DEFINITION of 'Foreclosure Prevention Act of 2008'
A housing act that is designed to help families keep homes that are facing foreclosure and stabilize the overall housing market. The American Housing Rescue and Foreclosure Prevention Act of 2008 seeks to achieve this goal through measures such as increased tax credits for low-income households and first time home buyers, and by encouraging the use of housing bonds to finance rental properties and affordable housing projects.
BREAKING DOWN 'Foreclosure Prevention Act of 2008'
The American Housing Rescue and Foreclosure Prevention Act of 2008 was passed by Congress on July 26, 2008, and was signed into law by President George W. Bush on July 30, 2008. The housing rescue law does not solve all of the problems created by relaxed subprime lending practices, the bursting of the U.S. housing bubble in 2006 and the effects of a sluggish economy, but it is expected to restore lending and borrowing stability for families in the future.
The bill expanded the available tax programs in an attempt to alleviate the financial pressures on low- and middle-income households. It also attempts to restore confidence in the American credit markets.
Homeowners facing foreclosure should consider all details; however, as conditions apply, and application to the program has a cost. For example, if homeowners sell their homes within the five years following a mortgage refinance, they must relinquish 50-100% of their proceeds to the government, according to a sliding scale.