The worsening foreclosure crisis provides lawmakers with an opportunity to learn from our past mistakes and rethink our national housing policy. That is the message the National Multi Housing Council (NMHC) and National Apartment Association (NAA) delivered in a written statement to a Senate Finance Committee hearing today on the real estate market.
NMHC/NAA point out that the current situation in the for-sale housing market is an extremely unfortunate turn of events that is made even more unfortunate by the fact that it was completely foreseeable and preventable. The NMHC/NAA statement cites warnings from as far back as 2004 by a wide variety of housing experts, former HUD officials and consumer organizations that the nation would likely pay a high price for its "homeownership at any cost" housing policy.
Now we are seeing the consequences of that misguided policy. People are losing their homes, local communities are struggling with blight and crime, and our national economy is at great risk as we face the danger of a deeper credit crisis.
"We certainly understand the great concern to help people remain in their homes," said Jim Arbury, NMHC/NAA Senior Vice President of Government Affairs. "But as Congress considers the various 'solutions' being proposed, we urge lawmakers to act deliberately and cautiously in order to avoid unintended consequences. The primary objective at this point should be to avoid causing a full-blown credit crisis."
The groups also urged lawmakers to abandon their unqualified support to add to the already sizeable incentives for homeownership, including a pending FHA reform measure (H.R. 1852, S. 2338) that would create a federally insured zero-downpayment mortgage program.
"The marketplace has made it clear that zero-downpayment mortgages are extremely risky," said Jim Arbury, NMHC/NAA Senior Vice President of Government Affairs. "The largest PMI (private mortgage insurance) firms are already exiting this market because of losses reaching more than $1 billion. One large PMI firm is now requiring at least three percent downpayments and another is requiring five percent down in 30 markets around the country. Yet the government is still pursuing zero-down as a housing policy at considerable risk to the Federal Treasury."
"If there is a silver lining in this situation, it is the opportunity we now have to learn from our mistakes and rethink our housing policy," said Arbury. "That means finally acknowledging that home ownership isn't the right housing choice for all households at all points in their lives. Housing our diverse nation means having a vibrant rental market along with a functioning ownership market. To do that, we need a more balanced housing policy that explicitly values rental housing and takes steps to ensure there is an adequate supply of it."
NMHC and NAA operate a Joint Legislative Program and represent the nation's leading firms participating in the multifamily rental housing industry. NMHC/NAA's combined memberships are engaged in all aspects of the development and operation of apartment communities, including ownership, construction, finance and management. Together, the organizations operate a federal legislative program and provide a unified voice for the private apartment industry. Nearly one-third of Americans rent their housing, and more than 14 percent of all U.S. households live in an apartment home. For more information, contact NMHC at 202/974-2300, e-mail the Council at info@nmhc.org, or visit NMHC's web site at www.nmhc.org.