Builders Testify Before Congress on Use of Tarp Funds

The National Association of Home Builders (NAHB) addressed the House Financial Services Committee last week and urged legislators to use a portion of the $700 billion U.S. Treasury's Troubled Asset Relief Program (TARP) to stimulate the housing demand.

"Up to this point, the TARP program has failed to expand the flow of credit to business and consumers on competitive terms," said NAHB chairman-elect Joe Robson, a home builder from Tulsa, Okla., during his testimony. "In addition the TARP program has not adequately responded to the nation's foreclosure crisis, which must be addressed to keep people in their homes, help stabilize home prices and promote recovery of the housing market and economy."

NAHB supports foreclosure prevention measures advocated by Federal Deposit Insurance Corp. chairman Sheila Bair, which would use $24 billion of the funds Congress authorized for the TARP to provide loan guarantees to mitigate foreclosures.

"The only way to stabilize the housing market and restore consumer confidence is to put a floor under declining home values," he said. "In conjunction with foreclosure mitigation efforts, Congress must pass temporary and targeted incentives to encourage Americans to buy homes again. This will help to stabilize home prices, prevent future foreclosures, restore consumer confidence and start creating jobs."

Specifically, Robson urged Congress to enact NAHB's proposal to boost housing demand by providing a bigger and better home buyer tax credit and offering below-market fixed-rate mortgages on home purchases, which would increase home sales by 1.1 million in 2009 and create more than 539,000 jobs.

"This two-pronged housing stimulus approach mirrors legislation passed by Congress in 1974 and 1975 to deal with the exact same problem," said Robson. "It helped bring our economy out of recession back then and it can do it again."

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