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Fix Housing First, which consists of more than 600 organizations, home building companies, and manufacturers, is pressing for a major stimulus package to stem the decline in home values, stabilize financial markets, and reignite consumer demand. To get the economy moving again, the coalition is urging Congress to support enhancements to the homebuyer tax credit and provide below-market 30-year fixed-rate mortgages for home purchases.
“If Congress enacts a meaningful tax credit, coupled with an aggressive interest rate buy-down program, we are confident that these measures will help to stabilize home prices, prevent future foreclosures, restore consumer confidence, and start creating jobs,” said Howard.
The coalition cites a similar plan that worked in 1975, when the nation was also in the midst of a recession. Congress then passed a short-term $2,000 tax credit for all new homes ($12,000 adjusted for today’s median home prices) along with subsidized mortgage rates. The stimulus jump-started the depressed economy and the effects continued after the measure expired.
“Entering this holiday season, we saw a sobering loss of more than half a million jobs in November, and major job cutbacks among the nation’s top employers are being announced daily,” said Howard. “We need to put a stop to this dangerous erosion on Main Street before it grows out of control.”
Added Howard, “We are leaving no stone unturned in conveying to our government and the public the message that a housing stimulus is urgently needed, and that restoring demand for housing is the fastest and most effective way of reviving the economy.”
The housing stimulus proponents are calling for significant enhancements to the current $7,500 tax credit for first-time home buyers. Among the improvements:
• All primary home purchases between April 9, 2008 and Dec. 31, 2009 would be eligible.
• The credit amount would be increased to 10 percent of the price of the home, capped at 3.5 percent of FHA loan limits, bringing the credit to a range of roughly between $10,000 and $22,000.
• The current recapture provision would be eliminated. Repayment would only be required if the home were sold within three years.
• The credit would be available at the time of closing, making it easier to be used as a down payment.
The second component of the stimulus plan would provide qualified home buyers with 30-year fixed-rate mortgages at 2.99 percent on contracts closed until June 30, 2009 and 3.99 percent on closings between June 30 and Dec. 31, 2009.
The coalition has also announced its support for continuing foreclosure prevention measures to keep people in their homes.
To learn more about Fix Housing First, go to www.fixhousingfirst.com.
Publication date: 12/22/2008