HUD Secretary Announces Monetization of Tax Credit at NAR Real Estate Summit

WASHINGTON, May 12, 2009

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that the
Federal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a downpayment.

Donovan’s remarks came in an address to several thousand Realtors® gathered this morning at The Real Estate Summit: Advancing the U.S. Economy, a special daylong session at the Realtors® Midyear Legislative Meetings & Trade Expo here.

Secretary Donovan said that important changes, which the National Association of Realtors® has been calling for, will help consumers purchase a home. “We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment,” Donovan said. According to Donovan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Donovan said the Obama administration plans to further stabilize the housing market. “I do think we have some early signs hat the market overall is stabilizing,” said Donovan. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said, “As the leading advocate for housing issues and homeownership, NAR continues to take a leadership role in promoting ideas for improving our economy by stabilizing the housing and real estate markets. Today we have the best of the best to begin a dialogue, develop solutions and initiate action toward real estate and economic recovery.”

The morning session included a panel discussion that was moderated by CNBC’s Ron Insana. The 13 panelists and Realtors® in attendance examined cutting-edge solutions necessary to promote and preserve homeownership and real estate development, stimulate the economy, and protect the nation’s taxpayers. They also shared their ideas on what the role and responsibility of the federal government is in the revitalization effort.

The list of distinguished panelists include Dr. Martin Feldstein, professor of Economics from Harvard University; Dr. Barry Bluestone, professor of Political Economy from Northeastern University; John Taylor, CEO of the National Community Reinvestment Coalition; Maria Kong, president of the National Association of Real Estate Brokers; and Sarah Rosen Wartell, executive vice president for the Center for American Progress.

“Right now the Federal Reserve is the market,” said Jay Brinkman, chief economist for the Mortgage Bankers Association. “What will be the effect when the Fed stops buying?” Brinkman explained that an exit strategy must be planned for the long-term; the federal government cannot continue to support the mortgage markets indefinitely.

“We must make sure FHA and the GSEs are supported,” added the Wharton School’s Susan Wachter.

“We are thrilled that so many high-caliber individuals were able to join us today at this important meeting to promote stability in the housing market and the U.S. economy,” McMillan said. “We look forward to an ongoing dialogue and action toward this goal, during our midyear meetings this week and beyond.”

The real estate summit is part of the Realtors® Midyear Legislative Meetings & Trade Expo here through Saturday. During the week, more than 8,500 Realtors® will attend meetings, visit lawmakers and inspire action on Capitol Hill.

Economy: Federal Efforts May Be Taking Hold

The housing stimulus package passed by the federal government earlier this year is working its way through the system.
By Lawrence Yun | May 2009

Are housing markets finally turning around? Existing-home sales increased 5.1 percent in February to a seasonally adjusted annual rate of 4.72 million units. The rise seems sharp but comes off exceptionally soft activity in January, so we’re far from declaring victory. Yet several developments give us reason to hope for a sustainable upturn.



First, the housing stimulus package passed by the federal government earlier this year is working its way through the system. Among other things, it provides a first-time home buyer tax credit of up to $8,000. From this incentive we estimate an additional 300,000 sales this year, plus additional sales as trade-up and trade-down buyers jump into the market. The package also restores high-cost conforming loan limits to $729,750, giving more people access to low mortgage rates.



When you combine these stimulus efforts with recent action by the Federal Reserve to increase its use of economic recovery funds to buy mortgage-backed securities, mortgage rates could stay at historically favorable levels for some time.



Affordability also is working for us. Housing affordability levels are at their most favorable mark since the NATIONAL ASSOCIATION OF REALTORS® first started tracking the data in 1971.



To be sure, some hurdles still exist. Underwriting standards are tough, creating a snag for many households that would like to buy. But those who qualify can lock in low rates and enjoy the upper hand in price negotiations.



It’s too soon to tell whether the upturn will last. The homebuying process takes several months, so we’ll need to wait until early summer before we know whether everything the federal government is doing is taking hold. But for now we have reason to hope for the best.

Realtors® Push Mortgage Reform

WASHINGTON, May 05, 2009

Home buyers must be protected against mortgage lending abuses while being assured of access to affordable mortgages. Toward this end, the National Association of Realtors® today expressed its support of H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009.

“Realtors® have a strong stake in preventing abusive lending for many reasons. Beyond the devastating impact on individuals and families, abusive lending erodes confidence in the nation’s housing system, and entire communities are harmed whenever abusive lending strips equity from homeowners,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth.

As consumer abuse in mortgage lending increased in the earlier part of this decade, Realtors® established a set of “Responsible Lending Principles” in 2005 with the goal of protecting consumers in the housing market. “After years of sharing our Responsible Lending Principles with Congress, NAR is extremely pleased that H.R. 1728, which embodies these principles, is set to be voted on this week,” McMillan said.

In a letter to Congress, NAR expressed strong support for H.R. 1728, including measures to ensure that all mortgage originators act in good faith and that all parties in a real estate transaction are treated honestly. “We ask members of Congress to indicate their support of consumers and the housing market by voting in favor of this important legislation,” said McMillan.

“On behalf of our members and consumers nationwide, NAR is committed to ending abusive and predatory lending practices and will continue to advocate sound, responsible legislation. We urge quick passage of this bill and swift implementation of penalties to those who dare to act dishonestly,” McMillan said.

NAR: Pending Home Sales, Affordability Rise

Daily Real Estate News | May 4, 2009 | Share

Pending home sales rose with many first-time buyers taking advantage of historically good housing affordability conditions, according to the latest report by the NATIONAL ASSOCIATION OF REALTORS ®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, increased 3.2 percent to 84.6 from a level of 82 in February. It is 1.1 percent higher than March 2008 when it was 83.7.

Lawrence Yun, NAR chief economist, says it should take a few months for the market to gain momentum.

“This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a down payment,” he says. “We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around.”

By Region

Here is a breakdown of pending home sales by region:

• South: rose 8.5 percent to 93.2 in March and is 7.7 percent above a year ago.
• West: increased 3.9 percent to 93.1 and is 1.7 percent higher than March 2008.
• Northeast: fell 5.7 percent to 59.5 in March and is 24.1 percent below a year ago.
• Midwest: slipped 1 percent to 82.3 but is 8.2 percent higher than March 2008.

NAR: Affordability Remains High

Meanwhile, NAR’s Housing Affordability Index remained near record highs.

The affordability index was 166.7 in March – down from an upwardly revised record of 174.4 in February due to higher home prices in March. The index remains 30.8 percentage points higher than a year ago.

The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.

NAR President Charles McMillan says the increase in buying power is quite remarkable.

“Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment,” he says. “For buyers who’ve been on the sidelines and have good jobs, the market has never looked more favorable. Homeownership has always offered immediate benefits and long-term value, but the advantages in today’s market are unique.”

A median-income family, earning $61,100, could afford a home costing $291,600 in March with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest.

Affordability conditions for first-time buyers with the same income and small down payments are roughly 80 percent of that amount. The affordable price was notably higher than the median existing single-family home price in March, which was $174,900.

Source: NAR

Learn more about the 2009 first-time home buyer tax credit >