Obama signs Stimulus bill and will outline mortgage relief plan on Wednesday

 President Obama and Housing & Urban Development secretary Shaun Donovan will discuss their plan at 12:15p.m. EST in Mesa, Arizona. The Treasury plans to use $50 billion of the remaining $350 billion in a bank-bailout fund for a program to help troubled homeowners avoid defaulting on their loans by subsidizing mortgage payments. As soon as the details are released, we’ll post them here!

 As for the Stimulus Bill… well there is a lot to cover. For now, let’s start with the First Time Homebuyer Tax Credit. 

 1. Eight grand, new buyers: The credit is equivalent to 10 percent of the purchase price of the home--although it's capped at $8,000--and applies only to first-time home buyers and principal residences. But unlike an earlier $7,500 home buyer tax credit, this one does not have to be repaid.

2. First time buyers defined: For the purpose of this legislation, a "first-time home buyer" is someone who hasn't owned a principal residence for three years before buying a house. Spouses are treated as one, so both must meet this qualification. 

3. 2009 buyers only: Only those who purchase a home on or after January 1 and before December 1, 2009 are eligible for the credit. Anyone who bought a home last year won't be able to take advantage of it. However, those that purchased on or after April 9, 2008 may qualify for the $7,500 tax credit enacted by HR 3221. This credit must be repaid.

4. Income limits: The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, that's $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.

5. Recapture: Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)

Here are a few other highlights from the Stimulus Bill:

 FHA and conforming loan limits. Specifics have not been released but reports indicate that the 2008 limits have been reinstated for 2009 except in those communities where the 2009 limits are higher. Additional increases in individual communities may also be available at the discretion of the secretary of the U.S. Department of Housing and Urban Development.

 Foreclosure mitigation and neighborhood stabilization. Funding for states and localities to be used for neighborhood stabilization activities for the redevelopment of abandoned and foreclosed homes are authorized. Some news reports put the funding level at $2 billion.

 Rental assistance.  Up to $1.5 billion to provide short-term rental assistance and other aid for families during the economic crisis.

Rural housing development.  Increased funding for the Rural Housing Service direct and guaranteed loan programs.

Low-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.

Tax-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.  Grants for energy retrofits for federally assisted housing (Section 8), funding for energy efficiency and conservation block grants to states, increases in the residential tax credit through 2010 for certain energy efficient upgrades and $5 billion to weatherize low-income homes.

 FOR WORKERS, CONSUMERS AND RETIREES

 * A "making work pay" refundable tax credit championed by Obama of up to $400 per individual and $800 for couples in 2009 and 2010. It is calculated at a rate of 6.2 percent of earned income and is phased out for individuals with adjusted incomes over $75,000 and couples with incomes over $150,000.

 * A one-time payment of $250 to Social Security beneficiaries, railroad retirees and veterans receiving benefits from the Department of Veterans Affairs.  State government retirees not eligible for Social Security would also get the $250 payment.

 * Increases the earned income tax credit for low-income workers with three or more children.

 * Increases eligibility for the refundable child tax credit to more low-income workers. The bill reduces the income floor to $3,000 in 2009 and 2010 from the current floor of $8,500.

 * A new $2,500 tax credit for college education expenses. The credit phases out for individuals earning more than $80,000 and couples with incomes over $160,000.

 * Temporary relief from the alternative minimum tax for millions of middle-class taxpayers who otherwise would be ensnared by the tax originally meant for the very wealthy.