| June 22, 2009 |
By Joe Robson
NAHB Chairman and
Jerry Howard
NAHB President and CEO |
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Helping prospective home buyers make their move
is the objective of a newly developed NAHB resource that answers frequently asked questions about how the first-time buyer tax credit can be used to pay upfront costs at the closing table.
 When HUD Secretary Shaun Donovan announced at NAHB's Spring Board of Directors Meeting that his agency had just released guidance on tax credit monetization, the move was anticipated to spark an additional 40,000 home sales beyond the original expectations for this key tax incentive. Accordingly, NAHB's latest addition to our consumer-friendly Web site on the first-time home buyer tax credit, at www.FederalHousingTaxCredit.com, is a Frequently Asked Questions (FAQ) sheet that tells qualified consumers how they can put the tax credit to work for them to cover downpayment or closing costs. The new guidelines permit FHA-approved lenders to purchase the tax credit from the home buyer in advance, so that those funds can be used to pay closing costs or make a downpayment in addition to the 3.5% minimum. Builders can direct consumers to the new FAQ sheet by sending them to the FederalHousingTaxCredit.com site, where they should select the Frequently Asked Questions section and scroll down to question 20. The FAQ sheet covers such topics as:
1) What exactly does "monetizing" the tax credit mean?
2) What is a "bridge" loan?
3) How can I find a list of lenders who are providing these short-term loans?
4) What types of loans qualify?
5) How can I tell if the short-term loan on the tax credit is being offered
by a reputable company?
These and other questions are answered clearly and concisely on NAHB's FAQ sheet. Contact Rob Dietz, x8285, for clarifications or more info.
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NAHB efforts to shine a spotlight on appraisal problems
 paid dividends this week with the publication of a well-documented piece in The Wall Street Journal. The June 17 article, "Foreclosures Haunt Appraisals," explains how builders are being harmed by the inappropriate use of foreclosed and distressed sales as comps. Resulting from a recent media tour undertaken by NAHB President and CEO Jerry Howard and staff, and encompassing CNN, BusinessWeek and the Dow Jones news headquarters, this piece is well worth the reading. In meetings with editors, Jerry specifically emphasized the economic ramifications of the credit crisis for acquisition, development and construction loans (AD&C) and the impact of appraisals on home values. Worthy of mention, The Wall Street Journal piece relied on substantial background information provided by NAHB and received widespread play, going out over the Dow Jones news wires, appearing in The Wall Street Journal's online edition, and receiving mention on CNN. Contact: Rob Pflieger, x8409.
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New regulatory guidance on FHA's condo approval process,
 announced by HUD on June 12, will have an immediate, beneficial impact on builders in Michigan. While most of the newly penned rules will not take effect until Oct. 1, a specific provision that eliminates the need for FHA approval of "site condominiums" (which are prevalent in Michigan but may also exist in other states) becomes effective right away. This is great news for Michigan's builders, who along with NAHB have been urging the move and were advised by HUD staffers that the guidance was on its way some time ago. With FHA loans becoming an increasingly significant share of the market, Michigan's builders and others should now be able to sell more homes to buyers who are having difficulty obtaining conventional financing. In addition, HUD's Mortgagee Letter 2009-19 containing the new guidance authorizes certain FHA-approved lenders to review and approve condo projects internally, and streamlines the environmental review requirement for condo projects, while setting presale and owner-occupancy requirements at 50%.
Despite the good news on site condos, the Mortgagee Letter includes a provision which would limit to 30% the number of units that could be financed using FHA-insured mortgage loans. NAHB has been in touch with HUD staff and will be pursuing a change in this policy as well as some changes to other policies that could be problematic if implemented as described in the letter. Contact: Bill Renner, x8597.
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A bill that redefines the Clean Water Act's jurisdictional reach
 was approved by the Senate Environment and Public Works Committee on June 18 despite opposition from NAHB and a coalition of industry groups. S. 787, the Clean Water Restoration Act, removes the term "navigable water of the United States" from existing legislation, a change that would have an enormous negative impact on the home building industry by eliminating all reasonable limits on the scope of Clean Water Act jurisdiction. In effect, the bill would expand the federal government's reach to all waters, including storm sewers and retention basins, roadside ditches, seasonal streams and any "activities affecting" all waters in the nation. During the bill's mark up this week, the underlying legislation was replaced by a substitute offered by Sens. Baucus, Klobuchar and Boxer. Unfortunately, that substitute retains the original bill's goal of removing the term "navigable water of the United States" from the Clean Water Act, and therefore does nothing to limit the federal government's jurisdictional reach. Should the Baucus-Klobuchar-Boxer substitute become law, home builders will have to apply for a federal permit for any activity impacting any water on a home building site, and face certain permitting delays. However, immediately following the committee's party-line vote to approve the legislation, Senator Mike Crapo (R-ID) placed a "hold" on it and stated his intention to filibuster the bill. At this time, there is no timetable for the bill's consideration by the full Senate. NAHB will keep you updated on further developments. Contact: Annie Raymond, x8307.
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Housing starts rebounded strongly in May
according to numbers released by the U.S. Commerce Department on June 16. Total starts posted an unexpectedly large gain of 17.2%, and while this was largely driven by a huge gain on the volatile multifamily side, it also reflected a substantial uptick on the single-family side and applied to every region of the country. Single-family starts were up 7.5% to a seasonally adjusted annual rate of 401,000 units in May, while multifamily starts posted a 77% gain (following a nearly equivalent decline in the previous month), to 124,000 units. Another positive sign was an overall 4% gain in permit issuance this May, which was entirely accounted for by the single-family sector. Single-family permits rose 7.9% to 408,000 units as multifamily permits fell 8.3% to 110,000 units. Commenting on the numbers, NAHB Chief Economist David Crowe noted that "Today's report showing three consecutive months of gains in single-family housing starts and two consecutive months of gains in single-family permits is a very welcome sign that the market may be nearing a turning point. That said, our recent surveys tell us that builders remain very cautious about the future." Read more in our press release, or see the government's report online. Contact Paul Lopez (x8409) for help with media inquiries.
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A one-point decline in NAHB's Housing Market Index
 this month indicates that single-family builders remain cautious and concerned about the fragile state of today's economy and housing market. The HMI, which had been trending slightly upward, fell to 15 in June as survey participants acknowledged some significant headwinds looking forward – the recent upturn in interest rates; the anticipated expiration of the first-time buyer tax credit at the end of November; and especially the continuing lack of credit for housing production loans. According to NAHB Chief Economist David Crowe, "As expected, the housing market continues to bump along trying to find a bottom. Meanwhile, builders are taking their cue from consumers, who remain uncertain about the economy and their own situation." Dave also noted that many builders are finding it difficult to complete a sale because customers can't sell their existing homes. In the latest HMI reading, two out of three of the guage's component indexes remained unchanged, with only the component gauging sales expectations in the next six months declining (by one point), to 26. The components gauging current home sales and traffic of prospective buyers were each unchanged, at 14 and 13, respectively. Read NAHB's press release or see the HMI tables online. Contact: Gopal Ahluwalia (x8480).
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NAHB Legal Action Fund grants
approved at the Spring Board Meeting will support a variety of litigation with significance to our members nationwide. The NAHB Legal Action Fund was created to help ease the burden on NAHB members and HBAs of pursuing expensive and time-consuming cases that involve nationally significant issues commonly faced by builders and developers. Among the more interesting cases approved for funding by the NAHB Executive Board last month are those involving:
-A builder who is challenging the denial of a property tax exemption for a Low Income Housing Tax Credit project in Texas;
-The Cabarrus County BIA in North Carolina's challenge of a municipality's adequate public facilities ordinance;
-An effort by a member of the HBA of Greater Dallas to de-annex his property from a municipality;
-A challenge brought by a member of the HBA of Washtenaw County in Ann Arbor, Mich., against an excessive sewer and water tap-in fee; and
-A case in which the Memphis Area HBA is supporting a scrap metal ordinance that is being challenged by scrap metal dealers.
The NAHB Legal Action Committee reviews Legal Action Fund applications three times a year in conjunction with scheduled meetings of the NAHB Board of Directors. The deadline for applications for the upcoming Board meeting in Chicago is August 18. Download applications and guidelines from the members-only pages of NAHB's Web site here. Contact: Mary Lynn Huett, x8485.
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Helping NAHB members understand the Chinese drywall issue
 is the point of NAHB's newly created Web page at www.nahb.org/chinesedrywall. Developed by NAHB's Legal Affairs Department in cooperation with the Building Product Issues Committee, a set of Chinese drywall resources is available at this location free of charge to NAHB members. The site also provides links to information on current legislation, federal government and state agency resources, and other related organizations and research. In addition, NAHB has created its own materials to help builders and associations understand the issue and communicate this knowledge to home owners and HBA members. The newest resource on this updated page is an insurance coverage analysis entitled, "Which Contractors Will be Covered by Their CGL Insurance Policies for Liability Arising Out of Chinese Drywall?" Additional updates to the list of available resources will be made as more information and research comes in. Contact: David Jaffe, x8317, or Felicia Watson, x8229.
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