By Stacey Moncrieff, Editor-in-Chief
When Senate Banking Committee Chair Christopher Dodd (D-Conn.) conducted a hearing last week on the credit crisis, he took aim at banks' intention to use funds from the massive $700 billion federal rescue to shore up their financial position rather than tackle the liquidity problem in the mortgage market that was so core to the government's goal in passing its bill.
"It's beyond troubling," said Dodd, "that those lenders who will be receiving billions of dollars from U.S. taxpayers are considering using those dollars not to make loans, but rather to pursue 'some acquisition opportunities' and to create a capital 'cushion' on which they will comfortably sit while the American consumer and small business person struggles."
That concern over banks' inward-looking use of the funds is one of the driving forces behind NAR's call for Congress to meet after the national elections in a lame-duck session to reinvigorate housing markets. One of the proposals NAR is touting in a four-point plan that it would like to see incorporated into legislation before the end of the year is a provision to hold banks to the purpose of the rescue by pushing them to use funds for lending.
NAR also wants to urge banks to stop dragging their feet on short sales and REO sales. "Qualified buyers must be able to get safe and affordable mortgage loans," NAR President Richard Gaylord said.
Since the introduction of its four-point plan, NAR has been in communication with members of Congress and their staff on the details. In addition to the bank provisions, the plan calls for expanding the $7,500 first-time home buyer tax credit to all buyers and eliminating that program's repayment requirement; making permanent the prohibition against banks entering real estate brokerage and management; and making permanent the high-cost conforming loan limit of $729,750, which has been in effect for less than a year.
Time is of the essence on the high-cost loan limits because the $729,750 drops to a permanent high-cost limit of $625,500 on Jan. 1.
NAR analysts say the $729,750 limit, to be effective, needs more time to work, so making it permanent before its expiration is crucial for stabilizing housing markets in high-cost areas like parts of California and Massachusetts.
To help push its four-point plan in Congress, NAR is planning a major communications push at the 2009 REALTORS Conference & Expo in Orlando Nov. 7-10 with a Call for Action to all members of Congress. To help publicize the campaign, NAR will invite REALTORS to sign their names to the exterior of a giant model house on the Expo floor emblazoned with the slogan, "We support the NAR housing stimulus plan."
The house symbolizes what the federal government's rescue package is all about: helping homeowners, buyers, and sellers on Main Street. That's something NAR hopes lawmakers, and banks, keep that in mind as hundreds of billions of federal dollars in rescue money goes to banks on Wall Street.