Making Progress Toward Recovery

Reducing inventory in our nation's housing markets will get the U.S. economy back on track.

April 1, 2009

There has been a healthy debate among our members about the stimulus package signed into law by President Barack Obama in mid-February. I’m grateful for the many thoughtful comments I’ve received from you—both pro and con.

Although there’s not one cure for the economic ills we’re facing, there’s one point on which I think we all agree: To get the U.S. economy back on track, we need a stable housing market. That means reducing inventory in our nation’s housing markets, and that has been the driving force behind our advocacy efforts over the past several months.

In November, NAR’s Board of Directors asked us to do four things: Push for loan limit increases for high-cost areas to be extended beyond 2008; make the $7,500 tax credit a true credit and not a loan; find ways to push interest rates down by 200 basis points; and help provide solutions to the foreclosure/short sale problem.

We’re making tremendous progress. For 2009, the loan limits for FHA, Fannie Mae, and Freddie Mac loans have been raised to $729,750 in high-cost areas. The tax credit has been raised to $8,000 with no payback, making it a true credit. And interest rates have come down 125–150 basis points.

Apart from the new stimulus bill, the administration has committed $50 billion from Troubled Asset Relief Program funds toward foreclosure mitigation, and the U.S. Treasury has doubled its commitment to buy mortgage paper from Fannie Mae and Freddie Mac. These actions should help reduce foreclosures and keep interest rates low. In addition, Fannie Mae has agreed to raise the cap on the number of investment properties eligible for loans, from four properties per borrower to 10.

On the short sales front, Fannie Mae sent an announcement to its servicers on Feb. 24 instructing them not to negotiate commissions below the amount negotiated by the listing agent (unless the commission exceeds 6 percent). The requirement took effect March 1. Fannie Mae recognizes that getting a short sale to closing requires intensive work over many months.

But we’re not finished. We’re still working every day to effect changes that will have a meaningful impact on your business. Some of our most important advocacy efforts are about preserving the homeownership benefits that exist. Shortly after we celebrated victory on getting the tax credit and higher loan limits, the Obama administration released a proposal to limit mortgage interest deductibility for high-income individuals. It’s a proposal we reject—and we’ve been working to let Congress and the administration know why we think it would further depress values and derail recovery efforts.

My theme for this year, "United Toward Tomorrow," is an apt one for the times. We’re all experiencing this faltering economy together—and together we’ll bring about better times. Thank you for your active engagement in the critical debates and advocacy efforts now taking place within this industry this association, and this country.

Charles McMillan

Charles McMillan was 2009 president of the NATIONAL ASSOCIATION OF REALTORS®.