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The feverishly debated stimulus package has been through more revisions than the price of postage, as the honchos on Capitol Hill fought to ensure that their respective interests were addressed. Now that President Barack Obama has signed the bill into law, it is time to circle back and figure out how housing ultimately fared in the battle for resources, and what the American Recovery and Reinvestment Act of 2009 ("ARRA") will do for homebuyers and homeowners.

First, a caveat. While the stimulus package does have a number of housing-specific features, it is primarily a "jobs bill," in the words of Speaker Nancy Pelosi. Real estate consumers looking for a holistic picture of government efforts to address housing should not look at the ARRA in isolation. The Treasury Department's economic recovery plan and Obama's new Homeowner Affordability and Stability Plan, which takes effect March 4, will directly address the foreclosure crisis by creating standards and mandates for lenders to reduce the monthly mortgage payments of struggling homeowners. In fact, a couple of major mortgage banks, JP Morgan Chase and Citigroup, have announced that they are suspending all foreclosures until the administration's foreclosure mitigation plan is in place or early March -- whichever is sooner.

With that said, let's take a look at what the stimulus package does offer to help homebuyers and homeowners:

Job creation. The $789 stimulus package has been projected to increase or save more than 3.5 million jobs. This scale of job creation is likely to significantly support the housing market. Currently, unemployment is undermining the housing market, as laid-off homeowners can't afford to make their payments, and unemployed renters lose the income and ability to buy. Positioning the stimulus package's impact on jobs vs. housing as an either/or equation is simply inaccurate -- what's good for employment is good for the housing market.

FHA loan limit increases. The ARRA will increase FHA loan limits to $729,750 in high cost of living areas, and empowers the FHA to increase the loan limits even further on an area-by-area basis. This makes it easier to buy (and thus, sell) a home in a major metro area with a low down payment; currently FHA-insured mortgages require only 3.5 percent down.

First-time homebuyer tax credit extended and raised to $8,000 with no payback. In 2008, a First-Time Home Buyer Tax Credit was implemented, giving folks who had not owned a home in three years a $7,500 tax credit if they bought a home between April 9, 2008, and July 1, 2009. However, that tax credit had to be paid back over 15 years, rendering this credit essentially an interest-free loan from the government.

The ARRA increases the credit from $7,500 to $8,000, and (most importantly) eliminates the repayment requirement for those who own and occupy their homes for at least 36 months. The ARRA also extends the tax credit to apply to homes purchased through Dec. 1, 2009. This will encourage homeownership by essentially granting $8,000 to first-time homebuyers who close escrow this year.

The Final Wrap-Up

The National Association of Realtors, in a note to its members, advised them not to forget the existing real estate market supports that stay in place under the ARRA: mortgage interest and property taxes remain deductible and capital gains continue to be excluded up to $250,000 for singles and $500,000 for married couples.

While it may seem that the stimulus bill favors jobs and other economic issues, don't underestimate the potential carryover effects of employment and consumer confidence on the housing market. "There's a feeling that the stimulus... would help with some of the uncertainty about the length and depth of the recession," said E. William Stone, who oversees more than $120 billion as chief investment strategist at PNC Wealth Management in Philadelphia. That will make buyers more comfortable buying, which in turn, is great for sellers and for homeowners looking to bolster the freefalling value of their homes.

More...

• Obama's Anti-Foreclosure Plan Lends Hand to Homeowners in Good Standing
• Obama Offers Housing Help in Economic Stimulus Package
• Rescue Programs for Homeowners
• Fighting Foreclosure Guide
• What to Know Before You Refinance