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House Panel Passes Comprehensive FHA Reform
By a strong bipartisan margin of 45 to 19, the House Financial Services Committee on May 3 approved legislation that would reform and revitalize the Federal Housing Administration’s single-family mortgage insurance programs. H.R. 1852, the Expanding American Homeownership Act of 2007, would give the FHA greater flexibility to respond to the needs of borrowers, enable more working families to become home owners and provide a viable alternative to the volatile subprime market.
Testifying on FHA reform before the Housing and Community Opportunity Subcommittee last month, Bill Killmer, NAHB’s group vice president for advocacy, championed several recommendations that were ultimately approved this week by the full committee. Specifically, H.R. 1852 would:
- Increase the current limit for FHA-insured mortgages to enable deserving potential home buyers to buy homes in high-cost areas.
- Provide the HUD secretary additional flexibility to increase the FHA multifamily mortgage loan limits in high-cost areas.
- Revise FHA requirements for condominium loans, which are often burdensome and differ significantly from mortgage loans for detached single-family homes.
- Remove the existing 275,000 loan volume cap on FHA's Home Equity Conversion Mortgages, or "reverse mortgages," while increasing the maximum loan to the Fannie Mae/Freddie Mac conforming loan limit. This would help more seniors who are at least 62 years old access the equity in their homes without having to make mortgage payments until they move out.
- Grant the FHA authority to establish greater flexibility in setting downpayment requirements for its single-family programs as long as they are operated on an actuarially sound basis.
- Ensure that sufficient funds are appropriated on an ongoing basis for housing counseling.
- Permit the FHA to extend the maximum loan maturity to 40 years to enable borrowers to reduce their monthly mortgage payments.
In addition, the bill includes a provision that would divert some surplus FHA revenue to a new affordable housing fund. This proposal was a source of contention for many Republican lawmakers, who felt it could threaten the solvency of the FHA fund. The bill is expected to go to the House floor in the coming weeks. For more information, contact Scott Meyer at 800-368-5242 x8144.
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Gulf Coast Provisions Caught in War Funding Veto
This week, as expected, President Bush vetoed a $124.2 billion supplemental appropriations bill to fund the military and the war in Iraq. The veto was in response to language specificying a timetable for withdrawal of U.S. military forces from Iraq. The bill also included $4.8 billion in small business tax provisions meant to offset the impacts of an increase in the federal minimum wage. Of special importance to home builders is an increase in Section 179 expensing limits to $125,000 and the phase-out to $500,000 and extending the provision through 2008 for Gulf Opportunity Zone (GO Zone) businesses. Also, tax-writers included key provisions for the repair and reconstruction of affordable housing in the GO Zone. Specifically, the legislation does the following:
- Extends the placed-in-service deadlines for properties that received an allocation of Low Income Housing Tax Credits (housing credits) within the GO Zone, Rita and Wilma GO Zones in 2006, 2007 or 2008 to Dec. 31, 2010.
- Extends the difficult-to-develop-area designations in this same area until Dec. 31, 2010
- Allows properties in this area that are placed-in-service by Dec. 31, 2010 to use 9 percent housing credits with “disaster relief” Community Development Block Grant funds loaned at below-market rates.
- Waives the Mortgage Revenue Bond program’s 20-year and existing walls rules for qualified rehabilitation in the GO Zone, Rita and Wilma GO Zones for owner-financing provided after enactment and before Jan. 1, 2011.
- Requires the Government Accountability Office to study the practices employed by state and local governments in allocating and utilizing tax incentives provided as part of the GO Zone Act of 2005 and to report to Congress on its findings within one year of enactment.
Congressional leaders in the House and Senate are now in negotiations with the President over a new supplemental appropriations bill that he is willing to sign. House Ways and Means Committee Chairman Charlie Rangel (D-N.Y.) stated this week that the tax provisions from the first supplemental would be included in the next version. if this does not transpire, tax-writers are committed to moving a small-business tax bill separately. For more information, e-mail Greg Brown or call him at 800-368-5242, x8421.
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Schumer Introduces Bill to Aid Subprime Borrowers
Senator Charles Schumer (D-N.Y.) this week introduced legislation to deal with subprime foreclosures now plaguing the housing market. The bill proposes $300 million in federal funds to help community non-profit counseling groups boost refinancing programs to help home owners avoid foreclosure. The second part of the legislation would regulate mortgage borkers and originators under the Truth in Lending Act by establishing on behalf of consumers a fiduciary duty and other standards of care. In addition, the bill outlines standards for brokers and originators to assess a borrower's ability to repay a mortgage and holds lenders accountable for brokers and appraisers.
Schumer's bill represents the first federal legislative proposal on subprime lending and NAHB is expecting extended congressional discussion of the issue this year. It remains uncertain at this point whether Senate Banking Committee Chairman Christopher Dodd (D-Conn.) will also pursue a legislative solution or continue urging mortgage industry lenders to outline ways to help keep troubled borrowers in their homes, while simultaneously urging federal regulators to use current regulatory authority to curb harmful lending practices. In the coming weeks and months, NAHB will continue to keep a close watch on the legislative, regulatory and industry response to the subprime lending situation. For more information, contact Scott Meyer at 800-368-5242, x8144.
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Senate Panel Passes Energy Bill
The Senate Energy and Natural Resources Committee on May 2 passed the first substantial energy legislation covering biofuels, energy efficiency, and carbon capture and sequestration. The efficiency portion of the committee’s legislation includes provisions to speed Department of Energy rulemakings for lagging home appliance standards, to allow DOE to set regional standards for heating and air conditioning equipment, and to increase energy code requirements for homes insured by the Federal Housing Administration or assisted by the U.S. Department of Housing and Urban Development. NAHB is working with a number of NCHI members and appliance manufacturing groups to express concerns over the regional standards provisions, as it could lead to increased pricing and supply disruptions for builders who normally install this equipment. This provision also has a number of enforcement and liability issues that could impact builders and contractors. As well, NAHB will weigh-in with congressional staff over the burdensome efficiency requirements the bill would place on FHA and HUD-assisted housing.
In a related development, the House Energy and Air Quality Subcommittee held its first hearing on home appliance efficiency standards. The subcommittee heard testimony from a number of appliance trade associations, the DOE and some advocacy groups about the delays in DOE rulemakings for home appliances. At issue in this hearing is whether or not States should be allowed to set separate standards for appliances and home equipment if the DOE fails to act in a timely fashion. NAHB is concerned that a potential patchwork of compliance with various State standards for home appliances could be problematic and costly, as well as being difficult to enforce. NAHB will be working with the Energy and Commerce Committee to express our concerns. For more information, contact Elizabeth Odina at 800-368-5242, x8570.
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NAHB Grassroots Program to Launch at Spring Board
Please be on the lookout for BuilderLink, NAHB's updated grassroots program. BuilderLink, which is replacing the Congressional Contact program, is set to be launched on Wednesday, June 6 at the 2007 Legislative Conference in Washington, DC. BuilderLink will provide opportunities for NAHB members to connect more frequently with their members of Congress.
For more information, click here, or contact Molly Murray at NAHB at 800-368-5242 x8470.
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Make Your Voice Heard on Capitol Hill
Builders who care about policies in Washington that affect their business and bottom line and who want to make a difference in the legislative process are encouraged to attend the Spring Legislative Conference on Wednesday, June 6 in the nation's capital. Our most important grassroots lobbying event of the year kicks off NAHB's Spring Board of Directors meeting and provides an ideal opportunity for association members like you to share their concerns on housing-related issues with lawmakers on Capitol Hill and to urge the politicians who represent you to support policies that will keep the economy moving forward and get housing back on track. A strong builder turnout on June 6 will certainly send a powerful message to members of Congress that housing MUST remain a top national priority! You can get more information and register online, or contact Jessica Boyce at 800-368-5242, 8334.
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BUILD-PAC on Schedule to Achieving $5 Million Goal
With the shift in Congress and a full agenda of legislative issues, BUILD-PAC’s success is more critical than ever. To that end, BUILD-PAC has a $5 million goal for the 2008 election cycle and is well on its way to achieving that goal. As of April 30, NAHB members have contributed $589,000 for the 2007/2008 cycle and BUILD-PAC trustees have disbursed $266,000 to members of Congress and political committees. Continued success will allow BUILD-PAC to reach federal lawmakers and candidates for federal office to ensure the voice of the housing industry is heard. For more information about BUILD-PAC, contact Meghan Everngam at 800-368-5242, x 8259.
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