Monday Morning Briefing Letter - 03/10/2008 (Plain Text Version)
By Sandy Dunn, NAHB President and
Urging Congress to go forward with GSE oversight reform,
NAHB Executive Vice President and CEO Jerry Howard told members of the Senate Banking Committee on March 6 that such action is needed to ensure that Fannie Mae, Freddie Mac and the Federal Home Loan Banks can vigorously pursue their housing mission and adequately respond to the ongoing mortgage credit crisis.
So far, the GSEs have failed to do this at a time when the housing market needs them more than ever, Jerry testified. "Rather than aggressively pursue market solutions, they are hunkering down to shore up financial results and shareholder returns – and are even taking steps that will further burden struggling mortgage borrowers," he noted. Jerry explained that, "Because the GSEs' regulator, the Office of Federal Housing Enterprise Oversight (OFHEO), continues to impose a 30% capital surcharge on both companies, Fannie and Freddie are attempting to build their capital reserves by imposing higher fees that will raise mortgage borrowing costs at the worst possible time." In all, OFHEO is constraining the ability of Fannie Mae and Freddie Mac to do all they can to promote affordable housing and help strapped borrowers. Meanwhile, HUD's mission oversight for the two GSEs is lacking, and HUD should require them to do more – not less – in the present dire mortgage market circumstances. "This just underscores why major reform of this flawed, bifurcated regulatory framework is long overdue and urgently needed," said Jerry.
A media teleconference helped amplify our message
last week that Congress must act quickly on legislation to help shore up the housing market. Held on March 6, the press conference was a tag-team effort, with NAHB Chief Economist David Seiders providing the latest housing statistics and forecasts and NAHB CEO & EVP Jerry Howard using those numbers as further ammunition for our argument that Congress must follow up on its recently enacted economic stimulus package with additional legislation to stimulate the economy and housing. Conceding that we are in the midst of a dramatic housing downswing, with a substantial inventory of new and existing homes clogging the marketplace, Seiders said that "at this point, the key is seeking out some bottoms for 2008" in terms of new-home sales, starts and other measures. "If Congress and the Administration do what needs to be done to alleviate the current mortgage credit crunch and the tightening of lending for housing, sales should stabilize by mid-year and starts by year's end, setting the stage for industry growth in 2009," he said. Seiders also noted that such a scenario is "really critical for the overall economy." Indeed, Jerry said, "It seems incumbent upon policymakers to take some steps to ensure that as the impact of the stimulus law declines, the housing markets are sufficiently shored up." More than 120 people dialed into the call, including reporters from major media outlets such as the Associated Press, Congress Daily, Dow Jones Newswire, CNN Money and Bloomberg. See the March 10 edition of NBN Online for complete coverage, or contact Paul Lopez (x8409) for help dealing with related media inquiries.
OFHEO has released its new temporary conforming loan limits
that will be in effect through year-end as a result of the recently enacted Economic Stimulus Act. The legislation permits Fannie Mae and Freddie Mac to raise their conforming loan limits in certain high-cost areas. The maximum for temporary jumbo conforming loan limits, which applies to loans originated between July 1, 2007 and Dec. 31, 2008, goes as high as $729,750 for one-unit homes in the continental United States. Two, three, and four-unit homes have higher limits as well. Alaska, Hawaii, Guam and the Virgin Islands also have higher maximum limits. The two data sources reflecting the new maximum limits are:
NAHB condemned the actions of eco-terrorists near Seattle
this week when five unoccupied luxury homes were burned in Woodinville, Wash., allegedly by members of the extremist group Earth Liberation Front (ELF), which has been labeled by the FBI as a domestic terrorism organization. The FBI estimates that arsons and other crimes attributed to ELF have caused $110 million in property damages over the past 25 years. A statement released by NAHB on March 3, the day the arsons occurred, quoted NAHB President Sandy Dunn. "ELF's heinous crimes do nothing to further the cause of environmentally sensitive home building, and everything to degrade ELF's own image in the public eye as a group of violent thugs who seek to damage and destroy property and put human lives in danger," Sandy said. "NAHB supports the continued efforts of both local and federal law enforcement in bringing these criminals to justice and putting an end to ELF's unlawful and violent activities."
The resolution of an important fair housing lawsuit
brought by South Carolina developer Connelly Development LLC and NAHB against the City of West Columbia, SC is good news for home builders because it demonstrates that local government actions related to development can run afoul of the federal Fair Housing Act even when the jurisdiction did not intend to discriminate. As previously reported in this publication, Connelly Development and NAHB filed litigation in federal court after the city of West Columbia took action to stop development of a multifamily rental project that would have served tenants earning at or below 60% of the area median income. That case was scheduled to go to court on Feb. 19, but the city instead chose to settle the litigation. The lesson for other local governments is that the city in this case could easily have avoided litigation and a costly settlement, which was more than half a million dollars. Read about what steps local governments can take to stay on the right side of the Fair Housing Act in our press release and in recent coverage of this story in Nation's Building News Online. Contact: Mary Lynn Huett (x8485). [return to top]
Inclusionary zoning acts as a tax on housing
that can actually worsen the affordable housing problem it is meant to solve, yet many workable alternatives to this approach exist, according to a trio of newly published studies commissioned by NAHB. Funded as part of our federation's ongoing efforts to address the nation's growing housing affordability problem, the three research projects include:
Builder confidence in the rental apartment market
is apparently not immune to the overall housing market's woes, according to the latest results of NAHB's Multifamily Rental Market Index (MRMI), released on March 5. All segments of the home building industry are being affected by the housing slowdown, including both multifamily and single-family, for-rent and for-sale components, noted NAHB Chief Economist David Seiders. On a scale of 0 to 100, where 50 indicates that the number of positive responses to the MRMI survey is about the same as the number of negative responses, the measures that track builder confidence in current supply and demand conditions for all classes of multifamily housing – except the most affordable apartments – each fell to or below 50. Yet, while multifamily builders were clearly not as optimistic at the end of 2007 as they were at the end of 2006, many do expect conditions in the apartment market to improve. For 2007's final quarter, the components of the index gauging expectations for demand over the next six months all remained at or above 50, including Class A apartments at 50; Class B at 53.9 and Class C at 61.1. Read our press release and see the MRMI tables for more, or contact Ann Marie Moriarty at x8350 for details. [return to top]
April is New Homes Month
and NAHB has developed a free, online promotional toolkit packed with resources to help our HBAs and members shine a spotlight on the benefits of home buying and homeownership. Just go to www.nahb.org/newhomesmonth to find free articles, advertisements, consumer flyers and other resources designed to help NAHB members make the most of this special time.
The 2008 edition of our "Cost of Doing Business Study"
is now available to NAHB members at a substantial discount through BuilderBooks.com. This publication offers an important way for home builders to benchmark their business operations against those of like-sized builders across the country so you can fine-tune your business and boost profits. The study analyzes several operational business categories and enables you to identify your company's strengths and weaknesses, increase efficiency, set realistic budget targets and improve business practices. Approximately 300 NAHB builder members participated in the study by providing data about their companies' operations. For more information or to order the study, click here or call 800-223-2665.
And the award goes to...
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