The National Association of Realtors® (NAR) is getting it right, this time. REALonomics did not agree with NAR’s previous rubber stamping of the Bush-Paulson-Bernanke $700 billion bail out. Nor did we agree with NAR’s attempt to get the industry to back the bail-out, prima facia.
This time around, however, NAR is getting it right and deserves the support of the industry…yes, I have already sent my letter to my elected officials supporting “The Four Point Plan” put forth by by NAR. REALonomics is endorsing this plan with comments inserted into NAR’s message that was emailed to members.
RESPONSE TO THE FOUR POINT PLAN
NAR has urged Congress to include the following provisions in any future legislation:
NAR POINT ONE: Make the $7500 tax credit available to all purchasers and eliminate the repayment requirement. The credit’s limited availability and required repayment terms have severely limited the credit’s appeal to potential homebuyers. As a result, the credit has not been widely used or proven effective at stimulating sales.
REALonomics: We concur. The tax credit should be a true credit against taxes, however, and at the descretioin of the buyer, be taken in one year or extended to up to three years of equal credit deduction. This would allow each consumer some flexibility in the application of the credit based upon income and other factors. In addition, we would like to see the deduction made available to investors who purchase in calendar year 2009.
NAR POINT TWO: Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent. New rules for 2009 would significantly reduce the FHA, Fannie Mae and Freddie Mac loan limit from their 2008 levels. Now is not the time to limit the availability of affordable mortgages.
REALonomics: This part of NAR’s plan needs further clarification for members. In general, we concur, but the devil could be lingering in the details on this one.
NAR POINT THREE: Get the Emergency Treasury bank relief program back on track by targeting more funds to mortgage relief efforts and increasing efforts to mitigate foreclosures. Don’t just give the banks unrestricted cash. Make the program work to improve mortgage and housing markets as it was originally intended.
REALonomics: Yes, NAR, this position is the correct one! We were all burned by the ambiguity of the emergency relief program and we, in fact, got hood-winked into believing that toxic mortgages were going to be purchased and sold to investors at discounts. In fact, the banks just banked (pun obvious) the bucks or, in some cases used the funds to purchase other banks. But the problem is also an empowered Treasury Secretary who could simply redirect the funds in just about any way he so desired. To date not a single mortgage has been purchased and resold. The mitigation of foreclosure loses is a tricky one and REALonomics takes a very conservative approach to how this should work. Consumers who are in default should not be rewarded without some additional tax incentives to those who are not in default. We cannot reward bad behavior. Leveling the playing field is going to require caution and discipline.
NAR POINT FOUR: Permanently bar banks and banking conglomerates from engaging in real estate brokerage and management. The banks have proven they have enough to do to simply properly manage their current lines of business. Do we really want them to manage the home buying process? Imagine what could have been the situation now if they already had the added ability to engage in real estate sales.
REALonomics: On this point REALonomics disagrees with NAR. Point four should not be on the table at this time. Although we are not yet convinced that we should advocate bank brokerage models, there remains a lot of room for discussion on how banks can collaborate in economic partnerships with real estate brokerage firms in order to shore-up the profitability of each to the benefit of the consumer. It’s understandable why NAR, as a preservation move, would call for this issue to be addressed and finalized. REALonomics still advocates streamlined and consumer-centric home buying/home financing models. Such models might be created out of financial partnerships that are carefully blueprinted so that banks and brokerage can maintain levels of expertise.
CLICK HERE to take action on the NAR Four Point Plan (NAR members only).