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Capps Talks Strategy with Santa Barbara Realtors on Strengthening Housing Market

Congresswoman says increased loan limits and lender reform would help pull the real estate industry out of its 'doldrums'

Rep. Lois Capps, D-Santa Barbara, met Monday with members of the Santa Barbara Association of Realtors and outlined ways to strengthen the housing market.

“We need to get the lenders, finance people and regulators to all agree it would be in their interest to keep people in their homes with their reduced mortgages and reduced rates,” Capps said. “It would be a one-time fix or stimulus, it would be a confidence builder that would reap terrific rewards both personally with people and their families, but also economically for our country.”

The government has traditionally promoted homeownership by allowing homeowners to deduct a portion of their mortgage interest. But to curb the nation’s growing debt, Congress may reform the deduction.

The real estate write-off costs the U.S. Treasury about $100 billion a year, according to the Federal Housing Finance Agency. Congress will vote on a plan, including mortgage interest deduction, to achieve the federal debt ceiling plan on Nov. 23.

Capps said she also supported increased loan limits, maintaining and reforming Fannie Mae and Freddie Mac, and funding the Flood Insurance Reform Act.

“We now see that the housing market is still in doldrums,” Capps said. “We need a strong housing market because it’s the key to creating jobs and keeping the economy from dropping further into its slump.”

Home sales in July fell to the lowest point this year, as did applications for mortgages to buy homes, according to the National Association of Realtors. The Bloomberg Consumer Comfort Index sank to its lowest level since 2008, and Realtors expressed their concerns at Monday’s meeting. 

Ed Fuller, the owner of San Roque Realty, called for government to reduce the margin between the interest-rate futures and the U.S. Treasury securities.

“They need to bring that margin down by buying mortgage-backed securities; they can put them on the books,” Fuller said. “As a government, they are printing money to do it so it doesn’t cost us anything; in fact, the interest the federal government and U.S. Treasury make on it goes toward paying down the national debt.”

Realtor Elaine Abercrombie of Abercrombie Fine Homes advocated lowering the interest rate across the board and lengthening mortgages, citing Japan as an example.

But both Abercrombie and Fuller agreed that Santa Barbara’s market isn’t as hard hit as some areas.

“Over the last four years, Santa Barbara is about 20 percent down in volume,” Abercrombie said.

Noozhawk business writer Alex Kacik can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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