Business Roundtable Releases Recommendations to Reinvigorate U.S. Housing Market

Last month, I wrote about my meeting with Richard Smith, Chairman of Realogy, who had just been appointed to the newly formed Housing Working Group of Business Roundtable, an association of chief executive officers of leading U.S. companies with more than $5 trillion in annual revenues and nearly 10 million employees. Member companies comprise nearly a third of the total value of the U.S. stock markets and pay nearly half of all corporate income taxes paid to the federal government. Annually, they return $133 billion in dividends to shareholders and the economy. These powerhouses of the economy had been in town for their first meeting at the Milken Conference. Yesterday the Roundtable sent out the following press release, to update the public on the recommendations they are making to the Obama Administration.

CEOs propose to expand homebuyer tax credit incentives, keep mortgage rates at historically low levels

Washington – The Housing Working Group of Business Roundtable, an association of chief executive officers of leading U.S. corporations, today announced bipartisan proposals to help return stability and growth to the U.S. housing market. “We recognize the earlier efforts made by the Administration and Congress, but strongly recommend taking additional steps to jumpstart the lagging housing market in order to stimulate a broader economic recovery,” said Richard A. Smith, President and CEO of Realogy Corporation and Chair of Business Roundtable’s Housing Working Group. “If the housing market is not corrected or stabilized, the tide of the recession is not likely to reverse in the near term, and the slide in the economy overall will continue. We believe targeted, demand-side solutions – such as the ones Business Roundtable is recommending today – will provide a critical next step for a housing recovery that will help create jobs and boost the economy as a whole.” The recommendations include expanding homebuyer tax credit incentives from $8,000 to $15,000 while expanding eligibility from strictly first-time homebuyers to all homebuyers, regardless of income, on homes purchased as a primary residence. Among other recommendations, the CEOs also strongly encourage the Administration to continue ongoing efforts by the Federal Reserve to keep 30-year fixed mortgage interest rates at historically low levels and do so for the next 12 months, and to undertake a comprehensive review of existing foreclosure mitigation and loan-modification programs. Business Roundtable’s Housing Working Group was formed on April 1 to provide actionable recommendations to Congress and the Administration on how to stabilize and grow the U.S. housing market. Recent reports indicate that without significant and immediate reform the U.S. housing market will continue its decline, further dragging down the economy. “The Obama Administration’s extraordinary efforts to lower interest rates, along with its passage of the stimulus package, were both essential first steps toward stabilizing financial markets and promoting U.S. economic confidence,” said John Castellani, President of Business Roundtable. “Congress and the Administration must now build on these gains by stimulating demand for housing, which will create new jobs and trigger expansive economic recovery for America’s citizens, communities and companies.” NEWS RELEASE The group strongly believes adoption of its proposals will have a cascade effect, creating jobs and hastening U.S. economic recovery. The group’s recommendations are to:

1. Keep mortgage interest rates at historically low levels for at least one year;

2. Expand the current First-Time Homebuyer Tax Credit incentive from the lesser of 10 percent of the purchase price of the home or $8,000 to a higher limit of either 10 percent or $15,000 for all homebuyers, remove the income restrictions and include all primary residence purchases for one full year;

3. Conduct a thorough review of current foreclosure mitigation and loan-modification programs in light of rising loan-modification re-default rates;

4. Make permanent the current temporary conforming loan limits; and

5. Continue to review and strengthen government efforts already underway to review and refine mortgage lending practices.

For more information about the Housing Working Group, please click here.