In a letter to President Obama, administration officials and U.S. lawmakers this week, National Association of Realtors (NAR) President Ron Phipps outlined five housing recommendations for Congress and the administration to consider. The recommendations emanate from a policy meeting organized earlier this month by NAR and two policy think tanks, the Progressive Policy Institute (PPI) and the Economic Policies for the 21st Century (e21).
"It's no secret our nation's housing markets remain depressed and continue to suffer," the letter says. "While no one thought the crisis would carry on so long, markets are slowly recovering and are in need of immediate policy solutions to address the myriad challenges in order to stabilize housing and support an economic recovery."
NAR's first recommendation – labeled ‘Do Not Risk Weakening Our Nation's Housing Markets Any Further’ – adopts a do-no-harm mentality, and calls for making the Qualified Residential Mortgage rule less stringent. NAR also endorses the restoration of higher conforming loan limits and opposes calls to reduce or eliminate the mortgage interest tax deduction.
Policy makers must also focus on reducing the foreclosure inventory, according to NAR recommendation No. 2. One way to accomplish that goal would be to direct Fannie Mae, Freddie Mac and servicers to prioritize short sales above foreclosures, NAR says. The association also suggests that Congress introduce legislation encouraging a debt-for-equity strategy proposed by Reology Corp. President and CEO Richard Smith.
Third, NAR recommends that policy makers take steps to create buy-side opportunity for private investors. Among the suggestions included here are expanding the Federal Housing Administration Section 203(k) rehabilitation loan program to investors and requiring Fannie Mae and Freddie Mac to temporarily suspend investor financing limitations, such as the number of mortgage loans allowed for any one investor. (Freddie currently caps the number of loans at four, while Fannie caps it at 10.)
These two initiatives would facilitate the rehabilitation of foreclosed homes and stabilize prices for REO assets, NAR says.
Recommendation No. 4 calls for support of a secondary market that includes ‘some level’ of government participation. NAR says policy makers should reject calls for a full privatization of Fannie Mae and Freddie Mac.
‘This is not an effective option because private firms' business strategies will focus on optimizing their revenue/profit generation. This model would foster mortgage products that are more aligned with the businesses' goals than in the best interest of the nation's housing policy or the consumer,’ NAR says.
ast, NAR recommends the White House hold a national housing summit to ‘articulate a new national housing policy.’