Washington Update - 09/12/2008 (Plain Text Version)

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NAHB Discusses Housing Finance Issues with Rep. Frank

The nation’s home builders have expressed hope that the government’s action to place Fannie Mae and Freddie Mac into conservatorship will help to increase liquidity for home financing and restore confidence in the global financial markets.

In a statement issued shortly after the Treasury Department announced on Sunday, Sept. 7 that it was taking over the two mortgage industry giants, NAHB Executive Vice President and CEO Jerry Howard said: “At this critical turning point, it is essential that government regulators and all parties involved in the nation’s housing finance system work together to rebuild the nation’s secondary mortgage market — a move that is absolutely vital to provide affordable mortgages for America’s home buyers and to help spur an economic recovery. In that regard, NAHB looks forward to working with the current policy makers and stakeholders, as well as the next Administration and Congress on their ongoing efforts to restore the financial health of Fannie Mae and Freddie Mac.”

On Sept. 12, Howard, along with Advocacy Group VP Bill Killmer, Chief Lobbyist Joe Stanton and Lobbyist Scott Meyer met with House Financial Services Committee Chairman Barney Frank (D-Mass.) to talk about the Fannie-Freddie situation and where Frank sees his committee going next year. Frank said his committee would be very involved in writing legislation to chart the future course of the two financial institutions. NAHB also spoke with Frank about the need to reinstate seller-funded downpayment assistance and ensure a healthy AD&C market.

NAHB has established a high-level task force that will meet next week to discuss the long-term implications of the federal government’s decision to take over the two housing government-sponsored enterprises (GSEs). Moving forward, the task force will develop a series of policy recommendations on how to restore the health of the nation’s housing finance system. For more information, contact Dave Ledford at 800-368-5242 x8265.

NAHB Seeks Passage of Seller Downpayment Assistance Bill

NAHB this week sent a letter to all House members in support of legislation to reinstate Federal Housing Administration (FHA) seller downpayment assistance for qualified borrowers. Introduced by Rep. Al Green (D-Texas), H.R. 6994, the FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008, would allow this critical homeownership program to continue past its current expiration date of Oct. 1, 2008. The bipartisan measure, which will be considered by the House Financial Services Committee on Sept. 16 and by the full House shortly thereafter, is also sponsored by Reps. Maxine Waters (D-Calif.), Christopher Shays (R-Conn.) and Gary Miller (R-Calif.).

Of note to home builders, H.R. 6694 would remove the current 12-month moratorium on risk-based mortgage insurance premiums. NAHB supports this provision and believes the authority to set insurance premiums that are commensurate with credit risk, while retaining the principal of actuarial soundness, would open the FHA program to growing ranks of potential home buyers who currently are shut out of the mortgage market by a tightening of qualification criteria.

The legislation would reinstate FHA seller downpayment assistance by establishing three classes for eligible borrowers based on their credit scores:

Those with FICO scores above 679 would be allowed FHA seller downpayments under current Department of Housing and Urban Development guidelines.
Those with FOC scores of 620 to 679 would pay a risk-based mortgage insurance premium to cover their possible defaults in the amount of 3%t of the original principal for a single premium and 1.25% of the principal balance as an annual premium.
Those with FICO scores of less than 620 who may be deemed as eligible by HUD for FHA seller downpayments would be subject to HUD-established risk-based pricing.

“A sudden shutdown of this supplementary source of assistance would have a devastating impact on efforts to provide homeownership opportunities,” NAHB said in its letter to House members. “It is not in a builder’s interest to have a recently-sold home return to the market through foreclosure. That is why NAHB is committed to finding a way to continue seller-funded downpayment assistance in a manner that is in the best interest of home buyers, builders and the solvency of the FHA mortgage insurance fund. NAHB strongly believes that H.R. 6994 accomplishes this goal.”

NAHB continues to urge lawmakers to pass this measure before Congress adjourns for the year in October. To view the legislation, click here and type the bill number in the box in the upper center screen. For more information, contact Scott Meyer at 1-800-368-5242, x8144. [return to top]

Baucus-Grassley Measure Would Extend Home Energy Tax Credits

This week Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Charles Grassley (R-Iowa) introduced the Energy Independence and Investment Act, a wide-ranging tax package of incentives for energy production, conversion and energy efficiency. With only two weeks remaining in the legislative session before the target adjournment, there is a flurry of congressional activity to craft a comprehensive energy bill that can pass both chambers and be signed into law by the President. The Baucus/Grassley bill is part of those efforts. The bill would extend several expiring energy tax incentives, including those for existing homes (25C), commercial buildings (179D) and new home construction (45L). While the future of any energy legislation is still uncertain, NAHB continues to advocate for these tax incentives as part of any final legislative package. For more information, contact Greg Brown at 800-368-5242, x8421. [return to top]

House-Passed Bill Helps Veterans

The House this week approved H.R. 6832, legislation that will help veterans weather the current housing downturn. The bill would:

Extend the authority for the U.S. Department of Veterans Affairs (VA) to offer adjustable-rate mortgages (ARMs) to veterans. While the vast majority of VA loan guarantees are for fixed-rate term loans, VA does have authority to offer ARMs and hybrid ARMS through Sept. 30, 2008. These ARM loans are appropriate for families on active duty who know they will be moving from location to location; and also for career military who are advancing through the ranks.
Make permanent the VA loan limit increases that are set to expire at the end of 2008.
Increase the ability for veterans who have risky subprime home loans to refinance into a safer VA home loan.

NAHB will urge the Senate to move on this bill before Congress adjourns in October. To view the legislation, click here and type the bill number in the box in the upper center screen. For more information, contact Scott Meyer at 800-368-5242, x8144. [return to top]