HERA was passed in 2008 in response to the subprime mortgage crisis that rocked the entire economy and left many Americans underwater on their mortgages.

People would need to refinance their mortgages and this bill approved the funding to help that happen. The Housing and Economic Recovery Act did several things, all aiming to help American consumers and lending institutions get out of the recession left by the subprime mortgage bubble in 2008.

Millions of Americans had seen the value of their homes pared down significantly, and discovered that they were underwater on their mortgages. HERA approved up to $300 Billion in insurance coverage for new refinanced 30 year mortgage loans. The bill was designed to keep borrowers afloat and also to salvage Fannie Mae and Freddie Mac and to restore their credibility.

There were about six main subtitles to the act, all of which had a different focus. One part of the act made it possible for states and municipalities to issue mortgage revenue bonds (MRBs) that would raise capital that the state’s housing finance agency could use to help state banks and lending institutions make new mortgage loans.

It restructured several parts of the landscape including creating the Federal Housing Finance Agency by melding two older institutions.