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Understanding the Housing and Economic Recovery Act of 2008 and Its Implications
Definition & Meaning
The Housing and Economic Recovery Act of 2008, commonly known as HERA, is a federal law in the United States aimed at addressing the subprime mortgage crisis that emerged in 2008. This legislation introduced various reforms to the regulation of government-sponsored enterprises (GSEs) and modernized the Federal Housing Administration (FHA). HERA authorized the FHA to guarantee up to $300 billion in new 30-year fixed-rate mortgages for subprime borrowers, contingent upon lenders reducing principal loan balances to 90 percent of the current appraisal value. The Act also aimed to bolster confidence in Fannie Mae and Freddie Mac by enhancing regulatory oversight and injecting capital into these entities, which are significant players in the mortgage funding market.
Table of content
Legal Use & context
HERA is utilized primarily in the context of housing finance and economic recovery. It is relevant in areas such as real estate law and financial regulation. Legal practitioners may encounter HERA when dealing with mortgage refinancing, GSE regulations, or federal housing assistance programs. Users can manage some related processes themselves using legal templates available on platforms like US Legal Forms, especially for refinancing or loan modification agreements.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A homeowner with a subprime mortgage is struggling to make payments. Under HERA, they may qualify for a new FHA-backed mortgage that reduces their loan balance, allowing them to keep their home.
Example 2: A state government uses mortgage revenue bonds authorized by HERA to refinance subprime loans, helping residents avoid foreclosure and stabilize the housing market. (hypothetical example)
Relevant laws & statutes
Key statutes related to HERA include:
Housing and Economic Recovery Act of 2008 (Public Law 110-289)
American Recovery and Reinvestment Act of 2009, which modified certain provisions of HERA.
State-by-state differences
Examples of state differences (not exhaustive):
State
Key Differences
California
State programs may offer additional refinancing options beyond HERA.
Texas
Specific regulations on mortgage lending may affect HERA's implementation.
Florida
State housing initiatives may complement HERA provisions for homeowners.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
American Recovery and Reinvestment Act
A law aimed at stimulating the economy through various measures.
Focuses more on economic stimulus rather than housing specifically.
Federal Housing Administration
A government agency that insures loans made by approved lenders.
FHA is a part of HERA but has broader responsibilities beyond its provisions.
Common misunderstandings
What to do if this term applies to you
If you are a homeowner struggling with a subprime mortgage, consider exploring options under HERA for refinancing. You can also look into legal templates available on US Legal Forms to assist with the process. If your situation is complex, seeking professional legal advice may be beneficial.
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