What Is HERA And How Does It Work?: The Comprehensive Guide
What Is HERA And How Does It Work?: The Comprehensive Guide
Abstract
What Is Housing and Economic Recovery Act? The Housing and Economic Recovery Act was drafted to countermeasure and revive the US economy after the subprime mortgage crisis of 2008. Housing and Economic Recovery Act prompted the Federal Housing Administration to guarantee three hundred billion dollars in new mortgages targeting subprime borrowers. How Does The HERA Work? The Prime intention of introducing the Housing and Economic Recovery Act was to restore public confidence in the loan-providing government-sponsored enterprises mainly, Fannie Mae and Freddie Mac. The act created Federal Housing Finance Agency which permitted states to refinance subprime mortgages with mortgage bonds. Under the Housing and Economic Recovery Act, there were some sub-acts included. Housing Assistance Tax Act of 2008: This sub-act provides first-time buyers with a significant tax credit of 10 percent of the purchase price of residential homes, payable in equal installments over 15 years. Putting all the sub-acts together, HERA helps to protect the borrowers from unfair and predatory lending practices so that borrowers can be confident about buying houses in a stable housing market without worrying about another housing crisis.
