On January 29, 2008, the House of Representatives passed H.R. 5140, the economic stimulus package. This bill, agreed to by the Administration includes several important housing provisions. These include increases in the loan limits for Fannie Mae and Freddie Mac and also FHA. The bipartisan vote of 385-35 demonstrates the overwhelming support for this proposal.
The House and the administration view strengthening the housing market as key to improving the national economy. Here is what was included in the package:
- The FHA limit will increase to as much as $729,750 in high cost areas (to 125% of local median home prices). This is a one year increase, pending final passage of FHA reform (which passed the House and Senate last year).
- The GSE limit will be increased up to $729,750 for one year. Currently Fannie Mae and Freddie Mac are capped at $417,000. It appears that there will be a formula similar to that of FHA, with GSE loan limits increasing to 125% of the local median home price, but not to exceed $729,750.
In addition, the package includes a bonus depreciation provision for leasehold improvements. This will allow 50% of the cost of a leasehold improvement placed into service in 2008 to be deducted in 2008. The remainder of the cost of the asset will be amortized over the remaining 38 years of the structure's life. The Senate is expected to consider HR 5140 early this week.
