OFHEO Outlines Corrective Steps for Fannie Mae
In a settlement with the Office of Federal Housing Enterprise Oversight (OFHEO) and the Securities and Exchange Commission (SEC), Fannie Mae has agreed to continue to maintain a previously imposed capital surplus of 30% and limit the size of its portfolio to the $727.2 billion it held at the end of last year. Fannie Mae was also fined $400 million. Fannie Mae signed the consent order in response to findings by OFHEO —outlined in a 340-page report released on May 23 — that a series of major improprieties in accounting and corporate governance practices at the government sponsored enterprise between 1998 and 2004 led to an overstatement of its earnings by $10.6 billion.

It is unclear what impact, if any, the OFHEO report will have on pending GSE reform legislation. While pundits on Capitol Hill anticipated that the report would give some impetus to the overly restrictive Senate bill (S. 190), OFHEO’s findings so far have had little bearing on the underlying political dynamics driving the GSE reform debate.

The House of Representatives passed favorable GSE reform legislation (H.R. 1461) by an overwhelming bipartisan vote of 331 to 90, while the Senate Banking Committee could only pass a reform bill out of committee on a party-line vote. While the OFHEO report hardly sheds a favorable light on the accounting activities of the GSEs, future movement of the reform effort in Congress still hinges on the ability of the Senate to compromise on key legislative provisions. View the Nation’s Building News Online story on OFHEO, or read the bills by clicking here and typing S. 190 or H.R. 1461 in the box at the center of the page. For more information, e-mail Scott Meyer at NAHB, or call him at 800-368-5242 x8144.

House Approves Housing Bill to Aid Veterans
The House of Representatives passed legislation last week that would create a five-year pilot program to award “adaptive housing” grants of up to $14,000 to disabled veterans temporarily living with their families.  The grants could be used to modify the homes to accommodate the injured veterans.  The bill, S. 1235, also includes a provision making permanent a pilot Native American housing loan program currently scheduled to expire in September 2008.  The NAHB-supported legislation is the result of a compromise between the House and Senate on a broader veterans benefits package and should be sent to the President for final approval in the coming months. To view the legislation, click here and type the bill number in the box in the center page. For more information, e-mail Scott Meyer or call him at x8144. [return to top]

Builders Seek to Work with HUD on Section 8 Reform
Housing and Urban Development Secretary Alphonso Jackson addressed NAHB members on May 11 at a special session during the 2006 spring board meeting to urge the association to change its current policy on Section 8 and support legislation the Administration is championing, H.R. 1999. The measure would alter the structure of Section 8 by delegating responsibility for the program to public housing authorities. NAHB opposes this approach, which has not garnered sufficient legislative support to move forward, because it would give congressional cover for drastic funding cuts in this important program.  NAHB President David Pressly responded to Secretary Jackson by sending a letter last week that states: “While NAHB continues to disagree with the approach to reform taken in The State and Local Government Housing Flexibility Act, H.R. 1999, our members would like to work with you, members of Congress and our industry colleagues in developing alternatives to current practices that will result in a more streamlined and efficient program.”

In a related development Housing and Community Opportunity Subcommittee Chairman Bob Ney (R-OH) last week introduced a new Section 8 reform bill, H.R. 5443, which he intends for his panel to consider in June.  H.R. 5443 is narrowly focused on streamlining several aspects of the existing Section 8 program.  Of interest to NAHB, the bill would significantly streamline the process of inspecting units for compliance with Housing Quality Standards.  H.R. 5443 also contains some changes regarding income eligibility and allows local housing authorities to require recertification of incomes for families on fixed incomes every three years instead of annually. NAHB staff will continue to work with our industry partners, congressional staff, members of Congress and HUD on this important issue in the coming weeks. View the NBN story on Section 8 reform, or read the bills by clicking here and typing H.R. 1999 or H.R. 5443 in the box at the center screen. For additional information, e-mail Scott Meyer or call him at x8144. [return to top]

House Panel Passes Rural Housing Bill
On May 23,  the Housing and Community Opportunity Subcommittee approved H.R. 5039, the Saving America’s Rural Housing Act of 2006.  H.R. 5039 would revitalize the USDA’s Rural Development Agency’s multifamily housing assistance program, known as Section 515.  While NAHB has some concerns with a few specific provisions in the measure, we strongly support the effort to reform the Section 515 housing assistance program.  Of particular note, H.R. 5039 would repeal the ban against prepayment of pre-1989 Section 515 loans – an action that NAHB has long sought.  Government Affairs staff worked with key committee members, in both the majority and minority, to resolve our remaining concerns with the legislation prior to full committee consideration.  NAHB lobbyists will meet with committee staff this week to discuss these needed changes. To view the bill, click here and type the bill number in the box in the center screen. For more information, e-mail Scott Meyer or call him at x8144. [return to top]

Comprehensive FHA Reform Clears House Panel
The House Financial Services Committee on May 24 passed a comprehensive Federal Housing Administration (FHA) reform bill that will now go to the House floor for further consideration.  H.R. 5121 would modernize the 72-year-old FHA by taking the following actions supported by NAHB: increase the current limit for FHA-insured mortgages in high-cost areas, grant the FHA flexibility to establish zero or reduced downpayment requirements for its single-family programs, allow the FHA to establish a risk-based mortgage insurance premium pricing structure, permit the FHA to extend the maximum loan maturity to 40 years, and revise the FHA’s requirements for condominium loans which are often burdensome and differ significantly from mortgage loans that are secured for detached single-family homes. 

NAHB Executive Vice President and CEO Jerry Howard testified in support of H.R. 5121 before the committee’s housing subcommittee in early April.  After pressing strongly for the bill to be considered by the committee, NAHB Government Affairs staff helped to defeat several amendments aimed at weakening key provisions of the reform bill. To view the legislation, click here and enter H.R. 5121 in the center screen box. For more information, e-mail Scott Meyer or call him at x8144. [return to top]

Zero Downpayment, HOPE VI Receive Green Light
In addition to the broader FHA reform effort noted above, the House Financial Services Committee also approved H.R. 3043, the “Zero Downpayment Pilot Program Act.” This measure would eliminate the downpayment requirements for families and individuals who buy houses with FHA-insured mortgages. NAHB supported similar legislation during the 108th Congress. However, that effort was stalled over broad funding concerns. The bill passed by the panel on May 24 would establish a pilot program for zero downpayment loans, limiting the number of mortgages to 50,000.

In another area of interest to NAHB, the House Financial Services Committee also passed legislation that would reauthorize the HOPE VI program through 2011. HOPE VI helps local communities to revitalize distressed public housing. NAHB supports continuation of the program, but the Administration has proposed eliminating it every year since fiscal year 2004. To read this legislation, click here and enter H.R. 3043 in the box at the center of the page. For more information, e-mail Scott Meyer or call him at x8144. [return to top]

Flood Insurance Advances in Senate, Overall Outlook Murky
The Senate Banking, Housing and Urban Affairs Committee passed legislation last week to reform the National Flood Insurance Program (NFIP).  In a victory for NAHB, the bill does not expand the current 100-year flood plain to the 500-year level.  This expansion was attempted by the Senate last year, but defeated by decisive NAHB action.  However, the bill does mandate the purchase of flood insurance for properties located behind flood control structures once the current 100-year mapping effort is complete.  NAHB sent a letter to Senate Banking Committee members prior to the markup expressing our opposition to this action.  In the coming weeks, NAHB lobbyists will work to overturn this provision in favor of language included in the House committee-passed bill to conduct a comprehensive study of this policy change first

As of this date, the likelihood of comprehensive NFIP reform passing this year is unclear.  The more favorable House committee-passed bill is expected to be brought to the House floor in the coming weeks.  Should the Senate ultimately pass the Banking Committee bill (which will be no easy task), a conference with the House will be difficult given the significant policy  differences between the two bills. For more information, e-mail Scott Meyer or call him at x8144. [return to top]