Housing and Economic Recovery Act

The Housing and Economic Recovery Act of 2008 (Pub.L. 110–289, 122 Stat. 2654, enacted July 30, 2008) (commonly referred to as HERA) was designed primarily to address the subprime mortgage crisis. It authorized the Federal Housing Administration to guarantee up to $300 billion in new 30-year fixed rate mortgages for subprime borrowers if lenders wrote down principal loan balances to 90 percent of current appraisal value. It was intended to restore confidence in Fannie Mae and Freddie Mac by strengthening regulations and injecting capital into the two large U.S. suppliers of mortgage funding. States are authorized to refinance subprime loans using mortgage revenue bonds. Enactment of the Act led to the government conservatorship of Fannie Mae and Freddie Mac.

The Act was passed by the United States Congress on July 24, 2008 and signed by President George W. Bush on July 30, 2008.

Some provisions of the law were modified by the American Recovery and Reinvestment Act of 2009, which was signed into law by President Obama on February 17, 2009.

The Act also established the Federal Housing Finance Agency (FHFA) out of the Federal Housing Finance Board (FHFB) and Office of Federal Housing Enterprise Oversight (OFHEO).

Through the powers granted to FHFA, created by the Act, on September 7, 2008, FHFA director James B. Lockhart III announced he had put Fannie Mae and Freddie Mac under the conservatorship of the FHFA. The action is "one of the most sweeping government interventions in private financial markets in decades".

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