This article briefly outlines the portions of the newly enacted American Recovery and Reinvestment Act of 2009 which deal with real estate.
Public Housing Fund for Rehabilitation and Retrofitting
An additional $4 billion is to remain available until September 30, 2011 to assist public housing authorities to rehabilitate and retrofit public housing units. This includes increasing the energy efficiency of units and making safety repairs. Of the $4 billion provided, $3 billion is to be distributed to public housing authorities through the existing formula used for amounts made available in 2008. The remaining $1 billion will be distributed through a competitive process by September 30, 2009.
Community Development Fund for Vacant, Foreclosed Properties
An additional $3 billion is to remain available until September 30, 2010. The Community Development Block Grant program is to receive $1 billion of these funds; the Neighborhood Stabilization program is to receive $2 billion. The Neighborhood Stabilization program assists states, local governments, and nonprofit organizations in the purchase and rehabilitation of vacant foreclosed properties to create more affordable housing and reduce blight. Grantees must expend 50% of the allocated funds within two years of these funds are made available to them; the remaining amount within three.
Low-income Housing Tax Credit Partnerships Program
An additional $2.25 billion is to remain available until September 30, 2011. These funds are to coordinate with the Low-Income Housing Tax Credit to fill in any financing gaps caused by the tax credit market collapse and to jumpstart stalled housing development projects.
Homelessness Prevention Fund for Rental Assistance
An additional $1.5 billion is to remain available until September 30, 2011 to provide short-term and medium-term rental assistance, housing relocation, and stabilization services for families who may become homeless due to the mortgage and economic crisis.
Section 8 Housing Energy and Green Retrofit Investments
An additional $2.25 billion is now available, of which $2 billion is to provide full-year payments to Section 8 landlords and $250 million is for grants or loans to upgrade HUD-sponsored, low-income housing to increase energy efficiency, including the installation of new insulation, windows, and furnaces.
Lead Hazard Control in Low-Income Housing
An additional $100 million is to remain available until September 30, 2011 to provide competitive grants to local governments and nonprofit organizations to remove lead-based paint hazards in low-income housing. Projects that were not funded in 2008 due to lack of funding are the targets of this additional money
Home Loan Limits Reinstated
The 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans have been reinstated. These limits in 2008 were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie Mae and Freddie Mac. The overall maximum cap was $729,750.
The HUD Secretary, with discretion, is allowed to increase the loan limit for any “sub-area”, limited by the $729,750 cap. These 2009 limits will expire December 31, 2009. [See first tuesday article “FHA 2009 Loan Limits“]
First-time Homebuyer Tax Credit as a Non-refundable Grant for 2009 Purchases
Internal Revenue Code §36
Amended by HR1
Effective: Immediately
The ceiling for the first-time homebuyer credit introduced in 2008 was increased from $7,500 to $8,000. For married couples filing separately, the ceiling increased from $3,750 to $4,000.
Principal residences purchased (closed escrow) during the 11-month period between January 1, 2009 and November 30, 2009 will not have to pay back the $8,000 credit as it is treated as a grant, unless the residence is sold or is deemed no longer the first-time homebuyer’s principal residence within three (3) years of the purchase date.
Homes purchased under the 2008 first-time homebuyer rules will still need to pay back the credit to the IRS.
Click here for more information on the 2008 first-time homebuyer credit as it was originally passed in July 2008. [See first tuesday article “HR3221: The Unfortunate Housing Act of 2008“]
States to Receive Grants for Low-income Housing Projects
Internal Revenue Code §42
Added and amended by HR1
Effective: Immediately
The Treasury Secretary is to grant to the housing credit agency of each state an amount equal to that state’s low-income housing grant election amount. This is of interest to builders and syndicators who sell tax credit situations to group investors.
Such grants would be in lieu of state 2009 low-income housing credit allocations.