Housing And Economic Recovery Act (HERA)
Categories: Regulations, Mortgage
The Housing And Economic Recovery Act (HERA) was meant to soften the blow of the subprime mortgage crisis of 2008, which led to foreclosures, refinancing, and of course, the Great Recession. Bummer times.
HERA did a few things, but the main purpose was to restore faith in the US’s quasi-governmental institutions for conventional mortgages: Fannie Mae and Freddie Mac. Fannie and Freddie were both full-on government institutions until the late 1960s, when they became kinda-private, kinda-not, which is also when the secondary mortgage market opened up...which is the place where the bubble burst down the road decades later.
Specifically, HERA helped subprime mortgage owners in a jam refinance, gave a tax credit to those already in the process of buying a house (oof...talk about bad timing), and clamped down with more regulatory licensing and registration for banks...like they didn’t already have to do those things.