To move the country out of this economic crisis, Congress and the next administration must place significant emphasis on restoring confidence in the housing market, Charles McMillan, the National Association of Realtors® president, testified to the House Financial Services Committee Tuesday.
“The housing sector is at the core of the current economic crisis,” McMillan says. “A renewed, revitalized and robust housing market is essential to generating commerce and helping families build wealth.”
McMillan said he was glad to see that Chairman Barney Frank, D-Mass., introduced last week H.R. 384, the TARP Reform and Accountability Act. Many points in this bill reinforce NAR’s proposed recovery plan to stimulate housing investment, mitigate foreclosures, help current home owners, and provide needed liquidity to commercial mortgage markets to ensure that financing is available.
The principle focus of NAR’s plan is to ensure that the Troubled Asset Relief Program does what it was originally intended to do—end the credit crisis and jump start mortgage lending.
“It is imperative to get TARP back on track by targeting funds for mortgage relief, which will help lower mortgage rates and reduce foreclosures,” McMillan said. “In addition, eliminating the repayment feature of the first-time home buyer tax credit and expanding it to all home buyers; reinstating the higher mortgage loan limits for FHA, Fannie Mae and Freddie Mac; and lowering mortgage interest rates through a buy-down program will meaningfully impact the housing industry.”
NAR’s plan also includes keeping mortgage interest rates low, boosting home buyer confidence, and reducing the current foreclosure rate. NAR has also asked that regulators be encouraged to help financial institutions resolve problems in the short-sale process, make it easier for servicers to modify existing loans, remove unreasonable underwriting guidelines and insist that credit reporting agencies correct errors promptly.
“Low interest rates are only effective if people can get a loan,” McMill said. “We hear every day from our members that even home buyers with good credit are having trouble getting mortgage loans. We must all work together to unclog the housing and financial system.”
NAR called on Congress to use current TARP dollars to not only reduce interest rates, but also fix operational issues that are preventing consumers from getting or modifying home loans.
“These are critical steps that must be undertaken quickly if we are to right our nation’s housing and financial markets,” McMillan said.
NAR hailed the House of Representatives’ actions and called on the Senate to move quickly in adopting its proposal. NAR also expressed hope that the new administration will focus on a housing recovery as it moves forward with a larger stimulus package.