Foreclosure Prevention Act of 2008 HR 3221

The Foreclosure Prevention Act of 2008 provides relief for homeowners who are facing foreclosure. The bill provides tax incentives for lenders and first-time buyers to stir slow housing markets and gives states higher limits for bonds to finance low-renters. The bill aims to stabilize the market by slowing foreclosures and provide low- to moderate-income households the opportunity for affordable housing.

Eligibility

Homeowners must have a Debt-To-Income ratio above 31 percent to qualify for assistance. The amount of money that you spend on debts compared to your gross income determines your DTI. Homeowners seeking assistance must be living in the home, although they can be behind on payments.

Grants

The Foreclosure Prevention Act of 2008 increases the funding for grants for communities to purchase and rehabilitate structures that have been foreclosed on by lenders. The properties must then be made available for low-income public housing. The initial funding that the FPA provided expired in 2010, but the program continues in 2011 through the Neighborhood Stabilization Program provided by the Department of Housing and Urban Development. Funding is currently provided by the Wall Street Reform and Consumer Protection Act of 2010.

Counseling

This act provides the funds for homeowners facing foreclosure to receive counseling before it is too late to save their home. Homeowners receive information that shows them how to avoid foreclosure and helps them learn how to manage their money.

Refinancing

The law provides funds for the Federal Housing Authority to insure refinanced loans for homeowners who qualify for assistance. Loans must be for no more than 90 percent of the homes value so lenders whose refinance loans are insured by FHA must forgive any amount of debt on the current mortgage that is more than the allowed amount.

First-time Homebuyers and Down Payment Assistance

First-time homebuyers qualify for a tax refund of up to $8,000 depending on the year of purchase. The refund must be paid back in equal installments spread out over 15 years, and is only applicable for homes purchased from 2008 to 2010. Lenders cannot assist buyers with their down payment of FHA loans. The bill decreases the down payment amount for FHA loans to 3 percent.