Housing and Economic Recovery Act of 2008
The Housing and Economic Recovery Act of 2008 in the United States included six separate major acts designed to restore confidence in the domestic mortgage industry. The Act included:
- Providing insurance for $300 billion in mortgages estimated to assist 400,000 homeowners.
- Establishing a new regulator, the Federal Housing Finance Agency via the merger of two existing authorities, The Office of Federal Housing Enterprise Oversight (OFHEO), and the Federal Housing Finance Board (FHFB), endowed with expanded powers and authority greater than the sum of its predecessors, to supervise operation of the 14 housing government sponsored enterprises (GSEs): (Fannie Mae and Freddie Mac) and the 12 Federal Home Loan Banks.
- Raises the dollar limit of the mortgages the GSEs can purchase.
- Provides loans for the refinancing of mortgages to owner-occupants at risk of foreclosure. The original lender or investor reduces the amount of the original mortgage (typically taking a significant loss) and the homeowner shares any future appreciation with the Federal Housing Administration. The new loans must be 30-year fixed loans.
- Enhancements to mortgage disclosures.
- Community assistance to help local governments buy and renovate foreclosed properties.
- An increase in the national debt ceiling by US$800 billion, to give the Treasury the flexibility to support the secondary housing markets and the 14 GSEs, if necessary.
Read more about this topic: Regulatory Responses To The Subprime Crisis
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