NAR's Four Point Housing Stimulus Plan

By
Real Estate Agent with 1st Action Real Estate
11-10 BOD & stimulus plan
nar

In my ongoing effort to bring you more from the business side of the 2008 NAR Conference & Expo,  today was the Board of Directors Meeting. It was an epic event spanning more than four hours in spite of the fact that there were no items of controversy on the agenda. I'll write another post on the meeting in general as there were some interesting announcement but the item that generated the most discussion today was NAR's Four Point Housing Stimulus Plan.

In an effort to be more inclusive of commercial Realtors, there were proposed amendments to the plan, which were defeated. In an effort to provide more responsiveness to people who currently have a mortgage in trouble, there were amendments which were defeated. What emerged was a simple, straightforward proposal designed to stimulate the 'BUY' side of the housing equation right now.  What follows is the verbiage of the plan as approved by the Board this morning:

As REALTORS, we know that at its core, the current economic crisis is the result of problems in our nation's housing and mortgage markets. With Congress considering a return to Washington this month for another economic stimulus effort, NAR has put forth a Four-Point Plan that mus be included in any stimulus effort in order to boost the economy and calm jittery real estate markets.

Housing has always lifted our economy out of past economic downturns. Immediate action is imperative to foster a housing recovery that historically leads any overall economic recovery.

NAR's plan would
  1. Make the $7500 first time homebuyer tax credit available to all buyers and eliminate repayment requirements. The credit's limited availability and re-payment requirement severely limit the credit's use and effectiveness.
  2. Make the 2008 FHA, Fannie Mae & 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 to mortgage relief. Create a federal mortgage interest buy-down program to lower rates to 4.5% or lower and stabilize home pries. The proposal calls for a short-term government buy-down of mortgage rates to at least 4.5% or lower, for a 30 year fixed rate mortgage (down from current rates of approximately 6.04%). This homebuyer incentive would apply to the purchase of all new and/or existing homes sold up to $1 million in price. There are a number of ways in which the government ultimately could decide to structure and fund this program, which could be addressed as part of the stimulus package currently being discussed in Washington.
  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. We do not want them to manage home sales and purchases.
As you might imagine, item 3 generated the most interest. Our lobbyists will actually be proposing an interest rate buy-down to as low as 2.99% for 1 year followed by a second year at 3.99%. Understand, these are 30 year fixed loans at 2.99% - or whatever the final amount is determined to be. Based on it's research, NAR believes that the current interest rate is artificially inflated by as much as 200 basis points, therefore it would take a real rate of @ 4% to encourage buyers to get in the game NOW. They would prefer a rate of 2.99% as a real stimulus incentive (do you have buyers who would get off the fence if they could get a 30 year fixed mortgage at 2.99% on todays housing prices? You bet!) Followed by a second year with the buy-down to 3.9%. After two years, the inventory would be largely eaten up and housing would revert to it's free market interest float - although by that time the housing recovery would have precipitated a more generalized economic recovery and interest rates should be naturally lower anyway.

In addition to approval by the Board, some 20,000 Realtor attendees at the Expo signed a large cardboard house that will be presented to legislators on our behalf. You will also shortly be asked to respond to a 'Call for Action' to notify your legislator of your support for this stimulus package. Estimated cost of the buy-down - around $100 Billion. But they just approved $700 Billion of which nothing has yet gone to the people we were told it would help. Now Nancy Pelosi just signed a letter with automakers asking for $100 Billion of that bail-out money. This would apparently enable people to move out of their foreclosed home in a new car. Thanks Nancy. Why do you people in Northern California keep re-electing this... person?

Our Buyers need that money and they need it NOW. Realtors, this will be a time to make OUR voices heard.
Gene Wunderlich - Selling Southwest California Homes including Temecula, Murrieta & The Southern California Wine Country
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Remember, Don't wait to buy real estate - Buy real estate and wait.
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' NAR Four Point Housing Stimulus Plan'
THE OPINIONS IN THIS COMMENTARY ARE STRICTLY GENE WUNDERLICH's PERSONAL OPINION. WHILE ANY REASONABLE &/or RATIONAL PERSON SHOULD AGREE, THESE VIEWS MAY NOT REFLECT THOSE OF ACTIVERAIN, COLDWELL BANKER RESIDENTIAL BROKERAGE OR ANY  LOCAL, STATE OR NATIONAL ASSOCIATIONS.

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Ambassador
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Interesting.  These are the first sensible proposals I've seen.  Let's hope we (NAR) still have some Dems that will let us in the door. 

Shucks, I could even refinance myself.  What appears to be missing is the matter of value.  Can these proposals work for folks with negative value????

Flagged.  This needs to be featured.

Love it Gene.  Good work.

 

Nov 10, 2008 07:43 AM #1
Rainmaker
227,776
Gene Wunderlich
1st Action Real Estate - Murrieta, CA
Realtor & Legislative Liaison

Lenn - they made a conscious decision to eliminate any reference to troubled mortgages in this plan. They said there are 3 other major bail-outs with funds earmarked for the troubled mortgages, adjustable rates and negative value work-outs. This plan strictly adresses the BUY side by trying to stimulate people on the fence and/or people who would buy but can't find a mortgage right now.

They also reported that the Realtor Action Fund and Presidents Circle folks spread around $13 million during this election cycle and that 95% of our supported candidates won - so I would hope there are a few doors open to us. Richard Rosenthal left early today because he has a meeting with Howard Glaser (from HUD, who spoke to us a couple days ago) and Secretary Paulsen tomorrow. No doubt this will go through some revisions before it comes to pass but it does make a lot of sense.

Nov 10, 2008 07:54 AM #2
Rainer
132,269
Jon Wnoroski
America's 1st Choice RH Realty Co., Inc. - Green, OH
Summit County Realtor

The proposals certainly make sense.  There is a need to fuel the housing industry and that need is immediate.  I certainly hope our lobbyists are successful in getting action on these proposals.

Nov 10, 2008 08:00 AM #3
Ambassador
2,703,589
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Great info.  Good that the NAR is proposing plans that would stimulate THE BUY SIDE OF REAL ESTATE, which would of course stimulate THE SELL SIDE. 

Good for REALTORS and that's their job.

 

Nov 11, 2008 12:21 AM #4
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Gene Wunderlich

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