Tennessee: Home builders push stimulus for housing

Home builders are pushing Congress to approve a stimulus to jump-start the housing industry.

“We are calling on Congress to enact some bold measures to fix the housing crisis which is at root of the economic troubles,” said Phil Chamberlain, a member of the Home Builders Association of Tennessee and a home builder in Cordova, Tenn.

The association held a conference call Thursday to discuss a plan called Fix Housing First.

The builders’ effort is part of a national campaign to convince Congress to make changes to a tax credit of up to $7,500 for first-time home buyers, an incentive that Congress approved last year to stimulate the housing market.

Builders contend that program is ineffective because the tax credit must be repaid over 15 years, is provided during the buyer’s next tax return instead of at closing, and is available only to first-time buyers. The credit is available for homes purchased between April 9, 2008, to June 30, this year.

The housing stimulus money would go directly to buyers and sellers, not to builders or real estate agents, Mr. Chamberlain said.

The builders’ plan calls for eliminating the repayment of the current tax credit; providing a tax credit of up to 10 percent of a home’s purchase price, or up to $10,000 in the Chattanooga area; making the credit available at the time of closing; expanding the program to all buyers, not just first-time buyers; and setting a below-market, 30-year fixed-rate mortgage.

Fix Housing First also supports a proposal by Federal Deposit Insurance Corp. Chairwoman Sheila Bair to prevent foreclosures, said Bernie Markstein, a senior economist for the National Association of Home Builders.

Ms. Bair has called for modifying millions of delinquent mortgages to prevent foreclosure, using the Troubled Assets Relief Program, or TARP, which Congress approved for providing assistance to financial institutions.

Foreclosed homes hurt homeowners by depressing their property values, Mr. Markstein said, and lower the sales price of new and existing homes.

“There are many people, who if given the opportunity, can stay in their homes,” he said.

Also on Thursday, Freddie Mac and Fannie Mae announced they were extending a foreclosure moratorium that was set to end today. Now, people in foreclosed homes will have until the end of January before they are evicted, said Cindy Walker, director of Crye-Leike Realty’s foreclosed home division in Chattanooga.

The moratorium only helps people who are due to be evicted from their foreclosed homes, Ms. Walker said. It does not help people who are entering into foreclosure.

“It’s great for people who would be homeless otherwise,” she said. “It will help some people out a little longer.”