| October 1, 2007 |
By Brian Catalde
NAHB President and
Jerry Howard
NAHB Executive VP and CEO |
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Recent progress toward resolving the credit crunch situation
has been charted in the form of favorable legislation moving through Congress and an apparent key policy shift on jumbo loans.
 The House Ways and Means Committee on Sept. 26 approved H.R. 3648, legislation that would help American families avoid foreclosure and stay in their homes. The bill would eliminate any tax penalties home owners might face when banks renegotiate the terms of a home loan and forgive a portion of the outstanding mortgage. This change in the tax law would apply only to principal residences. Prior to the panel's vote, NAHB sent a letter of support to all committee members that said: "With the whirlwind of problems in the mortgage finance system, H.R. 3648 can help stabilize families, their neighborhoods, the surrounding community and the economy as a whole." The legislation is also one of the policy provisions approved at the recent NAHB Fall Board of Directors meeting to address the mortgage credit crunch.
H.R. 3648 also includes an NAHB-supported provision that extends the deductibility of mortgage insurance. Mortgage insurance is especially critical for low- to moderate-income first-time home buyers, many of whom may not qualify for a market-rate mortgage. By allowing mortgage insurance premium payments to be deducted, homeownership is made more affordable for thousands of families who would now be able to buy a home without having to resort to more costly subprime or predatory alternatives. The current deduction expires Dec. 31; the bill would extend it through 2014. A similar debt forgiveness bill, S. 1394, is pending in the Senate. For more information, contact Greg Brown at x8421.
In another recent development, the Bush Administration has indicated what could be an important shift in policy regarding jumbo loans. Treasury Secretary Paulson told Congress on Sept. 20 that the Administration would be willing to temporarily allow Fannie Mae and Freddie Mac to buy, bundle and sell jumbo mortgages, so long as this was done in tandem with tighter oversight of the GSEs. Previously when NAHB approached the Administration about such a move, it was unwilling to even consider it.
Each of the above actions are very important steps toward resolving the liquidity crisis in mortgage markets and getting our industry back on track. For more information, see the next NBN Online – and stay tuned to the Monday Morning Briefing for the latest progress reports on NAHB's strategy to help resolve the credit crunch!
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NAHB resources on immigration law
are right at your fingertips, thanks to a special section devoted to the topic on our Web site. With proposed federal immigration reform legislation failing to pass the Senate this summer, many states are taking the issue into their own hands and proposing — and in some cases, passing — their own immigration legislation. In order to help builders stay informed about the immigration issue and comply with current regulations, NAHB has compiled the following resources at www.nahb.org/immigration:
- Safe-harbor procedures for employers who receive no-match letters
- An overview of the I-9 verification process
- What to do during an ICE (U.S. Immigration & Customs Enforcement) audit
- Sample subcontractor immigration language
- Talking points for communication with members and key stakeholders
- Statistics showing why legal immigrant workers are vital to the health of the
U.S.
economy
For more information about immigration resources available from NAHB, contact Michael Strauss at x8252 or David Crump, x8491.
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Home fire sprinkler systems are costlier than advocates claim,
 according to a new study by NAHB Economics. The study finds that, while installing fire sprinklers may bring down home owner insurance premiums, the difference is not enough to pay for the sprinklers themselves. Also, home builders surveyed for the study reported fire sprinkler installation costs are about twice as high as the costs touted by manufacturers and installers of the products, which adds to the argument that mandated systems have a negative effect on housing affordability. According to NAHB economist Lanlan Xu, the issues regarding sprinkler installations would be somewhat simplified if it could be shown that monetary savings existed to offset, or almost offset, the added upfront costs of installing fire sprinklers because builders would then be able to install the systems in most new homes and market the sprinklers effectively to prospective buyers as an added safety feature. Instead, however, from the insurer's point of view, sprinklers can generate savings but also may generate additional costs if they discharge accidentally and cause unnecessary water damage. So, while most insurers do offer meaningful discounts for residential fire sprinkler systems, those discounts are not substantial enough in any state to offset the added upfront costs that buyers face.
In fact, the study showed that "using the average insurance payment as a crude proxy for the basic premium, the most an average new home buyer in a particular state can expect to save on home owner insurance appears to be about $95 per year." And since insurance companies usually have a cap of about 20% for discounts related to safety devices (for example, deadbolt locks, burglar alarms and smoke detectors), given the large number of such features in many homes, the actual impact on the insurance payment could be very small or zero.
Read more about the study, Fire Sprinklers and Home Owner Insurance, and other NAHB research in this area in NBN Online, or contact Jeff Inks at x8547 or Lanlan Xu at x8428.
NAHB Member Benefit: NAHB's significant research on this topic, and representation of builder concerns about mandated systems during code development hearings, has contributed to the development of appropriate, cost-effective building codes that you build by every day and that provide for occupants' safety and health while keeping consumer choice and affordability concerns in mind.
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Asking the U.S. Supreme Court to decide
the validity of a ruling in a key multifamily accessibility lawsuit, NAHB filed a Cert Petition on Sept. 26. Our petition asks the Supreme Court to review a Sixth Circuit Court of Appeals ruling against one of our multifamily builder members in Kentucky. Two FHA interest groups that received HUD enforcement grants and hired special testers to detect violations sued the builder, alleging that several of its multifamily projects failed to meet the FHA's design and construction provisions. The Sixth Circuit ruled in favor of these citizen enforcers last year, holding that the groups suffered a sufficient injury so that they have "standing," meaning a right to sue. The court also provided a liberal ruling on the FHA's statute of limitations, holding that as long as one unit in a development is sold within the appropriate time period, the lawsuit could target ALL units – no matter how long ago they were sold before the suit was filed. NAHB's Cert Petition specifically requests Supreme Court review of the Sixth Circuit's rulings on both standing and statute of limitations. Though the odds of getting the high court to consider this case are against us, we are hopeful because there is a profound split among the federal appellate courts on the standing issue, and such disagreement is a key requirement for Supreme Court review. We'll keep you posted on what happens going forward. Contact: Duane Desiderio, x8146.
NAHB Member Benefit: NAHB's ability and drive to take this case to the Supreme Court is a testament to the legal expertise and resources that our federation brings to bear to protect our members and their clients from unfair litigation.
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Upholding the "No Surprises" rule for Habitat Conservation Plans,
 the U.S. District Court for the District of Columbia on Aug. 30 made a sensible decision that gives more certainty to home builders and is a victory for housing affordability. After being introduced by the federal government in 1994 and later codified to encourage the use of Habitat Conservation Plans (HCPs), the rule has been the subject of a decade's worth of litigation. Previous to its existence, a major objection of property owners to HCPs was that they provided no guarantee that government regulators would not impose additional requirements or revoke incidential take permits after the land owner undertook the expensive and time consuming process of creating such plans. In Spirit of the Sage Council v. Dirk Kempthorne, the court asserted the principle that incidental take permits and HCPs under the Endangered Species Act do not need to meet a "recovery" level of protection – a significant decision that means "No Surprises" still effectively means "no surprises." For more info, see NBN Online or contact Duane Desiderio, x8146.
NAHB Member Benefit: NAHB has long advocated in support of the No Surprises rule, which provides regulatory and financial certainty to builders who enter into a plan with federal fish and wildlife agencies to conserve habitat. The rule provides for written guarantees in HCPs that the property owner's mitigation obligations will not become more burdensome in the future if the health of a species declines.
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New-home sales declined 8.3% in August
as continuing turmoil in the mortgage finance system took a heavy toll on consumers and builders this summer. Figures released by the U.S. Commerce Department on Sept. 27 indicated that sales of new single-family homes fell to a seasonally adjusted annual rate of 795,000 units in August. According to NAHB Chief Economist Dave Seiders, the report "shows that the supply-demand imbalance in the single-family housing market still is quite serious, and the imbalance clearly is putting downward pressure on home prices." Going forward, NAHB's forecast projects that home sales will begin to stabilize in the early part of 2008, assuming that the Federal Reserve keeps overall employment and income growth going and that order is restored to key parts of the housing finance system. "We also expect builders to strengthen price and nonprice incentives to bolster sales and limit cancellations," Seiders noted. The report indicated that the median price of new homes sold in August was $225,700, which is 7.5% below its year-earlier mark. Meanwhile, the inventory of new homes for sale edged down 1.5% to 529,000 in August, with completed homes for sale accounting for 34% of the total, units under construction representing nearly 50%, and units for sale that have been permitted but not yet started representing 16%. Read NAHB's press release or see the government's figures on the Census Web site for more information.
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Regulators addressed questions related to wetlands permitting
 in the wake of new government guidance issued pursuant to a landmark U.S. Supreme Court ruling in the Rapanos and Carabell lawsuits during a Sept. 13 seminar hosted by NAHB along with the National Mining Association and environmental law firm Hunton & Williams. Representatives from the Army Corps of Engineers and EPA were invited to discuss the new guidance. Through the course of the event, it was clear that neither the regulators nor the regulated community have final answers or explanations on wetlands permitting, although the government agencies are continuing to work on this challenge. With about 110,000 jurisdictional determinations being made by the Corps each year, resulting in about 100,000 permits, EPA and the Corps emphasized that such decisions are now "fact-intensive and site-specific," with each jurisdictional decision made on a case-by-case basis. And, while discharge permits are required in wetlands adjacent to traditional navigable waters, officials said, swales and ditches are NOT normally jurisdictional. The audience also learned about one significant change in the guidance –namely, the agencies' determination that "traditionally navigable waters" do not have to be navigable at all times, navigable along their full reach or currently used for commerce to be determined jurisdictional.
The Rapanos workshop was named after the 2006 Supreme Court decision that addressed the issue of jurisdiction over "waters of the U.S." under the Clean Water Act. That court decision led to the June 8, 2007 publication of new guidance from EPA and the Corps on wetlands permitting under Sec. 404 of the Clean Water Act. Read more in NBN Online, or contact Glynn Rountree (x8662).
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Green Building Update:
The first public comment period for our proposed residential green building standard has just closed as NAHB moves closer to creating a green certification protocol for single-family and multifamily homes, lot and site development and residential remodeling. A draft version of the proposed standard is currently posted on the NAHB Research Center's Web site in accordance with procedures established by the American National Standards Institute (ANSI). Based on the NAHB Model Green Home Building Guidelines, the new standard has been reshaped by committee members who have been working since last spring in task groups assigned to study specific components of the guidelines and make recommendations for change. For example, residential remodeling and multifamily construction issues, which were not previously addressed in the guidelines, will be part of the standard.
The committee has also spent considerable time revamping the point system in the guidelines so that it assigns higher point values for practices that result in more significant "green" benefits. And, beyond the existing bronze, silver and gold certification levels, the draft proposes an emerald level for homes with significant green features. The draft also specifies more mandatory practices, such as Energy Star-rated windows. The consensus committee will next meet Oct. 29-31 to review all the comments that have been submitted and make decisions on whether to accept, reject or modify the recommendations. The NAHB Research Center can then take the next step to incorporate the proposed changes prior to a second 45-day public review period. NAHB is working with the International Code Council to develop the new standard, which, depending on how long it takes ANSI to review it, is now planned for release in March 2008.
NAHB Member Benefit: NAHB is committed to helping our members take advantage of arising opportunities in green building while avoiding inflexible, unworkable and costly mandates.
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The deadline to apply for a SAFE Award has been extended
 from Oct. 5 to Oct. 19, so take advantage of the new grace period and enter now to be recognized for your achievements in implementing a high quality construction safety program. The Safety Award for Excellence also honors government officials and NAHB-affiliated associations who have contributed to safety advancements in the home building industry. Get all the information you need, including eligibility requirements, on our Web site, or contact Lindsay Cather at x8163.
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