New housing rules that Pres. Bush recently signed

Yesterday, Clark Howard was talking about the hew housing legislation that President Bush signed last week. These new housing rules are more than 700 pages long. But here are a couple key points:

• If you’re delinquent on your primary home, you’ll be potentially eligible for a workout — funded by taxpayers — in the fall. This voluntary measure allows lenders to write down loans to current market value plus 10%. So let’s look at the example of a $150,000 home that’s now worth $120,000. The lender would mark it down to $120,000; take a further haircut to $108,000; and then write a new loan for that amount. The homeowner must then split the profits with taxpayers upon eventual resale.

• As a first-time homebuyer, you can get a $7,500 credit courtesy again of taxpayers. This also is a loan, which you as a borrower get interest-free. You pay it back over time interest-free, and it is retroactive for those who bought from April 1, 2008 onward. There’s also an oddball loophole that allows non-first-timers to qualify for the credit. Former homeowners who recently have been renting for a couple of years may be eligible.

• Down-payment assistance programs will no longer be legal beginning in October. These programs allowed builders to raise the price of a house, say, from $100,000 to $105,000. Then the builder would make a $5,000 donation to a supposed charity. That charity would in turn give you $5,000 toward the home. The end result was that it looked like you had a $5,000 down-payment when you really did not. But the rate of foreclosure involved here was extremely high.

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