Monday Morning Briefing Letter - 09/15/2008 (Plain Text Version)

By Sandy Dunn, NAHB President and
Jerry Howard, NAHB Executive VP and CEO

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Placing Fannie Mae and Freddie Mac into conservatorship

was an historic move by the federal government on Sept. 7. NAHB hopes this action will increase liquidity in the mortgage arena and help restore confidence in U.S. financial markets.

Indeed, the immediate reaction in mortgage markets appeared to be positive, with rates on 30-year mortgages dipping below 6% for the first time in many years.

In a statement issued shortly after the Treasury Department announced last weekend 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." Federal Housing Finance Agency Director James Lockhart noted that the federal takeover was necessary because Fannie and Freddie had become unable to balance the pursuit of their housing mission with safe and sound operations. Meanwhile, Treasury Secretary Henry Paulson cited the risk to the financial system of Fannie's and Freddie's large portfolios.

Going forward, NAHB has established a high-level task force that will discuss the long-term implications of the federal government's decision to take over the two housing GSEs. The task force will then get down to work on developing a series of policy recommendations on how to restore the health of the nation's housing finance system. Findings of the task force's work will be reported during the Board of Directors meeting at the International Builders' Show in January. Read more in NBN Online. Contact: Dave Ledford, x8265.

Leading the opposition to costly energy code changes

that will be up for a vote at the upcoming International Code Council final hearings in Minneapolis this month, builders say the so-called "30% solution" isn't all it's cracked up to be. The package of energy code changes, which is being promoted by a coalition of advocates including window and insulation manufacturers, is not a viable solution to energy efficiency concerns. Instead, many of its parts have no basis in building science or practice, it's too expensive, and because its backers include only a small part of the building industry, it addresses only a small part of the challenges and opportunities presented by energy-efficient homes. In fact, advocates of the package have failed to provide any technological, performance or cost-benefit analysis in support of their proposal. Meanwhile, new homes are already being built to be considerably more energy efficient than their predecessors of 20 years ago due to significant advances in building science. For more info, read NBN Online, or contact Calli Schmidt at x8132. [return to top]

A new mortgage insurance premium (MIP) structure

recently announced by the Federal Housing Administration will take effect for FHA-insured single-family loans on Oct. 1. At that time, the up-front MIP for all home buyers will be set at 1.75%. The annual MIP remains at 55 basis points for 30-year loans having loan-to-value ratios greater than 95% and 50 basis points for 30-year loans with LTVs of 95% or less.

The FHA has been operating with a system of risk-based MIPs since July 14. Under the risk-based structure, the up-front MIP ranges from 125 basis points for lower-risk borrowers to 225 basis points for riskier borrowers. However, the recently enacted housing stimulus bill placed a 12-month moratorium on risk-based premiums for FHA-insured loans. After this change occurs on Oct. 1, some lower-risk borrowers will face up-front MIPs that are 25 to 50 basis points higher, while the up-front MIP may decline for borrowers who have lower credit profiles. Read more about this complicated topic in NBN Online, or contact Bill Renner at x8597. [return to top]

Higher grant limits for the VA's Specially Adapted Housing program

(SAH) were included in the recently enacted housing stimulus bill. This program helps builders and remodelers better accommodate the housing needs and improve the quality of life of the nation's severely disabled veterans. Ceilings for the two grants available through the SAH program were increased by a combined $12,000. The first SAH grant, which is available to disabled service members to adapt homes due to a loss of mobility, went from a $50,000 ceiling to a $60,000 ceiling. The second grant, which is available to service members who need alterations to their home due to blindness, was increased from $10,000 to $12,000. NAHB has been urging an increase in these grant limits since the SAH program began, and in fact, NAHB Past President Brian Catalde testified in support of such a change before the House Committee on Veterans Affairs last year. Beyond the higher loan limits, additional changes to the SAH program include new criteria for eligibility and streamlined paperwork requirements. Read more about the VA's Specially Adapted Housing program online, or contact: Kelly Mack, x8451. [return to top]

A first-of-its-kind storm water management agreement

was recently penned in Texas and could one day serve as a valuable model for other states. Under the agreement, the Texas Commission on Environmental Quality and the U.S. Environmental Protection Agency will work in cooperation with the Texas Association of Builders (TAB) to prevent storm water pollution derived from construction site runoff. The three partners have joined up to develop a pilot program aimed at better educating, informing and assisting home builders regarding federal and state storm water regulations. To date, more than 1,300 Texas builders have received storm water compliance training through initiatives developed by TAB and the two regulatory agencies. Now, under the new agreement, association members who complete the training and a self-assessment checklist can display a "Storm Water Self-Certified" sticker on construction permits. Those sites that display the sticker will be a lower priority for routine inspections. Read more about it in NBN Online, or contact Calli Schmidt, x8132. [return to top]

NAHB suggestions for improving the EPA's water efficiency program

were submitted as public comments to the EPA last week. Builder members of NAHB have been participating in a pilot program based on the agency's draft specification for water efficiency in new single-family homes, which will be used to designate "WaterSense" homes. (WaterSense is the two-year-old counterpart to the well-known Energy Star program, and it rates products for water efficiency). "First and foremost, NAHB and its members believe that the WaterSense label must be clearly defined and recognized as an above-code and voluntary program," we told the EPA, adding that, "While the program can provide important incentives for builders to install water-saving devices in the homes they build, product availability, cost considerations, the availability of WaterSense partners and verifiers, and consumer demand will ultimately dictate participation." NAHB concerns with the draft program, reported in greater detail in last week's NBN Online, pertain to water pressure issues in homes served by private well systems, cost-benefit considerations related to insulation requirements for hot water pipes, landscaping criteria that may differ from the specifications of local jurisdictions and the prohibition of ornamental water features. Our letter also requested clarification on the WaterSense certification process, on the role of WaterSense-qualified irrigation installation contractors and on storm water management issues. NAHB now looks forward to the release of a second draft of the so-called "Water-Efficient Single-Family New Home Specification." Contact: Calli Schmidt, x8132. [return to top]

Proposed resolutions for consideration at Fall Board

are now available for your viewing online in their full-text versions. Last week, we reported that we had one resolution and two recommendations in the pipeline for the Board's review in San Diego. Since then, the Resolutions Committee chairman's memo summarizing each of the proposals and providing links to the full-text versions has been made available to NAHB members via our Web site. Contact Jay Shackford, x8406, for info on the resolutions review process. [return to top]

Stay tuned for our next issue on Oct. 6...

Due to ongoing activities related to the upcoming Fall Board of Directors Meeting in San Diego, The Monday Morning Briefing will not appear on Sept. 22 or 29. Our next edition, containing all of the news from Fall Board, will be dated Oct. 6. See you then! [return to top]