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The housing bill could ease some of the market's problems, but it provides only modest benefits for home buyers or borrowers facing foreclosure.
As a first-time home buyer: A tax credit of as much as $7,500 for first-time home buyers applies only for those who buy between April 9, 2008, and July 1, 2009. The full amount also is only available for individuals with incomes under $75,000 or couples earning less than $150,000. It will have to be paid back, interest-free, over 15 years.
As a homeowner: Cash-strapped homeowners -- those who are spending more than 31 percent of their income on their house payment -- may qualify for a new, more-affordable loan backed by the Federal Housing Administration. However, lender participation is voluntary and it would have to agree to take a loss on the existing loans, and would walk away with at least some payoff and avoid the costly foreclosure process.
Also, home buyers who buy a property with an FHA loan will no longer be able to receive financial assistance from the sellers. The bill closes a loophole that let sellers channel money to buyers through charities.
For the industry: In a move to shore up Fannie Mae and Freddie Mac, the bill allows the government to buy stock in them and extends a line of credit to the companies. Over the past week, investor fears about the health of Fannie and Freddie, which buy or guarantee about half of the nation's mortgage loans, have rippled through the market, causing a sharp rise in mortgage rates since late last week. Rising rates mean more trouble for the housing market as fewer borrowers are able to afford the higher monthly payments.
Average rates on 30-year fixed rate loans of less than $417,000 have soared to more than 6.8 percent -- the highest rates in a year, said data publisher HSH Associates. Besides worries about Fannie and Freddie's future, rising rates reflect an effort by banks recapture money lost on mortgages made in 2005 and 2006.
What's not in: Democrats abandoned efforts to mandate specific protections for taxpayers, such as a requirement that the companies suspend dividend payments to shareholders as a precondition of receiving federal aid.