is the right time to make your move. Where is your next home?
Marina Del Ray
License # 01497898
28051 Greenfield Drive, Suite A OFFICE: 949.640.3600
Laguna Niguel, CA 92672
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Yorba Linda - Land
Recovery and Reinvestment Act of 2009
the "American Recovery and Reinvestment Act of 2009" (AARA), passed the
House on February 13, 2009, by a vote of 246 - 184. On the same day, the
Senate passed the bill by a vote of 60 - 39. The President signed the
bill on Tuesday, February 17, 2009. The bill is a $780 billion package,
with roughly 35% of the package devoted to tax cuts (mostly for 2009)
and the rest to spending intended to occur in 2009 and 2010.
The bill includes the following provisions:
Homebuyer Tax Credit
The bill provides for a $8,000 tax credit that would be available to
first-time home buyers for the purchase of a principal residence on
or after January 1, 2009 and before December 1, 2009. The credit
does not require repayment. Most of the mechanics of the credit will
be the same as under the 2008 rules: the credit will be claimed on a
tax return to reduce the purchaser's income tax liability. If any
credit amount remains unused, then the unused amount will be
refunded as a check to the purchaser.
Fannie Mae and Freddie Mac Loan Limits
— The bill reinstates last year's 2008 loan limits for FHA, Freddie
Mac, and Fannie Mae loans. These limits 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 and Freddie, with an overall maximum cap of
$729,750. For the few areas where the 2009 limits were higher, the
higher limits will apply. In addition, the bill includes language
providing the HUD Secretary with the discretion, if warranted, to
increase the loan limit for any "sub-area", i.e.an area smaller than
a county. The Secretary's discretion is again limited by the
$729,750 cap. These 2009 limits will expire December 31, 2009.
The inclusion of these loan limit provisions in the final bill is a
victory for homeowners, buyers and REALTORS®. While these new limits
were included in version of the original stimulus bill approved by
the House, the bill first approved by the Senate did not. NAR's Call
for Action to both the House and the Senate prior to the final vote
advocated strongly for the provisions which were then included in
the final bill approved by both Chambers. NAR has estimated the new
2009 Loan Limits by county.
— Division A, Title XII of the bill provides $2,000,000,000 in
additional funding for the Neighborhood Stabilization Program (NSP).
The NSP was created by the Housing and Economic Recovery Act of 2008
(Public Law 110-289) to provide grants through the Community
Development Block Grant program (CDBG) to states and localities to
address the problems that can be created when whole neighborhoods
are decimated by foreclosures. The funds can be used to purchase,
manage, repair and resell foreclosed and abandoned properties. In
addition, the funds can also be used by states and localities to
establish financing methods for the purchase and redevelopment of
foreclosed properties. After purchase the homes must be used to
assist individuals and families with incomes at or below 120% of
area median income. Twenty-five percent of funds must be used for
households with incomes at or below 50% of area median income. By
leveraging their expertise in partnership with others from both the
public and private sector, REALTORS® in many communities have been
making important contributions to their local communities'
neighborhood stabilization programs.
Commercial Real Estate
— Commercial real estate is impacted primarily through those
provisions of the bill focused on green building and energy
efficiency as well as business tax incentives. H.R. 1 provides
significant funds for state energy programs, which could be used to
support commercial property owners' investment in energy efficiency
upgrades while commercial property owners seeking to invest in
alternative energy systems for onsite power generation would benefit
from the Department of Energy Renewable Energy Loan Guarantees
Program. Of particular benefit to small businesses would be certain
provisions of the bill that provide tax relief in the area of bonus
depreciation and capital expenditures, as well as the 5-Year
carryback of net operating losses for small businesses.
Rural Housing Service
— The bill provides an additional $500 million to existing USDA
Rural Housing programs. The RHS provides both a guaranteed loan
program and a direct housing loan program for those meeting the
program's eligibility criteria. The direct loan program will receive
$270 million while $230 million will be allocated for unsubsidized
guaranteed loans. It has been reported that this level of funding
would provide for an additional 192,000 homeowners.
Income Housing Grants
— Allow states to trade in a portion of their 2009 low-income
housing tax credits for Treasury grants to finance the construction
or acquisition and rehabilitation of low-income housing, including
those with or without tax credit allocations.
Exempt Housing Bonds
— Tax-exempt interest earned on specified state and local bonds
issued during 2009 and 2010 will not be subject to the Alternative
Minimum Tax (AMT). In addition, financial institutions will have
greater capacity to purchase tax-exempt state and local bonds.
Energy Efficient Housing Tax Credits & Grants
— To promote green jobs and energy independence, ARRA invests
significantly in efforts to make homes and buildings more energy
efficient. The bill provides state and local governments with $6
billion in energy efficiency and conservation grants for energy
audits, retrofits and financial incentives. Through 2010, homeowners
will be able to claim a 30% tax credit (up from 10%) for purchases
of new furnaces, windows and insulation. Another $5 billion will be
available to modernize the nation's electricity grid and install
smart meters on homes that help to save consumers money. There is
also $5 billion for weatherization assistance for low income
households and $2 billion for federally assisted housing (section 8)
— The bill provides $46.7 billion to states and localities for
capital investment for surface transportation projects including
highways, bridges, transit, and rail projects. NAR policy supports
increased spending on the types of transportation infrastructure
addressed in the bill with the exception of Amtrak and high-speed
inter-city rail where NAR has no policy. These investments will tend
to moderate traffic congestion and support a variety of
transportation alternatives which will improve the quality of life
of American communities and bolster the value of real estate.
— The bill creates $7.2 billion in grants to promote broadband
deployment in unserved and underserved areas and for mapping the
availability of broadband service in the U.S. Any entity is eligible
to apply for a grant including municipalities, public/private
partnerships and private companies as long as they comply with the
grant conditions. The grants are subject to "network neutrality"
requirements to ensure that broadband networks be free of
restrictions on content, sites, or platforms, on the kinds of
equipment that may be attached, and on the modes of communication
allowed. The bill also charges the FCC is with developing a national
broadband plan that shall seek to ensure that all Americans have
access to broadband capability and shall establish benchmarks for
meeting that goal.
provisions are important victories for REALTORS® because increased
broadband access promotes economic growth and expands opportunities for
home sales. A 2006 Commerce Department report determined that property
values are 6% higher in communities where broadband is available