NAHB: Home Builders Announce Housing Finance System Reform Plan

The National Association of Home Builders (NAHB) today announced a new comprehensive framework for housing finance system reform that would transition Fannie Mae and Freddie Mac to a new mortgage securitization system for single-family and multifamily conventional mortgages.

“Our plan seeks to overhaul the housing finance system to ensure that housing credit is available and affordable in the future and is delivered through a competitive, efficient, sound, safe and stable system,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla.

To achieve this goal, Rutenberg said the system must include private, federal and state sources of housing capital; offer a reasonable menu of sound mortgage products for both single-family and multifamily housing that is governed by prudent underwriting standards and adequate oversight and regulation; and provide a federal backstop to ensure that 30-year, fixed-rate mortgages are available at reasonable interest rates and terms.

Replacing Fannie Mae and Freddie Mac with a new securitization system for conventional mortgages backed by private capital and a privately funded federal mortgage-backed securities fund must be done in an orderly fashion over time. During this phase-in period, Fannie Mae and Freddie Mac would remain operational until the alternative system is fully functioning.

Under this scenario, Fannie Mae and Freddie Mac would be gradually replaced by private housing finance entities (HFEs) that would be chartered to purchase single-family and multifamily mortgages from loan originators and package the loans into securities for sale to investors worldwide. The federal government would guarantee the securities, not the mortgages.

The HFEs would only purchase mortgages that are well understood and have reasonable risk characteristics, such as standard 30-year fixed-rate loans. The HFEs would operate under the oversight of a strong independent regulatory agency to ensure all aspects of safety and soundness. NAHB believes the 12 regional Federal Home Loan Banks could serve as HFEs.

Federal support to the conventional mortgage of the future would consist of a privately funded insurance fund where the government would guarantee its solvency in a manner similar to the Federal Deposit Insurance Corporation’s backing of the fund that insures savings deposits. Under this system, mortgage originators would pay premiums to capitalize the insurance fund, which would cover losses and ensure full payment to investors. The federal government would be required to pay investors only if the insurance fund was depleted.

“The intent is for the government to be in a secondary position and to be the insurer of last resort in order to reduce the risk to taxpayers,” said Rutenberg.

NAHB’s housing finance reform blueprint also proposes to:

• Restart a carefully regulated fully private mortgage-backed securities system. NAHB believes reforms are needed in the system for rating mortgage-backed securities and is supporting the development of new securities ratings agencies that would use criteria developed by securities investors to assure objective evaluations and avoid conflicts of interest.

• Continue the role of the federal government housing agencies. The housing finance support roles of the Department of Housing and Urban Development, Federal Housing Administration, the Department of Veterans Affairs, the Department of Agriculture and the Government National Mortgage Association (Ginnie Mae) would be preserved.

• Enhance the position of state and local housing finance agencies (HFAs) as a source of housing funds. The HFAs should have a more prominent housing finance role through the development of original programs for new homes and multifamily rental units involving partnering with federal and private providers of housing capital.

• Expand the role of the Federal Home Loan Banks (FHLBanks) in the housing finance system. The FHLBanks should continue their current activities to serve as an ongoing liquidity source for institutions providing housing credit. Existing programs, such as the FHLBanks’ mortgage purchase programs, should be enhanced by allowing the banks to move beyond portfolio purchases to securitization.

• Repair flaws that produced the housing boom and bust. It is extremely important to continue and complete steps to close the gaps in standards and oversight that allowed and facilitated the improper and illegal activities in financial and mortgage markets. This should be done by undertaking a series of comprehensive reforms to ensure sound mortgage products and prudent underwriting; requiring sound mortgage securities structures and full transparency for investors; and imposing adequate oversight on previously unregulated segments of the mortgage and financial markets.

Credit Counselors: Consumers still eager to buy a house

According to a poll by the National Foundation for Credit Counseling (NFCC), the American dream of homeownership is alive and well. When asked what they were most anxious to do if their financial situation were to improve, more than half, 51 percent, indicated they would buy a home. Home repairs and improvements captured the second highest number of respondents, with 23 percent selecting that option.

Read the entire report at DebtAdvice.org by clicking here.

HousingWire: Housing inventory at its lowest level since 2006

According to an article on HousingWire.com, the inventory of of new and existing homes for sale are at their lowest levels since 2006.  HousingWire reports that the inventory or existing homes will take just 6.1 months to turn over, and the inventory of new homes is just a 5.6-month supply.

Read the entire report at HousingWire.com by clicking here.

Thank you: we could not do it without our volunteers

by Michael Dey, Executive Vice President
Home Builders Association of Greenville

Producing the Southern Home and Garden Show is a major operation. Our Home Show involves more than 300 exhibitors in a 120,000 square-foot exhibit hall. More than 1,500 personnel are on site during the show. And another 500 people are involved in setting up the show.

We close our office for two days and our entire staff works the Home Show. In addition, the Vass Markets team, which markets and manages the Home Show, also is on site for the entire time the show is being set up and open to the public. In addition, dozens of TD Convention Center staff take tickets, monitor parking areas, secure the facility, and make sure the trash cans are emptied, bathrooms are clean, and that all of the more than 10,000 visitors to the show are safe and sound.

Even with all of this support, your Home Builders Association of Greenville could not produce the Southern Home and Garden Show without the support of our volunteers. Our volunteers help us drive the parking lot shuttles, assist exhibitors and volunteers at the Exhibitor Registration and Will Call Desk, stock the Exhibitor Hospitality Lounge, and visit and thank all of our exhibitors.

I would like to thank all of the volunteers who helped make the 51st Annual Southern Home and Garden Show another great success:

• Robert Markel, CGR, Hadrian Construction Company
• Wayne Moore, Harold Moore Builder
• Richard Powers, Piedmont Natural Gas
• Mike Freeman, GMB, Freewood Contracting
• Scott Presley, Greer State Bank
• Lex Stapleton, Donald A. Gardner Architects
• Joe Hoover, Ryan Homes
• Sue Flaspoehler, K&S Stoneworks
• Russ Henson, GBS Building Supply
• Matt Vaughn, Homeowners Mortgage
• Reggie Alexander, Home Builders Institute
• John Wolfrom, Providence Realty & Marketing
• Toni Masters

We also had help from students at Clemson University as well as the C-Core mentoring program.

Volunteers make your Home Builders Association’s programs and services possible. Thank you each and every volunteer for making the Southern Home and Garden Show, and your association, a success.

Sunday is the last day for the Southern Home and Garden Show

Sunday is the last day for the Southern Home and Garden Show, produced by the Home Builders Association of Greenville and sponsored by The Home Depot.

• Hours: 1 p.m. until 6 p.m.
• Location: TD Convention Center, 1 Exposition Drive, Greenville, SC

Today's show features more than 300 exhibitors and the following seminars:

• 2 p.m.
• Paint it.  Hang it.  Toss it.  Making Change for Selling and Living.
• Lisa Harrison, TWEAK Home Marketing Solutions

• 3 p.m.
• How to Save Thousands of Dollars this Year.
• Brandy Long, Queen of the Penny Pinchers

• 4 p.m.
• Stretching Your Design Dollars.
• Elizabeth Stronkowsky, North Main Building and Design

• 5 p.m.
• How-To: Painting Tips & Faux Finishes
• The Home Depot

Shuttles run all day from each of the remote lots.  Entry fee is $7, $5 for seniors, children under 12 are free.  Parking is $5.  Bring a canned good and receive at dollar off your ticket.  Canned goods benefit Harvest Hope Food Bank.