Haas Newsroom


UC Berkeley Real Estate Expert Kenneth Rosen Proposes Housing Policy Options to President Obama


January 28, 2009


Haas School of Business Media Contact:


Pamela Tom

(510) 642-2734



Ute Frey

(510) 642-0342




President Obama’s economic cure depends on solving the housing market crisis, according to Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley’s Haas School of Business, who has proposed a housing stimulus package for the new administration.


Rosen’s proposal includes:



Rosen has shared his insights and plan on CNBC; his complete policy recommendation is available upon request.

Contact Haas Media Relations to schedule an interview.


Rosen says the housing and mortgage markets face three interconnected problems:  1) rising foreclosure and delinquency rates on poorly structured mortgages given to high credit risk borrowers; 2) continuing house price declines in the 20% range nationally and 25-50% in formerly "hot" markets; and 3) a collapse in new housing starts, a sharp decline in existing home sales, and a large inventory of unsold homes. 


“To address these problems, our economic stimulus policy must focus on the housing consumer, “says Rosen. 


Rosen calls his proposed loan modification plan a “partial solution.” It would assist property owners whose loans are delinquent or already in foreclosure and enable them to refinance. Rosen recommends reasonable lending terms at a 4.5-percent fixed-rate loan funded by the Federal Home Management Agency (FHMA); Federal Home Loan Mortgage Corporation (FHLMC “Freddie Mac”); and Federal Housing Administration (FHA) to restore the flow of credit, and extended loans or graduated payment loans for the low-income buyers. He also offers options for homeowners whose property have dramatically depreciated.


Rosen suggests each of the five big mortgage insurance companies issue $1 billion of convertible preferred stock to the Treasury in order to insure $250 billion of new low down-payment loans.


To stimulate the demand for homes, Rosen proposes a 10-percent tax credit up to a maximum of $22,500, for the purchase of a new or foreclosed home for owner occupancy, or the purchase of any house by a first-time buyer.