Any federal economic stimulus package should include strong housing provisions, especially for housing consumers most effected by economic downturn -- lower-income consumers.

Both the Mortgage Bankers Association of America's (MBA) "A 21st Century Agenda for Housing and Real Estate Finance" and the Association of Community Organizations for Reform Now's (ACORN) "Economic Stimulus Proposal" contain provisions for economic stimulus proposals aimed at housing.

"As a critical sector of the U.S. economy, real estate contributes more than 12 percent to the GDP (Gross Domestic Product) and our proposals offer real economic benefits for consumers, businesses and government at a critical time," said, James M. Murphy, Chairman, MBA.

In the waning days of the longest economic expansion on record, real estate was the strongest economic sector, largely credited with keeping the weakened economy out of recession. That's largely because so much of consumer spending is tied to the home. Consumers who buy homes also buy things to put in it, they use the equity to buy still more stuff and then they buy bigger, more expensive, larger homes to fill up with yet more stuff.

As a whole, consumer spending is the real lubricant that keeps the economy cranking -- it accounts for at least two thirds of the GDP, a measure of the output of goods and services produced by labor and property in the United States.

Among other provisions, the MBA will lobby for:

-- Making the 1998 Federal Housing Administration (FHA) down payment calculation pilot permanent and save first-time home buyers an average of $1,500 off the down payment for an FHA loan.

-- Allowing the FHA to insure adjustable rate mortgages (ARMS), which would allow HUD to insure mortgages for an additional 40,000 families.

-- Keeping Ginnie Mae guaranty fees at current level and eliminate the 50 percent increase scheduled to become effective in October, 2004. MBA says the guaranty fee increase amounts to a tax on home ownership.

-- Increasing development of affordable rental housing to spur economic investment and generate 153,000 new affordable rental units and 54,590 new jobs.

-- Eliminating the multifamily housing insurance premium increase that adds unnecessary costs and financial barriers to building affordable rental housing.

-- Increasing multifamily loan limits to stimulate the production of new affordable housing in high cost areas which would create 3,000 affordable rental units and 3,090 jobs.

-- Investing in a new production program that partners FHA mortgage insurance with an interest rate subsidy to encourage private production of affordable rental housing for working families. The approach would create 50,000 affordable rental units and 51,500 jobs.

"Housing is one of only a few sectors of the economy that is still strong," said Andrew Woodward, a former MBA president.

"To keep housing on that path and to help strengthen the economy, we will ask Congress and the administration to include these proposals in an economic stimulus package. Helping more people buy homes helps America," he said.

ACORN focuses on needy

ACORN, a community organization of low- and moderate-income families, says more focus is also warranted on the home economics of the needy facing rising housing, energy, and health care costs.

That's because, ACORN says, lower-income Americans suffer the greatest hardships, and a stimulus package heavily directed to lower-income families would have the greatest impact on the economy because the funds would be quickly spent and put back into the economy.

Among ACORN's housing provisions, it suggest:

-- Congress should implement a foreclosure/eviction prevention plan, including low-interest loans for FHA homeowners who lose their jobs, to prevent families hurt by the economic downturn from being forced out into the street. It should also provide $5 billion in immediate funds for the HOME Investment Partnership Program to build more affordable housing. The housing construction would create an estimated 184,000 new jobs.

ACORN says more than 5 million households pay more than 50 percent of their income for housing and a foreclosure/eviction prevention plan would provide some immediate assurance that families could keep their homes.

-- The Bush Administration should release $300 million in emergency funds appropriated for Low Income Home Energy Assistance Program, which helps eligible low-income households meet their home heating and/or cooling needs. It should also provide additional energy cost assistance for the coming winter.

-- A moratorium on utility shutoffs - and a turn-on plan for those already shut off - for unemployed families, as long as they make regular payments of a reasonable percent of their income toward their utility bills.

"Prices for natural gas, which heats the majority of American homes, and heating oil have gone up dramatically across the country. In the winter of 2000-2001, natural gas cost on average 42 percent more than the previous winter. Low-income families were projected to spend 19.5 percent of their income on residential energy in Fiscal Year 2001," ACORN said.

"Many people face the oncoming winter without having had their energy turned on again after it was turned off earlier this year. Others remain behind from the high costs of last year's bills and are still struggling to pay off those debts," the community organization added.

ACORN also seeks unemployment insurance reform to reach more unemployed workers with greater benefits, Medicaid coverage for unemployed workers, a $1.50 increase in the minimum wage and special tax-cuts earmarked for lowest-income families.

"It makes no sense for new tax cuts to go to wealthier people who are more likely to save their refunds and who are hurt least by the downturn. Tax cuts should go to the lowest-income families who are suffering the most harm from the economic downturn...and who are most likely to spend the amount extended quickly to meet basic needs," putting money back into the economy, ACORN said.

For more articles by Broderick Perkins, please press here.

Published: October 26, 2001

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A journalist for 35-years, Broderick Perkins parlayed an old-school daily newspaper career into a digital news service offering editorial content and consulting services. Perkins' San Jose, CA-based DeadlineNews Group includes the flagship news site, DeadlineNews.Com, offering real estate, personal finance and consumer journalism, and a backshop, the Deadline Newsroom.