President Obama's New Housing Plan Draws Reaction from Various Industry Associations

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This week President Obama announced his latest plan to revive the U.S. housing market, outlining a plan to help homeowners take advantage of record low mortgage rates, even if they are upside down and owe more than their homes are worth.

President Obama said in a speech at a community center in Falls Church Virginia, "This housing crisis struck right at the heart of what it means to be middle-class in America: our home".

Obama continued, "It's personal. It affects so much of how people feel about their lives, about their communities, about the country, about the economy. We need to do everything in our power to repair the damage and make responsible families whole again."

Following up on a proposal stated in his State of the Union address, the president has asked Congress for a tax on large banks to help "responsible homeowners" who are current on their payments refinance at today's low rates.

"No more red tape. No more runaround from the banks. And a small fee on the largest financial institutions will make sure that it doesn't add to our deficit," the president said, predicting that his plan would save the average borrower roughly $3,000 a year.

While the proposal faces an uphill battle in Congress, Obama said he is not waiting to take action. Announcing a new homeowners' Bill of Rights and streamlined mortgage form, the president explained that he understands what it's like to be stumped by all the paperwork.

The National Association of Home Builders (NAHB) chairman Bob Nielsen tells the World Property Channel, "The nation's home builders commend President Obama for highlighting the vital role that housing plays in the U.S. economy, for recognizing the high value that Americans place on homeownership and for focusing on how to address the nation's housing problems. Clearly, more decisive actions are needed to increase refinancing opportunities, to reduce the inventory of foreclosed homes and to prevent additional homes from going into foreclosure. NAHB looks forward to working with the Administration and Congress to find constructive solutions in these areas as soon as possible."

Nielsen further commented, "To create jobs and further stabilize housing and the economy, NAHB is also urging policymakers to end excessively tight lending standards that are preventing qualified borrowers from obtaining a mortgage and home builders from getting construction loans to build viable projects in communities that want and need them."

Ethan Handelman, Vice President for Policy and Advocacy for the National Housing Conference said, "President Obama's announcement today reinforces what we all know--we need coordinated action at many levels to restore housing markets, help struggling households, and support a broader economic recovery.  That action must, by necessity, be bipartisan and cooperative.  We urge Congress to take up these proposals in a spirit of bipartisanship and the Administration to move swiftly to implement the elements that it can do on its own."

"More, however, is needed.  Secretary Donovan, in his remarks today, referred to the mounting evidence that principal reduction will help restore housing markets, helping not only individual households but all of the institutions that depend on housing.   The proposals announced today are a step in the right direction.  More can be done, using shared appreciation mortgages, structured short sales, and other proven means to reduce outstanding debt, while improving returns to lenders and preventing painful and destabilizing foreclosures.  If leaders of both parties come together now, they can take concrete steps to prevent foreclosures, stabilize neighborhoods, and secure safe, decent, and affordable housing for all in America", Handelman concluded.

Cindy Chetti, Senior Vice President of Government Affairs for the National Multi Housing Council (NMHC) and National Apartment Association (NAA) commented, "The apartment industry remains supportive of efforts to find the bottom in the single-family housing market because it will help fuel overall economic and jobs growth, which are critical to our industry. However, efforts to bolster the ownership side of the housing sector should not mark a return to the housing policies that led to the bubble and subsequent economic collapse.

"We are pleased to see the Administration explicitly recognizing the importance of rental housing in meeting our nation's housing needs through the Real-Estate Owned (REO) Initiative announced today.

"We will be analyzing the President's proposal to ensure that it includes proper oversight and incentives to avoid creating landlords in name only who are not investing in proper maintenance. We would encourage the government to rely on trained, professional management entities to handle these properties. Mismanaging these rentals would make an even bigger mess out of our already struggling housing sector.

"Importantly, the President's proposal underscores our key message that while there might be an oversupply of single-family housing, there is a shortage of rental housing. Demographics and changing lifestyles have led to a structural shift in our nation's housing preferences to more heavily favor renting. Renters could make up half of all new households this decade, more than seven million new renter households.

"Many of these are echo boomers and empty nesters who are looking for the conveniences and amenities of apartments. We should be building approximately 300,000 apartments each year to meet demand, yet last year we started less than 150,000 because of the still impaired credit markets.

Chetti concluded, "Long-term, meeting our nation's housing needs will require us to restore liquidity to the market through housing finance reform that does not undermine the very successful system that has served the multifamily sector for two decades at a profit to taxpayers and with negligible defaults."