Now it begins. The President and the Chairman of the Federal Reserve admitted on Thursday (whether belatedly or not is for others to determine) that the U.S. economy is taking a header, and yes something needs to be done about it but, no, we aren't quite ready yet to announce exactly what.

In remarks at a Congressional hearing on Thursday Federal Reserve Chairman Ben Bernanke said he would support the idea of a short-term fiscal stimulus measure perhaps in the vicinity of $100 billion. By Friday morning the White House and Congress were talking $100 to $150 billion and tax cuts and tax rebates - perhaps in the vicinity of $800 per person - were being considered as ways to pump money into the economy.

"We believe that any stimulus package must address housing issues and increasing the conforming loan limits for these two GSEs," said NAR President Dick Gaylord. "The increase in loan limits would not only improve liquidity in the mortgage marketplace, but also boost homebuyers' confidence levels, resulting in increased sales and economic activity."

What NAR is seeking is an increase in the dollar limits for loans that can be sold to Freddie Mac and Fannie Mae from the current $417,000 to $625,000. "This change will permit more families to enter the housing market by making more mortgages available with lower interest rates. Increased home sales will lower inventories and immediately start stabilizing the housing market and the economy," Gaylord said.

The Association sent letters to leaders in Congress in which it estimated that such an increase in loan limits would serve to lower interest payments for homeowners who get new "GSE jumbo" loans. Such a change in loan limits, NAR said, would reduce the number of homes on the market by a one to one and a half month supply, boost home prices by two to three percent, and increase economic activity by $42 billion. NAR also claims that higher loan limits might help prevent 140,000 to 210,000 foreclosures and contribute to the sale of an additional 348,000 homes.

NAR restated its support of the Federal Housing Administration Reform bill which, NAR said, "would offer a safe and affordable alternative to subprime mortgages, which are widely blamed for the current high rate of foreclosures and credit crunch. FHA reform would not only ensure we don't find ourselves in this very unfortunate situation again, but also it can help many families currently facing foreclosure.

"This is the quickest way to help the hurting housing market. As the potential for an economic recession increases and the fragile housing market continues to teeter, raising loan limits and reforming FHA would immediately impact the marketplace without the need for any new, complex federal programs or tax dollars. We strongly urge Congress to take these actions, in any stimulus plan, to stabilize the housing market and protect homeowners," Gaylord said.