NAR Proposes Four-Point Plan to Revive the Housing Market

The National Association on Realtors (NAR) has proposed four key points to be included in any future stimulus package to help stabilize the housing market and, in turn, improve the economy.

The four-points put forth in NAR’s Housing Stimulus Plan are:

1. Make the $7,500 first-time home buyer tax credit available to all buyers and eliminate repayment requirements. The credit’s limited availability and repayment requirements severely minimize the credit’s use and effectiveness.

2. Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent. New rules for 2009 will reduce them. Now is not the time to limit mortgage affordability.

3. Get the Treasury relief program back on track and target more funds for mortgage relief. Create a federal mortgage interest buy-down program to make below-market rates available and stabilize home prices.

4. Permanently bar banks from engaging in real estate brokerage and management. The banks have proven they have enough to do to simply manage the loan process. Banks should not manage home sales and purchases.

I truly appreciate the efforts of NAR to create this Housing Stimulus Plan proposal. It is important to know what NAR views as essential steps toward improving the housing market and the economy.

Most of the points suggested in the plan are mortgage-related, benefiting the home buyer. In many ways reducing the interest rate, providing a $7,500 tax credit without repayment, and increasing the loan limits would stimulate more buying and eventually help balance the demand for homes with the supply of homes.

On the flip side, we have to slow down the supply of homes by keeping distressed home owners in their homes. This can be achieved if lenders work out affordable loan terms with home owners that are on the brink of foreclosure. What would it take for lenders to do this? A law obligating current lenders to agree on loan modifications to qualifying applicants is a start. But first, lenders should cut down on the maze they are putting their customers into. There should be an easier and faster way for lenders to make adjustments for borrowers who are showing signs of distress.