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.