| April 6, 2009 |
By Joe Robson
NAHB Chairman and
Jerry Howard
NAHB President and CEO |
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NAHB-advocated guidance on mark-to-market accounting
was approved by the Financial Accounting Standards Board (FASB) on April 2.
 The two newly approved proposals are intended to clarify the valuation of assets in inactive markets and the treatment of impairments. In so doing, they will relieve financial institutions from the heavy hits to earnings and capital that resulted from flaws in previous accounting requirements. Institutions will also be permitted to reverse some of the write-downs they have taken on mortgage-backed securities and report an increase in earnings and capital for the first quarter. This decision comes after months of pressure from Congress and others, including a recently formed coalition that NAHB joined to collectively seek solutions to fair value accounting problems. NAHB and coalition members had submitted comment letters to FASB that supported the proposed guidance and requested certain modifications and revisions to clarify it. However, the FASB's April 2 decision contained one concerning element in its departure from the proposed guidance on management's ability to use judgment in securities valuations. In this case, NAHB is concerned that FASB has taken a backward step in recognizing illiquid and non-functioning markets for valuation purposes. We will therefore continue working with our coalition partners and the Federal Home Loan Banks to correct these outstanding issues. FASB is scheduled to issue its final position on the proposals this week. Contact: John Dimitri, x8529.
Important note: The FASB action affects accounting treatment of mortgage-backed securities but not AD&C loans, because AD&C loans are subject to different accounting requirements that don’t involve the mark-to-market process that FASB is revising. AD&C loans are undergoing valuation reductions that are causing severe problems for home builders, and NAHB is working to address that problem through separate channels (see story below).
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Expanding our efforts to address the severe AD&C credit crunch
 through every available avenue, NAHB is stepping up our game plan on this issue in a big way. A central component of our strategy calls for developing compelling case studies to clearly portray the issue for regulators, legislators and others whose actions can help resolve the situation. This will involve collecting specific examples of the problems our members are encountering on a day-to-day basis. Of particular interest are stories coming from builders or developers located in relatively stable markets, which can most vividly illustrate inappropriate regulatory actions. Accordingly, NAHB is now developing a quick-and-easy online template that you'll be able to use to share your AD&C experiences. The Monday Morning Briefing will tell you how to access this template as soon as it is ready. Other parts of our stepped-up strategy on AD&C lending will include seeking new coalition partners, continuing meetings with bank regulators, and implementing our very strong grassroots network to increase congressional outreach, as well as engaging the media where appropriate to increase awareness of AD&C loan problems. Stay tuned to this report and NBN Online for further updates! Contact: John Dimitri, x8529.
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A new NAHB support program for struggling HBAs
has been established to ensure that our locals can remain a strong and steady force working for home builders and their associates in markets nationwide.
 This effort has two parts. The first part is a one-time, $500,000 financial aid program for eligible HBAs. This grant initiative will fund vital programs and services related to membership recruitment and/or retention efforts or other core revenue-generating member programs. HBAs eligible to apply for grant funds may seek up to $25,000 in financial support. Details and information outlining this program are available at www.nahb.org/hbasupport. Contact: Rusty Deiss, x8231.
Second, recognizing the value of the NAHB Affiliate Services department's consulting programs and the pressures currently facing HBAs, NAHB's Executive Board has approved a 50% fee reduction on all of the group's services. This action will allow every association in the NAHB federation to take advantage of Affiliate Services' highly rated programs such as strategic planning, membership recruitment and leadership training at discounted rates. The goal is to allow HBAs to participate in valuable cutting-edge programs at rates that will help them meet current challenges and thrive in the future. For more information, contact Jared Mathis, x8169, or visit www.nahb.org/nahbsupportservices.
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Helping buyers who need downpayment and closing cost assistance
 when purchasing a home with the newly created first-time home buyer tax credit, a number of state Housing Finance Agencies (HFAs) are offering special short-term second loans to qualified applicants. These loans are available for little or no interest, and may be repaid using the refund from the tax credit. NAHB has been in talks with the National Council of State Housing Agencies (NCSHA) to urge more states to enact such initiatives. One great example is a program recently launched by the Missouri Housing Development Commission, under which families who take advantage of the $8,000 first-time buyer tax credit can "monetize" the credit so it can be used as a down payment or to help with closing costs. The NCSHA supports such efforts and is acting as an information clearinghouse for states that have implemented similar programs or plan to do so in the near future.
To date, five states have implemented first-time home buyer tax credit loan programs: Colorado, Idaho, Missouri, Ohio and Tennessee. View the latest updates and links to each state's program information on this page of the NCSHA Web site. For builders in one of the above-mentioned states, this is a great incentive for potential home buyers who may not have enough cash for a down payment. Use NAHB's set of tax credit promotional resources to make sure your buyers are well aware of what's available to them. For more info on tax credit monetization programs, contact Rob Dietz at x8285 or Dave Ledford at x8265. For info on NAHB public relations resources to promote the tax credit, contact Gwyn Donohue, x8447.
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A beneficial Supreme Court decision in a Clean Water Act case
 on April 1 marked a victory for proponents of more affordable federal environmental regulations. In Entergy v. Riverkeeper, et al., the court ruled by a 6-3 margin that the EPA was allowed to employ a cost-benefit analysis when it determined the control technology that power plants with cooling water intake structures must use to satisfy the Clean Water Act (CWA). Specifically, the court said that this cost-benefit analysis could be applied when the EPA determined the "best technology available for minimizing adverse environmental impact." This part of the decision was of grave importance to NAHB members because the CWA requires EPA to determine the "best available technology" in developing Effluent Limitation Guidelines (ELGs) for the construction and development industry. Had the Supreme Court ruled that cost-benefit analyses could not be used in any CWA standards, the result could have been catastrophic. NAHB therefore filed an amicus brief on the issues at hand. To clearly illustrate the differences between technology standards contained in the CWA, NAHB developed a chart that was included with our brief, and this same chart was included by the court as an appendix to the majority's opinion. Bottom line: The court ultimately concluded that the CWA authorizes EPA to use cost-benefit analysis when it determines some technology standards, and the Construction & Development ELG is one of them. See the next NBN Online for details, or contact Amy Chai, x8232.
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Free resources for promoting New Homes Month
 are available on NAHB's Web site to help you make the most of this April. Our promotional toolkit is packed with materials for use by both builders and local associations this month, including a series of articles, ads, consumer flyers and special resources for promoting the first-time home buyer tax credit. Use these items to tout your upcoming Parade of Homes or any other appropriate event. Read more in NBN Online, or contact Brooke Fishel, x8061, for additional information.
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Findings of two new surveys bode well for the spring
 home buying season. The first, from Move, Inc., determined that 18% of respondents who are planning to purchase a home this year cite the newly created first-time home buyer tax credit as a big factor in their decision. In all, 23% of those surveyed by telephone said they plan to purchase a home in the next five years, and more than half of them (53.5%) will be first-time buyers. Meanwhile, 5.8% plan to purchase a home in the next 12 months, 12.8% plan to buy within two years and 11% think they will purchase within the next two to five years. However, despite the number of households who cited the new tax credit as a motivating factor, many more respondents (47.6%) reported that they did not know about the credit and almost 30% said it wasn't large enough to get them to act right away. Read more about this survey here.
The second survey was conducted for Century 21 Real Estate, and also focused on prospective first-time home buyers. Of those who indicated they are likely to purchase a home in the next two years, 78% said that now is a good time to buy a home, despite widespread concerns about the economy. In fact, 68% of respondents to the online poll said that now is a better time to buy than six months ago. The primary driving force for prospective first-time buyers in this survey was home prices, with 85% saying they consider current home prices affordable and 73% saying that taking advantage of current pricing would be a big factor in their decision to buy. Even so, potential first-time buyers are split between "being willing to consider an offer now" (42%) and "waiting for prices to go down" (48%) before seriously considering a purchase. Read about this survey here.
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Don't miss this month's great online seminars:
 April 7: FREE Webinar – Strategic Planning
April 16: Audio Seminar – Seeing Green in a Red Market
April 21: FREE Webinar – Impact Fee Alternatives
April 23: Construction Forecast Conference & Webcast
April 29: FREE Webinar – Negotiating With YOUR Lender*
Sponsored by Builders CoPilot
*space limited to first 1,000 registrants
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NAHB mourns the loss of 1983 President Harry Pryde,
 whose many career honors included induction into the National Housing Hall of Fame, the Building Industry Association of Washington's Hall of Fame, the University of Washington Construction Management Hall of Fame and the Master Builders Association of King and Snohomish Counties' Hall of Fame. Harry founded and led the Pryde Corporation for over 40 years, and his company has built over 3,000 homes, apartment complexes, office buildings and condos in the Seattle metro area. As NAHB President, he lobbied for regulatory reform and outlined the industry's concerns regarding rising interest rates and the extreme budget deficit, even bringing builders' concerns directly to President Reagan. In 2006, he and his wife, Ann, were named as Founding Advocates of the National Housing Endowment for committing a donation of six figures to the leadership and growth of our association's philanthropic arm. Many NAHB members will remember Harry as a mentor, a friend, a fantastic advocate for the housing industry, and above all, a very decent man. Our thoughts are with his family at this difficult time. Contact Connie Douglas (x8408) for more information.
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