Tell Congress to Fix Housing First


We need your help!  The National Association of Home Builders (NAHB) is taking decisive actions to push President-elect Barack Obama and the 111th Congress to revive the American economy by addressing the core problem to the current economic crisis…falling home values. 

The Problem:  Falling home values are at the core of the current economic crisis

The impact on the national economy of home building, and housing in general, in good times and bad, should not be underestimated.  The historic increase in foreclosures, tightened mortgage qualifying criteria, and general declining economic conditions have significantly cut demand for housing.  Housing wealth is the primary source of savings for most households and a key driver of consumer spending. 

As housing has slowed, so has the national economy.  In recent quarters, the decline in home building activity has subtracted a percentage point or more from annualized GDP growth.  These facts suggest that the recovery from the current economic crisis must begin in the housing sector.  Without addressing the crisis in home prices and residential construction, no recovery effort will be successful.  Key to this effort is stimulating housing demand.

The Solution:  Targeted incentives to encourage Americans to buy homes again.

Earlier in 2008, Congress adopted a measure providing first-time home buyers with a tax credit of up to $7,500.  While well intentioned, the legislation failed to stimulate or stabilize the housing market.  The measure’s failure can be attributed to three main factors:  the tax credit was really a loan that had to be recaptured: the tax credit was only available to first-time home buyers; and $7,500 was not enough to entice people to buy.

NAHB proposes to build upon the foundation of the homebuyer tax credit by perfecting its structure and scope.  First, eliminate the repayment requirement.  Second, make the credit larger by increasing the credit amount on a sliding scale between $10,000 and $22,000.  Third, make the credit available to all homebuyers.  Finally, extend the eligibility period for the credit to December 31, 2009.

In addition to an enhanced homebuyer credit, NAHB is advocating for a short-term mortgage subsidy for purchases made in 2009.  As you know, the Treasury Department is reportedly considering a program to provide 4.5 percent, below-market rate mortgages.  While this program is a welcome first-step, the depth of the recession demands a more aggressive response.  Specifically, NAHB proposes a federally-subsidized, 30-year fixed rate 2.99 percent mortgage for homes purchased before June 30, 2009, and a 3.99 percent mortgage rate for homes purchased before December 31, 2009.  The rate subsidy would only apply to principal residences.  This dual strategy of a homebuyer tax credit and a mortgage subsidy was used successfully during the 1970’s housing crisis, which was fed by excess inventory and falling home prices. 

Click here to view a one-pager on the home buyer tax credit and mortgage subsidy. 

AD&C Credit

The nation’s single family and multifamily home builders are currently experiencing a dramatic deterioration in credit availability for Acquisition, Development and Construction (AD&C) loans, and there is intensifying pressure on builders with outstanding loans to restructure the basic terms of the agreement.

In many instances, the construction projects are solid projects that simply need to be built out for completion.  Even builders who are current on their AD&C loan payments are facing bank demands for additional capital—builders, who would otherwise be able to complete and sell the project under the original terms of the loan, are being bankrupted because they lack the additional money the banks suddenly demand. 

NAHB is urging Congress to examine the need for regulators and lenders to provide relief to residential construction borrowers who have loans in good standing by providing flexibility on re-appraisals and forbearance on loans to give builders time to complete their projects.

Click here to view talking points on the AD&C credit crisis.

How You Can Help – Visit

Congress is currently crafting economic stimulus legislation that will most-likely be debated and voted on by Congress in early January.  It is expected that President-elect Barack Obama will sign stimulus legislation soon after his inauguration on January 20.  Now is the time to tell Congress to fix housing first and ensure that housing recovery measures are incorporated into the stimulus package.

Visit and send an electronic letter to Congress and urge their support for a homebuyer tax credit and short-term mortgage subsidy.  In addition, ask Congress to re-examine the need for regulators and lenders to give leeway to residential construction borrowers who have loans in good standing.  Need instructions on how to send the letter?  Click here.

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