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The Housing and Economic Recovery Act of 2008

Passed in early August, this housing bill promises to impact the real estate market in several different ways. First, it will allow about 400,000 homeowners who owe more than their homes are currently worth to refinance into federally backed loans, and provides incentive for these homeowners’ current mortgage lenders to simply erase the loan balance down to 90 percent of the current value of the home. In exchange, those who refinance under this law will agree to give the feds some portion of the future appreciation of their homes.

Second, low- and moderate-income buyers purchasing their first homes will be given an interest-free loan from the federal government toward their purchase up to 10 percent of the value of their homes, or a maximum of $7,500.

Again, the hope is that this will stimulate people to buy, increasing demand for homes and, thus, the recovery of the value of homes.

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