RISMEDIA—A federal mortgage interest buy-down program would help spark the housing market, the National Association of Realtors® said in a letter sent Monday to James B. Lockhart, chairman of the Oversight Board of the Federal Housing Finance Agency. NAR seeks a 4.5% mortgage interest rate buy-down program financed through the U.S. Treasury Department’s Troubled Asset Relief Program.
In the letter to FHFA, NAR shared three potential implementation procedures for a federal buy-down plan:
- TARP would fund the payment of points at the individual level.
- The Federal Home Loan Banks would raise funds by selling below-market-rate bonds to the Treasury Department for them to make the 4.5% interest rates available to lenders.
- Fannie Mae and Freddie Mac would purchase mortgages at the 4.5% interest rate but pay lenders the market rate.
“The buy-down program would complement other initiatives and help stabilize, stimulate and revitalize the housing market,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “We must address the foreclosure crisis and increase housing demand. Lower interest rates and foreclosure mitigation are two sides of the same coin. Together they represent the key ingredients to stabilizing the housing market and preserving communities and homeownership.”
NAR has calculated that a 1 percentage-point decrease in mortgage rates would result in an additional 500,000 home sales.
In addition to suggesting that TARP assets be used to buy-down mortgage interest rates, NAR has recommended other principles that would help create long-term stability by ensuring that safe and affordable mortgages are available throughout the nation:
- The higher loan limits passed in the economic stimulus bill earlier this year should be made permanent.
- The federal government should ensure sufficient capital to support mortgage lending in every type of market.
- The temporary $7,500 tax credit for first-time home buyers should be extended to all home buyers and the repayment requirement eliminated.
Courtesy of RISMedia.com