsibility for establishing requirements for those states not enacting licensing laws;
• FHA Modernization – Modernizes FHA programs;
• Active Service Members – Extends stays of foreclosure and legal proceedings from 90 days to nine months, and
extends the six percent mortgage rate cap for one year after active duty;
• Redevelopment of Abandoned and Foreclosed Homes – Authorizes $4 billion in block grant funds for states to
purchase and redevelop foreclosed properties;
• Counseling – Authorizes funds for the Neighborhood Reinvestment Corporation (NRC) for foreclosure mitigation
activities;
• Truth in Lending Act (TILA) – Adds new mortgage disclosure requirements under TILA;
• Veterans Matters – Provides home improvement benefits for the disabled;
• Public Housing Authorities – Reduces regulatory requirements for smaller PHAs;
• Tax Incentives – Establishes a range of tax incentives, including a first-time homebuyer tax credits, and expands the
Low-Income Housing Tax Credit (LIHTC);
• Real Estate Investment Trusts (REITs) – Loosens certain restrictions on REITs; and
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• Public Debt Limit – Increases the Federal debt limit to $10.615 trillion.
FOCUS ON HIGHER LOAN LIMITS –
• GSE Single Family Loan Limits: Sets the GSE loan limit for single family, one-unit properties at the greater of $417,000
(with increased limits for other single-family properties up to four units)1 or 115 percent of the local area median home
price, as determined by HUD, up to a cap of 150 percent of the GSE limit of $417,000 for a one-unit property or
$625,500By January 1, the new GSE regulator will set the GSE loan limit based on home prices. The new GSE loan
limits will go into effect after the limits in the Economic Stimulus Act expire on December 31, 2008. .
• FHA Single-Family Loan Limit: Increases the loan limit for FHA mortgage insurance under Section 203(b) of the
National Housing Act for single-family, one-unit properties (with increased limits for other single-family properties up to
four units) to the lesser of 115 percent of the local area median home price, as determined by HUD (but no lower than a
floor of 65 percent of $417,000) or 150 percent of the GSE limit of $417,000 or $625,500. The mortgage amount also
cannot exceed 100 percent of the appraised value of the property. Note on FHA Single-Family Loan Limit: This new FHA
loan limit will not go into effect until after the limits in the Economic Stimulus Act expire on December 31, 2008.
• HECM Loan Limit: Set at GSE loan limit, currently $417,000.
• FHA Repair/Improvement Loan Limit: Raises the limit from $17,500 to $25,090.
• FHA Manufactured Housing Limit: Raises limit from $48,600 to $69,678, with future adjustments based upon the rate of
inflation.
• FHA Rescue Loan Limit: Sets limit for loans under rescue plan authorized under “Hope for Homeowners” program, at
132 percent of the 2007 conforming loan limit ($417,000) or $550,440.
• VA Loan Limit: Beginning at enactment and ending on December 31, 2008, the “maximum guarantee amount” (for
loans above $144,000) shall be 25 percent of the higher of: 1) the GSE loan limit ($417,000), or 2) 125 percent of the
area median home price for a single family, one-unit property, not to exceed 175 percent of the GSE loan limit
($729,750). After December 31, 2008, the VA’s guarantee for loans above $144,000 is 25 percent of the new GSE loan
limit base or the limits for high cost areas as described above.
DIVISION A – HOUSING FINANCE REFORM
TITLE I – REFORM OF REGULATION OF ENTERPRISES (Division A, Title I)
• Regulator: Establishes the Federal Housing Finance Agency (FHFA) as the new GSE regulator replacing OFHEO, HUD
(except for Fair Housing regulation) and the Federal Housing Finance Board (FHFB).
• Raises GSE Loan Limit: As described above.
• Portfolio Caps: Provides FHFA greater discretion to impose restrictions on the GSEs’ mortgage portfolios.
• Mission Oversight/Product Approval: Requires Fannie Mae and Freddie Mac to obtain prior approval before offering
any new product except for products related to either: their automated loan underwriting systems; or modifications to
mortgage terms, conditions or underwriting criteria. Requires FHFA regulator to seek input from the public prior to
making a decision. Authorizes regulator to review existing activities of the GSEs.
1 $533,850 for a mortgage secured by a two-family residence, $645,300 for a mortgage secured by a three-family
residence, and $801,950 for a mortgage secured by a four-family residence.
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• Capital Requirements: Expands FHFA’s authority to set GSE capital requirements. Also, provides regulator additional
options to deal with a financially troubled GSE, including shutting it down and replacing it with another entity.
• Affordable Housing Requirements: Retools existing goals to address housing needs of low- and very-low-income
families. Goals are annual and set as a percentage of the regulated entity’s single-family and multi-family business lines.
Revisions to the current goals framework include separate goals for purchase money and refinance transactions, and
procedures for adjusting goals under unique circumstances. The FHFA also has stronger enforcement powers for
noncompliance, including cease and desist powers. Requires FHFA to assess and report to Congress on whether
disparities exist between interest rates on loans to minorities and non-minorities. Disparities will also be referred to the
appropriate regulatory agency. Applies affordable housing goals to the FHLBanks’ mortgage purchase programs as well
as Fannie Mae’s and Freddie Mac’s. Creates a new duty for the enterprises to lead the industry in developing loan
products and flexible underwriting guidelines for:
o manufactured housing;
o affordable housing preservation; and
o rural markets.
• GSE Backstop Provisions: Gives the Secretary of the Treasury authority to increase the existing lines of credit of
Fannie Mae, Freddie Mac, and the FHLBanks. Treasury has standby authority to buy Fannie or Freddie stock to
provide confidence in the GSEs and stabilize housing finance markets. Prior to exercising these authorities, Treasury
must determine that an emergency exists and action is necessary to stabilize markets, maintain liquidity, and protect the
taxpayers. Provides additional oversight by requiring the Federal Reserve and Treasury to consult with FHFA on issues
concerning the safety and soundness of the GSEs and use of the standby authority. These provisions expire on
December 31, 2009.
• Workforce Diversity: Requires GSEs to establish procedures for promoting diversity in their business activities. FHFA
must seek demographic diversity among staffing at all levels commensurate with the U.S. population.
AFFORDABLE HOUSING TRUST FUND (Division A, Title I, Subtitle B)
• GSE Contributions: Requires Fannie Mae and Freddie Mac to set aside an amount equal to 4.2 basis points for each
dollar of “total new business purchases” and transfer 65 percent to the Secretary of HUD to fund an Affordable Housing
Trust Fund. In the first year, the fund will subsidize the HOPE for Homeowners Program. Thereafter, funds will be
allocated to states using a needs-based formula in order to provide affordable housing for extremely low- and very- low
income households. The remaining 35 percent will be transferred to a Treasury “Capital Magnets Fund” to attract
investments in affordable housing and related neighborhood revitalization.
TITLE II – FEDERAL HOME LOAN BANKS (Division A, Title II)
• Oversight: Requires FHFA to consider the unique differences between the FHLBank System and Fannie Mae/Freddie
Mac when taking supervisory action. Permits the Director to reduce the number of FHLBanks below the current
restriction of eight. Requires the Director to conduct two studies: 1. The benefits and risks of authorizing FHLBanks to
securitize mortgages; 2. Advances collateral compliance with the interagency guidance on nontraditional mortgage
products.
• Structure: Establishes procedures for election of both member and independent directors. Permits mergers between
FHLBanks with FHFA’s approval. Raises the total assets
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requirement for Community Financial Institutions from $500 million to $1 billion. Permits Community Development
Financial Institutions to be FHLBank members.
TITLE III – TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFHEO AND THE FEDERAL HOUSING
FINANCE BOARD (Division A, Title III)
• Abolition of OFHEO and FHFB: Abolishes OFHEO and FHFB and transfers their functions and employees to Federal
Housing Finance Agency (FHFA) along with certain employees of HUD.
TITLE IV – HOPE FOR HOMEOWNERS (Division A, Title IV)
• The Plan: Establishes a new FHA program, the “HOPE for Homeowners Program,” with an additional $300 billion in
FHA mortgage insurance authority. Under program, principal balance and interest rate for eligible borrowers is reduced
through refinancing into a new, affordable FHA-insured loans based on current property values. Loans will be eligible for
securitization with Ginnie Mae.
• Reps and Warrants: Requires insurance benefits not be paid if a mortgage violates the representations and warranties
the program’s governing body (Board) will require or if a borrower of the new loan fails to make the first payment on the
FHA loan.
• Eligibility:Mandates mortgages eligible for refinance be originated on or before January 1, 2008. Borrowers must have
debt-to-income ratios greater than 31 percent (or a higher ratio set by the Board) as of March 1, 2008. Borrowers must
certify they did not intentionally default on the original mortgage or other debts or furnish false information (five year jail
time for false statements) to obtain the FHA loan. Borrower not eligible if convicted of fraud or previously defaulted on
government loan. Borrower’s income must be fully documented through two most recent tax returns and meet other
standards established by the program’s governing Board or HUD. Eligible borrower may only have one primary
residence.
• New Loan Requirements: Requires 30-year fixed rate loan not exceeding 90 percent of the property’s current value.
Principal amount cannot exceed 132 percent of the 2007 Freddie Mac loan limits, or $550,440. Board establishes
reasonable limitation on origination fees. Prohibits junior liens for five years.
• Write-Down: Requires participating noteholders agree to a reduction in principal to achieve the 90 percent loan-to-
value requirement. Also, requires waiver of prepayment penalties and fees related to default or delinquency.
• Premiums: Requires noteholder to pay the three percent upfront premium from the proceeds of the refinance.
Borrower pays 1.5 percent premium annually.
• Shared Appreciation: Requires borrower to share future equity with FHA when the property is sold or the loan is
refinanced. Homeowner’s share of newly created equity will be phased-in over five years. After five years, homeowner
and government each will share in 50 percent of the equity. Program’s governing Board establishes standards for
sharing future appreciation owed to HUD with subordinate lienholders.
• Sunset: Program runs from October 1, 2008 through September 30, 2011.
• Servicer Liability: Amends the Truth in Lending Act (TILA) to create a fiduciary duty for mortgage servicers to
“maximize the net present value of the pooled mortgages in an investment to all investors and parties having a direct or
indirect interest.” The duty does not supersede servicing contracts to the contrary. Also would deem servicers to act in
the best interests of all investors if the servicer implements a refinance or modifies a loan, meeting certain conditions
such as being in default, through the HOPE for Homeowners plan.
TITLE V – S.A.F.E. MORTGAGE LICENSING ACT (Division A, Title V)
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• Nationwide Licensing and Registry System: Encourages states through the National Conference of Bank Supervisors
(NCBS) and American Association of Residential Mortgage Regulators (AARMR) to establish a Nationwide Mortgage
Licensing System and Registry for residential loan originators. Registry is to accomplish several objectives including
establishing means by which residential mortgage loan originators would, “to the greatest extent possible, be required to
act in the best interests of the consumer.” “States” includes all U.S. states, the District of Columbia, any territory of the
United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the
Northern Mariana Islands.
• Coverage: Covers all persons who take residential mortgage loan applications and offer or negotiate mortgage terms
except administrative, clerical personnel or those who only perform real estate brokerage activities or, who are only
involved in extensions of credit relating to time shares
• Standards: Establishes minimum standards for licensing and registration as State-licensed loan originators including
that they must: never have had an originator license previously revoked; pled guilty or been convicted of a felony during
the seven year period prior to licensing or at any time if such felony involved fraud, dishonesty, breach of trust or money
laundering; demonstrate financial responsibility, character, and general fitness; complete pre-licensing educational
requirements; pass a written test; and meet either net worth or a surety bond requirement, or paid into a State fund.
• Default Licensing and Registration Law: Requires HUD to establish a backup licensing and registry system for the
licensing and registration of loan originators for any state that fails to establish a state system within one year from
enactment, or two years for states where legislatures meet biennially.
• Federal Regulators: Requires Federal banking regulators to jointly establish a registry of loan originators for federally
regulated bank and thrift institutions and their subsidiaries. Fingerprints and personal experience information on these
originators is to be furnished to the Nationwide Mortgage Licensing System and Registry.
• Annual Report on Licensing and Registration: Requires Secretary to report annually on the effectiveness of licensing
and registration provisions.
• RESPA Legislative Recommendations: Requires Secretary to make recommendations to Congress six months after
enactment on appropriate legislative reforms to RESPA to promote more transparent disclosures, allowing consumers to
better shop and compare loan terms and settlement costs.
TITLE VI – MISCELLANEOUS (Division A, Title VI)
• Studies: Mandates that FHFA conduct an annual study and report to Congress on Fannie Mae and Freddie Mac
mortgage guarantee fees (G Fees). Study will analyze topics such as how the G Fee is calculated across product types,
volume and originator characteristics, G Fee revenues earned and costs incurred from guaranteeing mortgages. FHFA
must study and report to Congress on ways to improve the overall default risk evaluation of residential mortgages,
including processes or technologies to provide standardized risk measures.
• Conversion of HUD Contracts: Converts Section 8 and Rental Assistance Payment contracts to project-based Section
8 contracts, allowing multifamily housing owners to get higher rents while protecting tenants from paying higher rents or
being displaced.
• Bridge Depository Institution: Provides a generic name for the temporary financial institution created by the FDIC to
administer the deposits and liabilities of a failed bank or savings association.
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• Senate Support for Local Foreclosure Requirements: Includes “Sense of the Senate” provision voicing support for
local government requirements for holders of foreclosed property to maintain them.
DIVISION B – FORECLOSURE PREVENTION
TITLE I – FHA MODERNIZATION ACT OF 2008 (Division B, Title I)
SUBTITLE A – BUILDING AMERICAN HOMEOWNERSHIP (Division B, Title I)
• FHA Loan Limits: Raises the limits as described above.
• Cash Investment Assistance and Prohbition of Seller Funded Downpayment Assistance: Requires at least 3.5 percent
cash or its equivalent investment by mortgagor. Prohibits seller-funded downpayment assistance but allows other down
payment sources such as CDBG and HOME assistance. Permits amounts borrowed from a family member to be treated
as cash or cash equivalent as long as any lien for repayment is subordinate and the total liens do not exceed 100
percent of the value of the property plus appraisal, inspection and other fees. The downpayment assistance limitation
applies where the mortgagee has issued credit approval for the borrower on or after October 1, 2008.” The October 1
effective date is intended to protect homebuyers and homeowners refinancing from a sudden change in program
requirements.
• Home Equity Conversion Mortgages (HECMs): Limits HECM loans to the GSE loan limit, currently $417,000 for a one-
unit single-family property. Also limits origination fees to two percent of the maximum claim amount up to $200,000 plus
one percent of any maximum claim amount exceeding $200,000 to a total cap of $6,000 (adjusted in increments of $500
annually based on the CPI).
• HECM Restrictions: Prohibits HECM lenders from being associated with any other “financial or insurance activity”
unless they prove to HUD they maintain appropriate firewalls to ensure originators do not have an incentive to sell other
products. Also prohibits lender or any other party from conditioning the HECM on purchase of other financial or
insurance products, except hazard and other peril insurance and title insurance or other products that are customary
and normal as determined by HUD.
• Energy Efficient Mortgage Program: Increases the limits on cost-effective energy efficiency improvements and adds a
percentage limitation on energy efficient mortgages insured each year.
• Pilot Program for Alternative Credit: Requires the Secretary to establish a pilot program to provide an automated
process for providing alternative credit rating information for borrowers and potential borrowers who have insufficient
credit histories to determine their creditworthiness.
• Modernization Funds: Authorizes $25 million from negative credit subsidy to improve technology, processes, program
performance, eliminating fraud and providing appropriate staffing in connection with FHA programs.
• Prepurchase Homeownership Counseling Demonstration: Requires Secretary to establish and conduct a
demonstration program to test the effectiveness of alternative forms for pre-purchase homeownership counseling for
eligible homebuyers.
• Multifamily Mortgage Insurance Premiums: Prevents the Secretary of HUD from increasing multifamily mortgage
insurance premiums above the limits as of October 1, 2006 until October 1, 2009. The Secretary may only increase
rates based upon determination that positive credit subsidy will result if no increase and after 30-day notice to the
Senate Banking and House Financial Services Committee and Federal Register notice is published.
• Risk-Based Premiums: Prohibits the Secretary of HUD from taking any action to implement or carry out a risk-based
premium program for twelve months beginning on October 1, 2008.
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The October 1 effective date for the provision is intended to protect homebuyers and homeowners refinancing from a
sudden change in program requirements and permit a cessation of the current program.
SUBTITLE B – MANUFACTURED HOUSING LOAN MODERNIZATION (Division B, Title I)
• Increased Loan Limits: Increases loan limits as indicated above.
• Prohibitions Against Kickbacks and Unearned Fees: Provides that provisions of sections 3,8,16,17,18 and 19 of
RESPA apply to the sale of a manufactured home financed with an FHA-insured loan as well as services rendered in
connection with such transactions.
TITLE II – MORTGAGE FORECLOSURE PROTECTIONS FOR SERVICE MEMBERS (Division B, Title II)
• Counseling: Requires the Secretary of Defense to develop a counseling program to prevent or forestall foreclosures.
• Protections: Extends the stay of foreclosure and other legal proceedings (i.e., evictions) from 90 days to nine months
following the termination of a service member’s active duty. These protections revert back to 90 days on January 1,
2011.
• Six Percent Rate: Extends the six percent mortgage interest rate cap to one year after the termination of active duty.
Defines interest as all charges (except bona fide insurance).
TITLE III – EMERGENCY ASSISTANCE FOR THE REDEVELOPMENT OF ABANDONED AND FORECLOSED HOMES
(Division B, Title III)
• Appropriations: Authorizes $4 billion in block grant funds to be spent for the redevelopment of abandoned and
foreclosed homes and residential properties.
• Allocation: Allocates funds to states and units of general local government as defined by HUD, according to need,
considering: 1) the percentage of foreclosed homes; 2) the percentage of homes financed by a subprime mortgage; and
3) the percentage of loans in default or delinquent. All funds appropriated must help individuals and families whose
income does not exceed 120 percent of area median income, with 25 percent of funds appropriated to benefit
individuals or families whose incomes do not exceed 50 percent of the area median income.
• Purchases, Sales and Rehabilitations: Requires residential properties purchased by the government be at a discount
from the current market appraised value, while the sales of residential properties that have been improved under this
appropriation, shall be in an amount equal to or less than the cost to acquire and redevelop or rehabilitate the property.
Rehabilitations must be for code compliance purposes or to increase energy efficiency. For five years following
enactment, any revenue generated from the sale, rental or rehabilitation of the property that exceeds the cost to acquire
and develop the property will revert to the state. After five years, such funds go to the U.S. Treasury.
TITLE IV – HOUSING COUNSELING RESOURCES (Division B, Title IV)
• Appropriations: Authorizes $100 million for the Neighborhood Reinvestment Corporation (NRC) to be available through
December 31, 2008 for foreclosure mitigation activities. Requires eligible recipients of NRC funds to identify and
coordinate with non-profit organizations operating national or statewide toll-free foreclosure prevention hotlines.
TITLE V – MORTGAGE DISCLOSURE IMPROVEMENT ACT (Division B, Title V)
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• Timing: Amends the Truth in Lending Act (TILA) to expand the mortgage loans subject to early disclosures within 3
days of application. Also, requires disclosure seven days before closing and any correction of an APR 3 days before
closing.
• Fees: Requires consumers receive early TILA disclosures before paying any fee, except possibly a fee for a credit
report.
• New Statement in Disclosures: Requires a new statement in TILA disclosures involving dwelling secured transactions:
“You are not required to complete this agreement merely because you have received these disclosures or signed a loan
application.”
• Additional Disclosure Requirements: Requires disclosures to better explain adjustable rate products, through
examples, including how monthly payments adjust based on interest rate changes and the maximum payment.
• Violations: Increases money penalties for violations.
TITLE VI – VETERANS HOUSING MATTERS (Division B, Title VI)
• Permanently Disabled Veterans: Authorizes the Secretary of Defense to furnish improvements and structural
alterations to residences of permanently disabled service members.
TITLE VII – SMALL PUBLIC HOUSING AUTHORITIES PAPERWORK REDUCTION ACT (Division B, Title VII)
• Relief: Exempts public housing authorities (PHAs) with 550 or fewer combined units and vouchers from the requirement
of submitting an annual plan to the Department of Housing and Urban Development. Only PHAs that have a passing
score under HUD’s Section 8 management assessment program are exempt.
TITLE VIII – HOUSING PRESERVATION (Division B, Title VIII)
SUBTITLE A – PRESERVATION UNDER FEDERAL HOUSING PROGRAMS (Division B, Title VIII)
• Rental Assistance: Identifies certain recipients as eligible for relief under HUD rental assistance programs.
SUBTITLE B – COORDINATION OF FEDERAL HOUSING PROGRAMS AND TAX INCENTIVES FOR HOUSING (Division
B, Title VIII)
• Federal Housing Programs and Low Income Housing Tax Credit: Requires the Secretary of HUD to implement
administrative and procedural changes to expedite approval of multifamily housing projects under HUD’s jurisdiction
involving low-income housing tax credits and existing public housing and assisted housing projects where the Secretary’
s approval is necessary.
• NOTE: FORECLOSURE RESCUE SCAMS (Kohl Amendment to Division B) The House struck this title (Division B, Title
VII in the Senate Bill) in its entirety. The provision would have prohibited “foreclosure consultants,” from receiving
compensation until the consultant has fully performed each service contracted to perform. It also prohibited certain
activities including taking a lien or interest in the real estate. Servicers, noteholders and government agencies, such as
VA, were technically included in the definition of a foreclosure consultant. Servicers were also required to send a notice
to delinquent borrowers warning them about foreclosure rescue scams. Penalties for violating the provisions were 1)
actual damages or 2) amounts the borrower paid to foreclosure consultant.
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TITLE IX – MISCELLANEOUS (Division B, Title IX)
• Homeless Assistance – Increases authorization for McKinney-Vento Homeless Assistance Act and reserves amounts
for grants to state educational agencies for children, youths and their families who have become homeless due to home
foreclosure.
• Increasing Access to Energy Efficient Mortgages – Requires the Secretary of HUD, not later than 180 days after
enactment in conjunction with Administrator of EPA, to consult with the residential mortgage industry and States to
develop recommendations to eliminate the barriers that exist to increasing the availability, use, and purchase of energy
efficiency mortgages and report to Congress such recommendations.
DIVISION C –TAX-RELATED PROVISIONS
TITLE I – HOUSING TAX INCENTIVES (Division C, Title I)
• First-Time Homebuyer Tax Credit: Makes a qualifying individual or a couple, who is a first-time homebuyer of a
principal residence in the United States from April 9, 2008 through April 1, 2009 eligible for a tax credit not to exceed
$7,500 (to be paid back over 15 years) Credit will begin to phase out if single taxpayer’s income exceeds $75,000 per
year or the couple’s income exceeds $150,000.
• Low-Income Housing Tax Credit (LIHTC): Repeals the Alternative Minimum Tax limitations on LIHTC and increases the
dollar amount of the LIHTC ceiling for each state for calendar years 2008 and 2009 by $0.20. In addition, the prohibition
against using tax credits with Section 8 moderate rehabilitation projects is repealed.
• State and Local Tax Deduction: Allows a tax deduction, applicable to non-itemizing homeowners who pay state and
local property taxes for the tax year 2008 and forward, of the lesser of the amount allowable as a deduction under state
and local taxes or $500 ($1,000 in the case of a joint return).
• Alternative Minimum Tax: Repeals alternative miminum tax limitations on tax exempt bonds, Low-Income Housing Tax
Credit and Rehabilitation Credit.
• Federal Home Loan Bank Bond Guarantee: Allows bonds guaranteed by the Federal Home Loan Banks to be treated
as tax-exempt bonds through 2010.
• Tax Free Mortgage Revenue Bonds: Increases the state ceiling for each state subject to a calculation written in the
statute. The proceeds of the increase in ceiling may be used to re-finance a mortgage on a residence which was
originally financed by the mortgagor through a subprime loan made after December 31, 2001 and before January 1,
2008. In addition, the bill repeals the Alternative Minimum Tax on tax-exempt interest.
TITLE II – REFORMS RELATED TO REAL ESTATE INVESTMENT TRUSTS (Division C, Title II)
• Real Estate Investment Trust (REIT): Reforms various REIT rules including rules for foreign currency transactions, and
allows healthcare facilities, such as nursing homes, to have qualifying income.
TITLE III – REVENUE PROVISIONS (Division C, Title III)
• Changes to Revenue Provisions: Includes changes to various tax rules and revenue offsets.
• Increases Debt Limit: Increases the Public Debt Limit to $10.6 trillion.
July 25, 2008
