| March 16, 2009 |
By Joe Robson
NAHB Chairman and
Jerry Howard
NAHB President and CEO |
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The impacts of financial and mortgage market woes
continue to be felt across the housing sector, NAHB Chairman Joe Robson told Congress on March 11.
 Testifying before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, Joe conveyed home builders' deep concerns that ongoing financial-market dislocations will increase the depth and length of the housing downturn. Coordinated regulatory efforts among federal and state agencies are necessary to ensure prudent lending practices and effective consumer protections while facilitating efficient operation of the residential mortgage markets, Joe said. He noted that while NAHB supports efforts to ensure that mortgage lending occurs in a safe and sound manner and that abuses in lending practices are properly addressed, "It is imperative that any steps taken in this effort do not unnecessarily disrupt the mortgage lending process or consumer financing options, or increase the costs or reduce the availability of mortgage credit." On behalf of NAHB, Joe urged Congress to implement a clear national framework for mortgage origination standards to replace the current patchwork of state and local laws, which often lead to unnecessary restrictions on mortgage credit. "Specifically," he said, " Congress should establish a federal pre-emption statute creating essential uniformity in mortgage market standards."
Joe also told Congress about single-family appraisal problems that are an area of concern for builders and are contributing to the current housing and credit crisis. "Appraisers have often used sales of homes in foreclosure or other distressed property sales as comparables for appraisals of new homes without making the appropriate value adjustments," he said. Read more about Joe's congressional testimony in our press release or in the March 16 edition of NBN Online.
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Spanish speakers can find out about the new home buyer tax credit
 now that the Spanish version of our increasingly popular and recently updated Web site at www.FederalHousingTaxCredit.com is up and running. Launched on March 9, the new version can be accessed via a link on the original landing page. This latest advancement should open the door to even more first-time home buyers finding out about the new and improved, $8,000 tax credit. Nearly a million visitors have checked out the Federal Housing Tax Credit Web site so far. Contact: Jay Shackford, x8406.
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Legislative efforts to fight fire sprinkler mandates
 have been initiated by HBA advocates around the country to keep the installation of fire sprinklers in new one- and two-family dwellings as an option for consumers. With many jurisdictions looking to adopt the 2009 International Residential Code, one powerful tool is statewide legislation that allows the home buyer to choose whether fire sprinklers should be installed in a new home. Twelve states are considering legislation that would prohibit a jurisdiction from adopting provisions in any model code that takes away this right. North Dakota and Arizona were among the first states to hold hearings on their bills. As expected, fire sprinkler advocates have labeled this as anti-fire sprinkler legislation that will put home owners at an increased risk, and they have mobilized proponents to fight this legislative threat. Go to NAHB’s online Fire Sprinkler Action Kit to learn about states where home builders are pursuing this option and study the bills that have been introduced. Questions? Please contact Steven Orlowski, x8303.
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Details of major mortgage refinance and modification initiatives
announced by President Obama last month were revealed as the Making Home Affordable (MHA) program on March 4. This plan, aimed at preventing millions of foreclosures, has three main elements:
 The Home Affordable Refinance Program: Beginning on April 1, Fannie Mae and Freddie Mac will refinance mortgages they own or guarantee for borrowers who owe more than 80% (but not more than 105%) of the current value of their home. To qualify, refinanced mortgages must be originated by June 10, 2010. The Administration believes this plan will enable Fannie Mae and Freddie Mac to provide refinancing to 4 million to 5 million home owners.
The Home Affordable Modification Program: This program creates new incentives for lenders to work with borrowers to modify the terms of loans at risk of default or foreclosure. Participating lenders must reduce payments to no more than 38% of a borrower's income; the government will then provide a subsidy to help further cut the borrower's mortgage debt-to-income ratio to 31%. This program is expected to reach up to 4 million at-risk home owners and is available until Dec. 31, 2012. Borrowers are eligible if their mortgage payments are a high percentage of their income, or if their mortgage is "underwater" – meaning, a higher amount than the house is worth. Eligible mortgages must have been originated on or before Jan. 1, 2009, and the unpaid principal balance must be equal to or less than $729,750.
Initiatives to Bolster Fannie Mae and Freddie Mac: The plan is to shore up the housing GSEs to help keep mortgage rates low for millions of middle-class families looking to buy a new home or refinance an existing one. It calls for Treasury to provide additional financial support for Fannie and Freddie and allow them to increase their portfolios. Meanwhile, Treasury and the Fed will continue purchasing the GSEs' mortgage-backed securities. The plan also calls for Fannie and Freddie to provide support to state housing finance agencies.
More comprehensive coverage of these programs is available in last week's NBN Online. Contact: Bill Renner, x8597.
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Allowing bankruptcy judges to modify mortgages
for primary residences is the aim of legislation approved by the House of Representatives on March 5. The bill, H.R. 1106, would let judges reduce the value of a loan, extend the terms of the loan, lower the interest rate, delay the effective date of an adjustable rate increase and make other similar changes to a mortgage in order to save the home from foreclosure. NAHB urged Congress to narrow this bill so that it only focuses on those mortgages responsible for today's surge in defaults, and we said that any changes to the bankruptcy code must be limited in scope, temporary and apply only to current mortgages. Moving in this direction, the House limited the measure to existing mortgages and changed the legislation to ensure that it does not have a negative impact on mortgages backed by FHA and the Department of Veterans Affairs. The bill would also deny relief to individuals who can afford to repay their mortgages without judicial modification, and would discourage bankruptcy judges from reducing the value of a mortgage if lowering the interest rate alone would result in affordable payments. Additional changes to narrow the bankruptcy provisions are likely in the Senate. Read more in NBN Online. Contact: J.P. Delmore, x8412.
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A promising bit of news on RESPA reform
came this week with the Obama Administration's proposal to withdraw and reconsider a rule that would have cost home buyers thousands of dollars at the closing table and further depressed the struggling housing sector. In overhauling regulations tied to the Real Estate Settlement Procedures Act (RESPA) during the final days of the Bush Administration, HUD revised the "required use" provisions of the rule in a way that would prevent builders from offering incentives for consumers to use affiliated companies for home purchase services, such as mortgage and title services. Such builder-provided incentives for voluntary use of affiliated companies have saved consumers millions of dollars in home purchase and financing costs through the years. Therefore, NAHB and a coalition of our members filed suit on this issue on Dec. 22. At that time, implementation of the new rule was delayed from Jan. 16 to April 16. But on March 10, HUD announced another implementation delay until July 16, citing NAHB's lawsuit. HUD also said it would allow the public the opportunity to comment on whether the Obama Administration should pull back and re-evaluate the rule. NAHB sees this latest development as a major step toward permanently restoring the benefits that consumers receive from home builders when purchasing a new home. Public comments are due April 9, 2009. Contacts: Duane Desiderio (x8146) and Bill Renner, x8597.
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Approximately $6 billion in remodeling projects
will be generated by year-end 2010 due to newly enacted or enhanced federal tax credits for energy-efficient home improvements, say congressional economists. Now you can find out how you and your customers can take advantage of these tax credits and the rising demand for green renovation projects with newly published comprehensive information from Energy Star.
Internal Revenue Code Section 25C tax credits for existing homes can be used for installing energy-efficient windows, doors, roofing and insulation, as well as furnaces, air conditioners and heat pumps. Although 25C credits were reinstated by the Bush Administration last year after expiring in 2007, their terms weren't quite strong enough to get home owners off the fence and into a contract. But now, under newly signed economic stimulus legislation, the percentage of the cost and lifetime cap have been tripled to 30% and $1,500 respectively. Also, the deadline for installing these energy-efficient products was extended through the end of 2010.
Meanwhile, the IRS 25D credit for renewable energy products has also been expanded and is even more generous for specific improvements – including geothermal heat pumps, solar panels, solar hot water heaters, small wind energy systems and fuel cells. The 30% tax credit applies to these products, but there is no cap on their cost through 2016. Notably, these credits also apply to new construction as well as remodeling and renovation projects. Read more here, or contact Calli Schmidt, x8132.
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NAHB State & Local Issues Fund applications are due
on April 24, 2009 in order to be considered at our upcoming Spring Board of Directors Meeting. Such applications are reviewed three times a year for funding to deal with legislative, regulatory or ballot issues with national significance for the housing industry. The following HBAs had their applications considered and approved for funding during the 2009 IBS in Las Vegas:
1) The Florida HBA, which received funding to help draft and pass Florida's
Growth Management Act, which would stem the local ballot planning initiatives
that have proliferated across the state.
2) The Spokane HBA, which received funding to fight a particularly onerous
proposed home rule charter amendment that would give "rights" to the
environment, and, in effect, virtually halt all development.
3) The HBA of Greater Chicago, which was awarded funding to study the costs
and benefits of the National Green Building Standard on typical Chicago-style
residential buildings.
4) The BIA of Southern California, which received funding to help develop the
technical capabilities to undertake alternative regional planning analyses
and assist association members through the implementation of recent
legislation that provides significant regulatory reform for development projects.
For more on the State & Local Issues Fund, please contact Beth Ambrose, x8253.
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Making it easier for multifamily developers to refinance
 their existing properties using FHA mortgage insurance is the aim of a recent move by the U.S. Department of Housing and Urban Development (HUD). Under normal circumstances, the Section 223(f) program provides mortgage insurance to refinance properties that have been operating for at least three years. However, in light of today's severe economic conditions and the constrained liquidity in multifamily markets, HUD is waiving the three-year rule. This waiver program will be in effect for the next six months, after which time HUD may choose to extend it. The final loan amount that can be refinanced is limited to what is sufficient to pay off existing indebtedness (as defined by HUD and subject to loan limits and a valuation analysis) and cannot include an equity payment to the owner. Mortgage loan limits vary by type of structure and geographic location, and are adjusted upward in geographic areas with high construction costs. You can view the mortgage loan limits on HUD's Web site. HUD's list of approved FHA multifamily lenders is also available online. Read more here, or contact Claudia Kedda at x8352.
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Log in for a free online seminar on strategic planning
 that will be offered Tuesday, April 7, from 12:00-1:00 p.m EST. Offered by the Custom Electronic Design & Installation Association (CEDIA), founding sponsor of NAHB's Home Technology Alliance, this great "webinar" event will give you step-by-step instruction on how to efficiently implement a strategic business plan. Included in the program will be an introduction to the "One-Page Strategic Plan," keys to aligning your company's team with a common purpose, and an interactive session on how to incorporate strategic planning in business. Register online here, or contact CEDIA's Casey Keller for more information at 317-328-4336.
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