On Wednesday, President Bush sat at his desk in the Oval Office and signed into law the Housing and Economic Recovery Act of 2008, a massive housing bill that includes provisions to help struggling homeowners as well as mortgage giants Fannie Mae and Freddie Mac.

The provisions of the bill that affect homeowners directly are:

• A $7,500 tax credit is available to buyers who have not owned a home for three years and who have modified adjusted gross income of less than $75,000 for one person or $150,000 for a married couple.  The purpose of the temporary tax credit is to “stimulate home buying, reduce excess supply in housing markets and shore up home prices.”
  
• FHA is given additional authority to insure up to $300 billion of mortgages to refinance loans headed for foreclosure.
  
• The law raises the conforming loan limit for Fannie Mae, Freddie Mac, and FHA-insured loans.  The new loan limits will be as high as $625,000, depending on the area.
  
• The Mortgage Revenue Bond Program gives states the ability to issue $11 billion in bonds to help borrowers in certain areas refinance their home loans.
  
• The Low Income Housing Tax Credit to expand availability of affordable rental housing.
  
• The law raises the minimum down payment requirement on FHA loans to 3.5% of the home’s value (the current minimum is 3%).
  
• The law eliminates seller-funding down payment assistance programs like AmeriDream and Nehemiah as down payment options for FHA loans.  The down payment assistance programs, combined with FHA loans, were the last bastion of “no down” mortgages.
  
• The government extended huge lines of credit to Fannie Mae and Freddie Mac and permitted the Treasury to buy an equity stake in the companies through the end 2009, should such a move be necessary to keep the mortgage giants afloat.