Here's how housing relief bill works

After more than a month of fine-tuning, Congress finally passed a measure that's meant to help struggling homeowners and nudge hesitant first-time buyers.

There's a lot to dissect in the bill's more than 700 pages, but I'll try to strain out the important pieces.

The legislation's centerpiece is an expansion of the Federal Housing Administration's loan guarantee programs, which could help troubled borrowers refinance into more-affordable loans. Lenders have to agree to forgive a portion of the borrower's debt that amounts to at least 10 percent of the property's current appraisal value. Borrowers also have to agree to share their home's appreciation with the FHA when they sell the property.

Real estate industry groups are praising a $7,500 tax credit that's available to first-time home buyers, saying it could stimulate property sales.

The credit is more like an interest-free loan that's paid back over 15 years through annual tax filings, and it's available until July 1, 2009.

Under the rescue bill, a first-time buyer is someone who hasn't owned their primary residence in the past three years.

The credit is not available to individuals who make more than $75,000 annually.

But while the credit is available only to a select group of buyers, some real estate experts say it could create a ripple effect. As first-time buyers commit to a home, that property's previous owners can buy another place, that home's owners in turn can buy another home, and so on.

More information on this is available at federalhousingtaxcredit.com.

On the downside for buyers, though, FHA loans now call for a down payment of 3.5 percent, a slight increase from the previously required 3 percent.

The bill will make $180 million available to groups that offer foreclosure counseling. Family Services Inc. of North Charleston, a nonprofit that offers those services free to South Carolina homeowners, will likely apply for some of that money in the absence of state funding.

The bill passed eight days ago, but without the help of Sen. Jim DeMint (R-S.C.), who objected loudly to the effort.

The day Congress passed it, he issued a statement saying his colleagues "crossed a dangerous line between freedom and socialism."

DeMint criticized Fannie Mae and Freddie Mac, two government-sponsored enterprises that back a major portion of U.S. home loans, for lobbying politicians while in a delicate financial state. The measure extended an unlimited line of credit to the two publicly traded companies.

DeMint also took issue with a handful of other spending projects that blurred "free market economy" lines, including a $4 billion fund that allows cities to buy blighted foreclosed homes in urban areas and fix them up.

President George W. Bush didn't like that urban housing funds provision either, but he signed the bill anyway on Wednesday.

On display

Design plans for Midtown — a massive hotel, condo and retail project that will anchor the north end of King and Meeting Streets in downtown Charleston — have been in the planning process spotlight for months now.

But just in case you missed the meetings and news coverage, those plans will be on display from 4:30-6:30 p.m. Wednesday at 556 King St.

The portion of the project between King Street and the railroad tracks that cross Spring Street is up for preliminary approval from the city's Board of Architectural Review on Aug. 13.

Reach Katy Stech at 937-5549 or kstech@postandcourier.com.