In response to the continuing housing and credit crisis, the Housing and Economic Recovery Act of 2008 (H.R. 3221) (the “Act”) was signed into law on July 30. The Act is the most comprehensive federal response to the housing crisis to date and provides for greater regulation and potential financial support of the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and the Federal Home Loan Banks. The Act also expands the target population served by the FHA and creates the “Hope for Homeowners” voluntary FHA-insured mortgage refinance program.

This advisory analyzes the Act’s housing finance reform, foreclosure prevention and tax provisions, which may significantly affect participants in the primary secondary residential mortgage markets, including the residential securitization market.