At their recent meeting in Orlando, Florida, directors of the National Association of Realtors® (NAR) gave formal approval to NAR's Housing Stimulus Plan. The plan, to be submitted to Congress in its lame-duck session, is designed to end the free-fall of values in the housing market. It aims to do this by providing sufficient incentives to get potential buyers "off the fence." The plan has four points.

(1) Make the current $7,500 first-time homebuyer tax credit available to all homebuyers and, also, eliminate its repayment provisions.

(2) Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent. Currently, those limits have been raised to $729,750, but those are due to be reduced to $625,000 in 2009.

(3) Use funds from the $700 billion rescue plan (a.k.a. "the bailout") to institute a temporary (probably two-year) federal mortgage interest buy-down program to lower rates to 4.5% or lower for a thirty-year fixed rate mortgage. This would apply to homebuyers purchasing new or existing homes up to $1 million in price.

(4) Permanently ban banks from engaging in real estate brokerage and management.

The support for this plan did not come without some controversy and the offering of alternative programs. Most of this centered around the third point, the interest rate buy-down proposal. There were those who urged that the target rate be more like 3% rather than the "4.5%, or lower". It was argued that this lower number reflected what would actually be needed to stimulate buyer activity in a meaningful way. Moreover, it was pointed out that it would be easier to start with a lower number and compromise upward, if necessary.

Others argued that a government-backed interest rate buy-down program should extend to all residential mortgage borrowing (e.g. refinances) and not just be applicable to purchase mortgage originations. Advocates of this point argued that, although the proposed NAR plan would certainly stimulate home buying, it did nothing to help those who were currently having serious difficulty making their present mortgage payments. They felt that any stimulus program also needed to help prevent foreclosures.

As proposed, NAR estimates that the stimulus plan would cost approximately $100 billion per year, "a small price to pay" said Dale Stinton, CEO of the organization, "to stop the hemorrhaging." However, if the interest buy-down provision were extended to refinancing existing troubled mortgages, that cost could reach numbers in the trillions of dollars.

Charles McMillan, newly-inducted 2009 President of NAR, has already met with senior U.S. Treasury officials to discuss the four-point plan. According to an NAR news release, the plan was received positively. However, Treasury representatives said "their authority under the Emergency Economic Stabilization Act (EESA) to use rescue funds for that type of market intervention is unclear."

The news release went on, "To move its proposal forward, NAR committed itself to communicating the value of the buydown to members of Congress and asking lawmakers to clarify – through legislation or other appropriate means – Treasury's authority for the intervention on interest rates." The effort has already begun. On November 13, NAR issued a "call to action" to its million-plus members asking them to contact their federal representatives in support of the plan. By now, thousands have responded.

NAR members who are unclear about how to contact their legislators and/or what to say to them should contact their local association of Realtors® for assistance. Non-Realtor® citizens should weigh in on this as well. The depressed housing market is a central element of our current financial debacle. Things aren't going to be fixed until the housing market stabilizes. NAR's four-point program gives some promise of accomplishing that.