WASHINGTON – Oct. 6, 2009 – Habitat for Humanity, the United Nations Human Settlements Program (UN-HABITAT), the U.S. Department of Housing and Urban Development (HUD) and the Rockefeller Foundation hosted World Habitat Day activities yesterday, with continuing events this week.
“World Habitat Day is an opportunity to bring attention to the worldwide need for decent and affordable housing,” says Jonathan Reckford, CEO, Habitat for Humanity International. “During World Habitat Day events, we join the many organizations that are addressing the global crisis of poverty housing with particular emphasis on the urban challenges in the world’s rapidly growing cities.”
Habitat and the Rockefeller Foundation’s public policy forum took place yesterday at the National Press Club – the first official event to commemorate World Habitat Day. The event, “Whose American Dream: Moving Toward a Balanced Housing Policy,” included a panel of experts exploring the appropriate role of housing policy in meeting the needs of low-income families and revitalizing neighborhoods.
According to Habitat for Humanity’s 2010 Shelter Report, research studies show that homeowner benefits include better overall health, wealth accumulation and improved work productivity. The sense of stability achieved through homeownership often leads to improved performance in education among children and also can stabilize neighborhoods, providing positive benefits to entire communities.
The United Nations designated the first Monday of October as World Habitat Day to remind the world of its collective responsibility to address substandard housing. Additional global World Habitat Day events are listed on the United Nations website.
Monday, October 26, 2009
Fla. justices consider mediation for foreclosures
TALLAHASSEE, Fla. – Nov. 5, 2009 – Mediation would be a good way to expedite a flood of mortgage foreclosures, members of a foreclosure task force said Wednesday, but some disagreed on the details in oral arguments before the state Supreme Court.
Florida’s courts are currently trying to cope with more than 290,000 foreclosure cases.
“What this court system has is virtually a tsunami of these filings,” said Justice Barbara Pariente.
A majority on the high court’s Task Force on Residential Mortgage Foreclosures recommended trying mediation on owner-occupied homes before cases go to court, with lenders picking up the tab. Borrowers would be contacted by phone and mail and asked to participate. The high court did not immediately act on the proposal.
“The data that the banks have says the earlier in the process you get into mediation, the better and more likely you are to resolve the case,” task force chair Circuit Judge Jennifer Bailey of Miami said in an interview. She argued for a statewide managed mediation system.
Minority members said mediation should be offered only if ordered by a judge, and the costs – an estimated $750 per case – should be split 50-50 between lenders and borrowers.
Chief Circuit Judge Lee Haworth of Sarasota said borrowers who have the means to pay should have “skin in the game.”
The Florida Bankers Association supports that option. Without making a financial commitment to the mediation process, borrowers may try to use it to delay foreclosure, association lawyer Virginia Townes said in an interview.
“If the borrower is mediating in bad faith or is really not available or able to engage in a meaningful mediation then we’ve wasted the court’s time,” Townes said.
Bailey said the value of getting the cases decided sooner will outweigh the lenders’ upfront costs. If loans can be restructured through mediation those costs would be included and ultimately paid by the borrowers.
Rebecca Storrow, alternative dispute resolution director for the 15th Circuit Court in Palm Beach County, argued for the traditional court-ordered mediation system. She said it is working well in her system and is cheaper than the task force’s proposal.
The justices also heard arguments on proposed emergency rule changes.
One would require lenders to verify they hold mortgages before going forward with cases. Many lenders initially say they have lost the note, which can result in wasted court time because the notes eventually are found in nearly every case, Bailey said.
She said the rule would tell lenders to double-check before filing. Townes argued it would be a costly and needless step.
The other contested rule would require lenders to cite a reason and get a court order to cancel a foreclosure sale. Now all they have to do is not show up at the sale.
Bailey said 65 percent of sales in Miami-Dade County are canceled that way every month, causing delays for all sales.
Marc Ben-Ezra, a Fort Lauderdale lawyer who represents lenders, opposed the rule. He said it would result in unintended sales if lenders settle with borrowers at the last minute or if delayed by a flat tire.
The sale delays can be costly for borrowers who often mistakenly think they must move out before their homes are sold, Bailey said.
“They’re still on the hook for these houses,” she said. “They’re on the hook for the taxes. They’re on the hook for any code violations.”
It’s also costly for condominium and homeowner associations because no one’s paying monthly fees on those properties, Bailey said.
Florida’s courts are currently trying to cope with more than 290,000 foreclosure cases.
“What this court system has is virtually a tsunami of these filings,” said Justice Barbara Pariente.
A majority on the high court’s Task Force on Residential Mortgage Foreclosures recommended trying mediation on owner-occupied homes before cases go to court, with lenders picking up the tab. Borrowers would be contacted by phone and mail and asked to participate. The high court did not immediately act on the proposal.
“The data that the banks have says the earlier in the process you get into mediation, the better and more likely you are to resolve the case,” task force chair Circuit Judge Jennifer Bailey of Miami said in an interview. She argued for a statewide managed mediation system.
Minority members said mediation should be offered only if ordered by a judge, and the costs – an estimated $750 per case – should be split 50-50 between lenders and borrowers.
Chief Circuit Judge Lee Haworth of Sarasota said borrowers who have the means to pay should have “skin in the game.”
The Florida Bankers Association supports that option. Without making a financial commitment to the mediation process, borrowers may try to use it to delay foreclosure, association lawyer Virginia Townes said in an interview.
“If the borrower is mediating in bad faith or is really not available or able to engage in a meaningful mediation then we’ve wasted the court’s time,” Townes said.
Bailey said the value of getting the cases decided sooner will outweigh the lenders’ upfront costs. If loans can be restructured through mediation those costs would be included and ultimately paid by the borrowers.
Rebecca Storrow, alternative dispute resolution director for the 15th Circuit Court in Palm Beach County, argued for the traditional court-ordered mediation system. She said it is working well in her system and is cheaper than the task force’s proposal.
The justices also heard arguments on proposed emergency rule changes.
One would require lenders to verify they hold mortgages before going forward with cases. Many lenders initially say they have lost the note, which can result in wasted court time because the notes eventually are found in nearly every case, Bailey said.
She said the rule would tell lenders to double-check before filing. Townes argued it would be a costly and needless step.
The other contested rule would require lenders to cite a reason and get a court order to cancel a foreclosure sale. Now all they have to do is not show up at the sale.
Bailey said 65 percent of sales in Miami-Dade County are canceled that way every month, causing delays for all sales.
Marc Ben-Ezra, a Fort Lauderdale lawyer who represents lenders, opposed the rule. He said it would result in unintended sales if lenders settle with borrowers at the last minute or if delayed by a flat tire.
The sale delays can be costly for borrowers who often mistakenly think they must move out before their homes are sold, Bailey said.
“They’re still on the hook for these houses,” she said. “They’re on the hook for the taxes. They’re on the hook for any code violations.”
It’s also costly for condominium and homeowner associations because no one’s paying monthly fees on those properties, Bailey said.
Builders cut back on incentives
WASHINGTON – Oct. 6, 2009 – Home builders are cutting back on the freebies they’ve been tacking on new homes for the last couple of years to woo buyers.
The reason is simple: Demand is almost back in sync with supply. According to Jeffrey Laverty, analyst with research firm Oscar Gruss & Son, new-home inventory has declined from 12.4 months in January to 7.3 in August, close to the six-month mark considered standard.
While eliminating incentives like free cars and free pools, some builders are continuing to offer to pay points on mortgages and discounts on upgrades – “Incentives that make sense,” says Laura VanVelthoven, Hovnanian’s corporate vice president of marketing and sales.
The reason is simple: Demand is almost back in sync with supply. According to Jeffrey Laverty, analyst with research firm Oscar Gruss & Son, new-home inventory has declined from 12.4 months in January to 7.3 in August, close to the six-month mark considered standard.
While eliminating incentives like free cars and free pools, some builders are continuing to offer to pay points on mortgages and discounts on upgrades – “Incentives that make sense,” says Laura VanVelthoven, Hovnanian’s corporate vice president of marketing and sales.
Real estate prices could climb slowly
WASHINGTON – Oct. 6, 2009 – With the population aging and fewer young people to take the place of baby boomers, the demand for housing may slow for years to come, keeping home values from increasing as they have done since World War II, according to at least one well-known housing expert.
“We can no longer assume that housing will be as good an investment for the future as it has been,” said Robert Reich, public policy professor at the University of California-Berkeley and U.S. Labor Secretary in the Clinton administration.
Reich isn’t predicting that buying a home will no longer be a good financial strategy, just that the value of real estate won’t climb as rapidly.
“People in the middle class, although stressed, will still want homes, and homeownership will still be part of the American dream,” he said. “House prices will continue to rise, just more slowly than they did in the past 70 years.”
“We can no longer assume that housing will be as good an investment for the future as it has been,” said Robert Reich, public policy professor at the University of California-Berkeley and U.S. Labor Secretary in the Clinton administration.
Reich isn’t predicting that buying a home will no longer be a good financial strategy, just that the value of real estate won’t climb as rapidly.
“People in the middle class, although stressed, will still want homes, and homeownership will still be part of the American dream,” he said. “House prices will continue to rise, just more slowly than they did in the past 70 years.”
Tax credit extension passes House and Senate
WASHINGTON – Nov. 5, 2009 – The $8,000, first-time homebuyer tax credit has not yet been extended beyond its Nov. 30 end date, but it’s very close to gaining a longer life.
The extension was added as an amendment to an existing bill, HR 3548, that extends unemployment benefits. The U.S. Senate passed that bill on Wednesday and, after debate, the U.S. House passed HR 3548 this afternoon. It now needs only President Obama’s signature to become law, and the White House has indicated it will sign it, perhaps as early as tomorrow.
Until the president signs the bill, however, it is not law.
In addition to extending the tax credit for first-time homebuyers under the current rules, the bill adds a smaller tax credit for move-up homebuyers who have lived in the house for five of the past eight years. The bill also increases the income limits of homebuyers from $75,000 (single) to $125,000; and from $150,000 (married) to $225,000.
Florida downpayment assistance
After the president signs the bill and extends the tax credit, the Florida Homebuyer Opportunity Program – a downpayment and closing costs assistance program relating to the federal tax credit –automatically gets extended too. The state still has about $28 million available for homebuyers. The money is essentially a loan to first-time buyers; they receive it upfront, use it for a downpayment or other costs, and pay it back once they get their federal refund.
For more information on the Florida Homebuyer Opportunity Program, visit the Homebuyer Center on floridarealtors.org: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm
Also check floridarealtors.org for updates as they’re released; and, after the tax credit extension becomes law, details on the new program.
The extension was added as an amendment to an existing bill, HR 3548, that extends unemployment benefits. The U.S. Senate passed that bill on Wednesday and, after debate, the U.S. House passed HR 3548 this afternoon. It now needs only President Obama’s signature to become law, and the White House has indicated it will sign it, perhaps as early as tomorrow.
Until the president signs the bill, however, it is not law.
In addition to extending the tax credit for first-time homebuyers under the current rules, the bill adds a smaller tax credit for move-up homebuyers who have lived in the house for five of the past eight years. The bill also increases the income limits of homebuyers from $75,000 (single) to $125,000; and from $150,000 (married) to $225,000.
Florida downpayment assistance
After the president signs the bill and extends the tax credit, the Florida Homebuyer Opportunity Program – a downpayment and closing costs assistance program relating to the federal tax credit –automatically gets extended too. The state still has about $28 million available for homebuyers. The money is essentially a loan to first-time buyers; they receive it upfront, use it for a downpayment or other costs, and pay it back once they get their federal refund.
For more information on the Florida Homebuyer Opportunity Program, visit the Homebuyer Center on floridarealtors.org: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm
Also check floridarealtors.org for updates as they’re released; and, after the tax credit extension becomes law, details on the new program.
Florida’s existing home, condo sales up in September 2009
ORLANDO, Fla. – Oct. 23, 2009 – Florida’s existing home sales rose in September, which marks more than a year (13 months) that sales activity has increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®. September’s statewide sales also increased over sales activity in August in both the existing home and existing condominium markets.
Existing home sales rose 34 percent last month with a total of 14,419 homes sold statewide compared to 10,778 homes sold in September 2008, according to Florida Realtors. Statewide existing home sales last month increased 4.1 percent over statewide sales activity in August.
Florida Realtors also reported a 77 percent increase in statewide sales of existing condos in September compared to the previous year’s sales figure; statewide existing condo sales last month rose 8.9 percent over the total units sold in August.
All of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in September; all but one MSA also showed a gain in condo sales. A majority of the state’s MSAs have reported increased sales for 15 consecutive months.
Florida’s median sales price for existing homes last month was $142,000; a year ago, it was $174,900 for a 19 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in August 2009 was $177,500, down 12.1 percent from a year earlier, according to NAR. In Massachusetts, the statewide median resales price was $315,000 in August; in California, it was $292,960; in Maryland, it was $265,862; and in New York, it was $205,000.
NAR’s latest industry outlook notes positive signs in the housing sector, but adds that extension of the federal first-time homebuyer tax credit would help sustain a fragile recovery. “Now that the market is showing some momentum, we have an opportunity to achieve a more rapid and broader stabilization in home prices,” said NAR Chief Economist Lawrence Yun. The outlook for home sales and prices depends on whether the tax credit is extended, he said, describing it as “the best tool in our arsenal to encourage financially qualified buyers to stimulate the economy and help reduce the budget deficit.”
In Florida’s year-to-year comparison for condos, 5,088 units sold statewide last month compared to 2,870 units in September 2008 for a 77 percent increase. The statewide existing condo median sales price last month was $102,500; in September 2008 it was $153,500 for a 33 percent decrease. The national median existing condo price was $179,300 in August 2009, according to NAR.
Interest rates for a 30-year fixed-rate mortgage averaged 5.06 percent last month, a significant drop from the average rate of 6.04 percent in September 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s smaller markets, the Pensacola MSA reported a total of 275 homes sold in September compared to 267 homes a year earlier for a 3 percent increase. The market’s existing home median sales price last month was $135,000; a year ago it was $146,900 for an 8 percent decrease. A total of 48 condos sold in the MSA in September, up 41 percent over the 34 units sold in September 2008. The existing condo median price last month was $190,000; a year earlier, it was $180,000 for a 6 percent gain.
Existing home sales rose 34 percent last month with a total of 14,419 homes sold statewide compared to 10,778 homes sold in September 2008, according to Florida Realtors. Statewide existing home sales last month increased 4.1 percent over statewide sales activity in August.
Florida Realtors also reported a 77 percent increase in statewide sales of existing condos in September compared to the previous year’s sales figure; statewide existing condo sales last month rose 8.9 percent over the total units sold in August.
All of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in September; all but one MSA also showed a gain in condo sales. A majority of the state’s MSAs have reported increased sales for 15 consecutive months.
Florida’s median sales price for existing homes last month was $142,000; a year ago, it was $174,900 for a 19 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in August 2009 was $177,500, down 12.1 percent from a year earlier, according to NAR. In Massachusetts, the statewide median resales price was $315,000 in August; in California, it was $292,960; in Maryland, it was $265,862; and in New York, it was $205,000.
NAR’s latest industry outlook notes positive signs in the housing sector, but adds that extension of the federal first-time homebuyer tax credit would help sustain a fragile recovery. “Now that the market is showing some momentum, we have an opportunity to achieve a more rapid and broader stabilization in home prices,” said NAR Chief Economist Lawrence Yun. The outlook for home sales and prices depends on whether the tax credit is extended, he said, describing it as “the best tool in our arsenal to encourage financially qualified buyers to stimulate the economy and help reduce the budget deficit.”
In Florida’s year-to-year comparison for condos, 5,088 units sold statewide last month compared to 2,870 units in September 2008 for a 77 percent increase. The statewide existing condo median sales price last month was $102,500; in September 2008 it was $153,500 for a 33 percent decrease. The national median existing condo price was $179,300 in August 2009, according to NAR.
Interest rates for a 30-year fixed-rate mortgage averaged 5.06 percent last month, a significant drop from the average rate of 6.04 percent in September 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s smaller markets, the Pensacola MSA reported a total of 275 homes sold in September compared to 267 homes a year earlier for a 3 percent increase. The market’s existing home median sales price last month was $135,000; a year ago it was $146,900 for an 8 percent decrease. A total of 48 condos sold in the MSA in September, up 41 percent over the 34 units sold in September 2008. The existing condo median price last month was $190,000; a year earlier, it was $180,000 for a 6 percent gain.
U.S. Supreme Court: Who owns the beach?
WASHINGTON – Oct. 23, 2009 – On Dec. 2, the United States Supreme Court will hear oral arguments in Stop the Beach Renourishment v. Florida, a national property rights petition. The Orlando firm of GrayRobinson is representing the Coalition for Property Rights (CPR).
GrayRobinson, P.A. attorneys Menelaos Papalas and Sidney Ansbacher filed an amicus curiae brief with the U.S. Supreme Court on behalf of CPR in August 2009. CPR is made up of a small group of beachfront property owners.
The case involves property owners along 6.9 miles of beaches in Walton County and Destin in Okaloosa County. Because their properties border the ocean, CPR claims they have “littoral” rights, which includes the right to benefit from the slow natural process of the beach widening over time. As part of the beach re-nourishment project, which is authorized under Florida’s “Beach and Shore Preservation Act,” the state added sand to the beach because it was “critically eroded.”
Florida then declared that it owns the new stretch of beach, which changes the boundaries of the properties. If the state owns the new stretch of beach, the homeowners’ property boundaries don’t go to the ocean as they once did – they now end on a public beach. Instead of having oceanfront property, they now have what is considered ocean view property. And, as a public beach, the homeowners cannot exclude others from using the now state-owned land.
The case has gained national attention because of the implications it could have on future property rights cases. It will also be the nation’s first glimpse of private property rights decisions made by new Justice Sonia Sotomayor.
“If Florida is permitted to ignore property rights – using the pretext of beach re-nourishment to accomplish its real goal of taking a private beach and turning it public – then other states will follow suit,” says Papalas. “The Court now has the chance to define how it will treat private property rights for years to come.”
GrayRobinson, P.A. attorneys Menelaos Papalas and Sidney Ansbacher filed an amicus curiae brief with the U.S. Supreme Court on behalf of CPR in August 2009. CPR is made up of a small group of beachfront property owners.
The case involves property owners along 6.9 miles of beaches in Walton County and Destin in Okaloosa County. Because their properties border the ocean, CPR claims they have “littoral” rights, which includes the right to benefit from the slow natural process of the beach widening over time. As part of the beach re-nourishment project, which is authorized under Florida’s “Beach and Shore Preservation Act,” the state added sand to the beach because it was “critically eroded.”
Florida then declared that it owns the new stretch of beach, which changes the boundaries of the properties. If the state owns the new stretch of beach, the homeowners’ property boundaries don’t go to the ocean as they once did – they now end on a public beach. Instead of having oceanfront property, they now have what is considered ocean view property. And, as a public beach, the homeowners cannot exclude others from using the now state-owned land.
The case has gained national attention because of the implications it could have on future property rights cases. It will also be the nation’s first glimpse of private property rights decisions made by new Justice Sonia Sotomayor.
“If Florida is permitted to ignore property rights – using the pretext of beach re-nourishment to accomplish its real goal of taking a private beach and turning it public – then other states will follow suit,” says Papalas. “The Court now has the chance to define how it will treat private property rights for years to come.”
Rates on 30-year loans inch up to 5 percent
WASHINGTON – Oct. 23, 2009 – Rates for 30-year home loans have inched up, hitting 5 percent for the first time in nearly a month after bond yields edged up.
The average rate on a 30-year fixed mortgage was 5 percent this week, up from 4.92 percent a week earlier, mortgage company Freddie Mac said Thursday. It was the highest average since the week of Sept. 24, when rates averaged 5.04 percent.
While above the record low of 4.78 percent hit in the spring, rates are still attractive for people looking to buy a home or refinance.
To prop up the housing market and help the economy recover from the worst recession since the 1930s, the Federal Reserve has been engaged in an extraordinary level of support, spending $1.25 trillion on mortgage-backed securities, which has driven down rates on home loans.
Last month, Fed Chairman Ben Bernanke and his colleagues agreed to slow down the pace of the program to buy mortgage securities from Fannie Mae and Freddie Mac. Instead of wrapping up the purchases by the end of this year, the Fed now plans to do so by the end of March.
Despite the government’s effort to support the housing market, qualifying for a loan is still tough. Lenders have tightened their standards dramatically, so the best rates are available to those with solid credit and a 20 percent down payment.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often in line with long-term Treasury bonds.
The average rate on a 15-year fixed-rate mortgage rose to 4.43 percent, from 4.37 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages averaged 4.4 percent, up from 4.38 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.54 percent from 4.6 percent.
The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 points for 30-year loans. The fee averaged 0.6 points for 15-year, five-year and one-year loans.
The average rate on a 30-year fixed mortgage was 5 percent this week, up from 4.92 percent a week earlier, mortgage company Freddie Mac said Thursday. It was the highest average since the week of Sept. 24, when rates averaged 5.04 percent.
While above the record low of 4.78 percent hit in the spring, rates are still attractive for people looking to buy a home or refinance.
To prop up the housing market and help the economy recover from the worst recession since the 1930s, the Federal Reserve has been engaged in an extraordinary level of support, spending $1.25 trillion on mortgage-backed securities, which has driven down rates on home loans.
Last month, Fed Chairman Ben Bernanke and his colleagues agreed to slow down the pace of the program to buy mortgage securities from Fannie Mae and Freddie Mac. Instead of wrapping up the purchases by the end of this year, the Fed now plans to do so by the end of March.
Despite the government’s effort to support the housing market, qualifying for a loan is still tough. Lenders have tightened their standards dramatically, so the best rates are available to those with solid credit and a 20 percent down payment.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often in line with long-term Treasury bonds.
The average rate on a 15-year fixed-rate mortgage rose to 4.43 percent, from 4.37 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages averaged 4.4 percent, up from 4.38 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.54 percent from 4.6 percent.
The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 points for 30-year loans. The fee averaged 0.6 points for 15-year, five-year and one-year loans.
Obama announces plan to boost small businesses
WASHINGTON – Oct. 23, 2009 – President Barack Obama announced new small-business lending initiatives Wednesday that aim to expand loan amounts and make more capital available to small banks.
Small businesses fuel the economy and have been hardest hit by the recession, losing 2.4 million jobs from the middle of 2007 to the end of 2008, Obama said at Metropolitan Archives, a family-owned small business in Landover, Md., that has been able to expand with an SBA loan. Obama said that since the American Recovery and Reinvestment Act was enacted in February, it has helped provide some small-business relief, but too little credit is flowing to small businesses.
Obama will ask Congress to increase the top limits on Small Business Administration loans. The loans for standard small-business borrowers would go from $2 million to $5 million, and to $5.5 million for manufacturers. The size of the SBA’s Microloan would increase from $35,000 to $50,000.
Obama also wants to provide lower-cost capital to community banks, credit unions and community development financial institutions. And he’s asked the Treasury Department and SBA to confer with Congress members, lenders and small-business leaders to determine additional steps to help businesses.
As small businesses try to make their way out of the recession, Obama’s proposal will be helpful, says Todd McCracken, president of the National Small Business Association.
McCracken and others are uncertain how many small-business lenders would accept the cheaper capital if it comes with strings attached because the source of the funding is the Troubled Asset Relief Program.
Although many small-business and banking experts support Obama’s proposal, some say it doesn’t do enough to help community banks and credit unions, which are the mainstay of small businesses.
“The administration can and should go further in allowing more credit union access in making business credit available,” said the Credit Union National Association in a statement.
Further discussions among the groups involved would be beneficial, McCracken says.
“There haven’t been many opportunities for those people, who are key to making it work, to get together at one time and hash it out,” McCracken says. “It’s a really good idea if it can be done very soon, and it can let us roll up our sleeves and get to work.”
Small businesses fuel the economy and have been hardest hit by the recession, losing 2.4 million jobs from the middle of 2007 to the end of 2008, Obama said at Metropolitan Archives, a family-owned small business in Landover, Md., that has been able to expand with an SBA loan. Obama said that since the American Recovery and Reinvestment Act was enacted in February, it has helped provide some small-business relief, but too little credit is flowing to small businesses.
Obama will ask Congress to increase the top limits on Small Business Administration loans. The loans for standard small-business borrowers would go from $2 million to $5 million, and to $5.5 million for manufacturers. The size of the SBA’s Microloan would increase from $35,000 to $50,000.
Obama also wants to provide lower-cost capital to community banks, credit unions and community development financial institutions. And he’s asked the Treasury Department and SBA to confer with Congress members, lenders and small-business leaders to determine additional steps to help businesses.
As small businesses try to make their way out of the recession, Obama’s proposal will be helpful, says Todd McCracken, president of the National Small Business Association.
McCracken and others are uncertain how many small-business lenders would accept the cheaper capital if it comes with strings attached because the source of the funding is the Troubled Asset Relief Program.
Although many small-business and banking experts support Obama’s proposal, some say it doesn’t do enough to help community banks and credit unions, which are the mainstay of small businesses.
“The administration can and should go further in allowing more credit union access in making business credit available,” said the Credit Union National Association in a statement.
Further discussions among the groups involved would be beneficial, McCracken says.
“There haven’t been many opportunities for those people, who are key to making it work, to get together at one time and hash it out,” McCracken says. “It’s a really good idea if it can be done very soon, and it can let us roll up our sleeves and get to work.”
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