NAR pushes for gradual changes to secondary mortgage market | Chappaqua NY Homes


Former high-level officials for Presidents Barack Obama and George W. Bush agree that any changes to the secondary mortgage market to drive private capital back into housing must be gradual. Otherwise, the shock to the system could destabilize the economy and housing.

“You don’t want the medicine to kill you,” said David Axelrod, former senior adviser to President Obama and one of the chief architects of his election three years ago. “You want to come out healthier on the other side.”

Dana Perino, the chief spokesperson for President Bush during his second term, predicted that lawmakers would debate reform proposals for the two government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, for another two years before changes are enacted. “You can’t throw this thing in reverse,” she said, referring to the need to take time in crafting a solution to the two companies. As recently as last week, Fannie Mae announced it needed another federal infusion of $8.5 billion as it works through the bad loans on its books.

The message from Perino and Axelrod jibes with the one REALTORS® will be sending to their members of Congress this week on their visits to Capitol Hill. NAR’s proposal calls for replacing the two companies over time with another entity that maintains federal support of the market without allowing executives and shareholders of the new company to privately profit while taxpayers take any losses.

Keeping the MID Intact

During those Capitol Hill visits, REALTORS® will also be talking about the need to preserve the mortgage interest deduction, and in response to a comment from a REALTOR®, imploring Axelrod to talk to his boss about the importance of the deduction to the young buyers she works with, Axelrod said he generally agreed with the need for the MID to benefit households getting into the housing market and trying to build wealth.

Maintaining the current value of the deduction for higher-wealth households is something that should be talked about, said Axelrod, alluding to a controversial proposal in the Obama administration’s latest budget request to cut the value of MID and other itemized deductions for higher-income households.

“Your young couple should be able to take advantage of that tax deduction,” he said, but that raises the question of whether there should be a “limit so [the deduction] is there for that young couple that really needs the help.” The Obama administration’s proposal would cut the value of itemized deductions to 28 percent for households in the 35 percent tax bracket.

‘Nudge Lawmakers In a Creative Direction’

Both Perino and Axelrod encouraged REALTORS® to use their meetings with lawmakers this week to drive home their messages on policies that impact housing.

“NAR is an amazingly powerful organization,” said Perino, “not because you have a great D.C. lobbying group, but because you represent all those communities. Members of Congress want their communities to thrive, so if NAR comes with creative ideas and a united front, you can nudge lawmakers in a creative direction and get things done.”

Axelrod ended his comments with a note of optimism. “It’s a testament to our country,” he said, “that we’re always perfecting our union, always moving forward — and hopefully we do that in a way that sustains and strengthens the middle class. Key to that is the work you do, home ownership.”

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