6 ideas to give housing a boost
Members of Congress got together recently with consumer advocates, real estate professionals and think-tank folks to try to figure out ways Washington could help the housing market recover.
Their ideas could benefit homeowners who’ve had a hard time taking advantage of today’s bargain interest rates as well as home buyers who’ve been sitting out the current market.
Here are the 6 ideas they came up with to boost the housing market:
Give first-time home buyers down payment vouchers. Sen. Jeff Merkley (D-Ore.) says single people should get $2,500 vouchers and couples should get $5,000 vouchers they could use to buy homes.
He also likes a strategy Ocwen Financial Corp. is using to fight foreclosure. The company forgives a portion of the mortgage, and in exchange, the homeowner shares 25% of any future home price appreciation with Ocwen.
Expand the Making Home Affordable program. Sen. Johnny Isakson (R-Ga.) and Rep. Dennis Cardoza (D-Calif.) want to let you refinance when you owe the lender more than your home is worth.
So, if you owe $125,000 on your mortgage but your home is worth $100,000, you could still refinance your loan to take advantage of today’s historically low interest rates.
Isakson also wants people to be able to withdraw up to $50,000, or 50% of their 401(k), without paying a penalty if they use the money to reduce the size of their home mortgage or make mortgage payments if they’re having financial difficulties.
Attack student loan debt. Consumer advocate Ellen Schloemer, executive vice president of the Center for Responsible Lending, would like to find a way to reduce student loan interest rates and debt so more young people would be able to buy homes.
High student loan payments are preventing 30-somethings from buying homes, she said.
Get Fannie, Freddie active. Richard Smith, CEO of Realogy Corp, which owns Century 21, Coldwell Banker, ERA and Sotheby’s International Realty, wants Fannie Mae, Freddie Mac and FHA to sell more of their foreclosed homes to real estate investors.
Kill Fannie, Freddie fees. Kevin Schneider, CEO of Genworth Financial’s U.S. mortgage insurance company, wants to get rid of fees Fannie Mae and Freddie Mac charge home buyers who make small down payments.
He’d also like to kill a plan by bank regulators, called the Qualified Residential Mortgage rule, that will make people who refinance or buy a home with less than 20% down pay higher interest rates.
Stop government from meddling. National Association of Realtors president Ron Phipps wants the government to stop doing things that harm the real estate market, such as lowering the maximum size of the mortgage you can get from the Federal Housing Administration, letting the National Flood Insurance Program lapse five times in the past two years and talking about ending the mortgage interest deduction.
The real estate market will self-correct if the government stops doing it harm, he said.