Resolution No. ___1
Date: September 7, 2007
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Resolution No. ___1
Addressing the Mortgage Credit
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Resolution No. ___1
Addressing the Mortgage Credit
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of 3

NAHB's position

Published on: Mar 3, 2016
Source: www.slideshare.net


Transcripts - NAHB's position

  • 1. Resolution No. ___1 Date: September 7, 2007 City: Seattle, Washington NAHB Resolution Title: Addressing the Mortgage Credit Crunch Original Sponsor: Housing Finance Committee WHEREAS, concerns over the quality of subprime mortgages have unsettled financial markets and triggered a serious mortgage credit crunch that, unless addressed quickly and effectively, could drag the entire U.S. economy into recession; WHEREAS, the flight of investors from subprime securities markets has spilled over into other sectors of the housing and credit markets, especially non-conforming loans (those not eligible to be purchased by Fannie Mae and Freddie Mac) and has made it increasingly difficult and expensive for all but the most credit-worthy borrowers to find mortgages to finance home and condominium purchases; WHEREAS, the mortgage credit crunch struck at a time when the housing industry was already reeling from a major downturn from the peak levels of production and sales recorded in 2003, 2004 and 2005; WHEREAS, except for mortgages insured by the Federal Housing Administration (FHA), guaranteed by the Department of Veteran’s Affairs (VA), and conventional conforming loans (mortgages up to $417,000 that can be purchased by Fannie Mae and Freddie Mac), the availability of mortgage credit has tightened significantly, particularly in the jumbo loan market where the availability of these loans is limited and very expensive, creating serious implications for high-cost housing markets such as in California, the Northeast and many large metropolitan areas; WHEREAS, credit has tightened in the single and multifamily market resulting in more expensive debt financing, stricter underwriting and higher equity requirements; WHEREAS, credit has also tightened in other sectors of the housing market, such as acquisition, development and construction (AD&C) loans, where underwriting terms have become more stringent and/or costs have increased; WHEREAS, mortgage foreclosures and defaults in the subprime and Alt-A markets are likely to increase because borrowers are unable to make the payments on adjustable-rate mortgages (ARMs) that have reset to a higher interest rate or because their home is not worth as much as their outstanding balance and they cannot refinance or need to move; 5/4/2010 14:49:41 a5/p5
  • 2. Resolution No. ___1 Addressing the Mortgage Credit Crunch – September 2007 WHEREAS, ripple effects from these disruptions will continue to spread, pushing down home sales, adding to already high unsold housing inventory, further depressing home prices and reducing housing demand; WHEREAS, any further deterioration of the housing market is a serious threat to job growth, consumer confidence and the performance of the overall economy; WHEREAS, the Federal Reserve Board, which in August pumped billions of dollars into the banking system and cut the discount rate, has other tools that it can use to provide additional liquidity, reassure investors, calm financial and credit markets and reduce interest rates; WHEREAS, Fannie Mae and Freddie Mac are required by law to provide liquidity to the mortgage markets, but presently are limited from doing so by regulatory caps on their portfolio holdings; WHEREAS, the Federal Home Loan Banks are providing liquidity to their member banks and thrifts by stepping up their collateralized lending or advances in response to member demand for additional resources to provide housing credit, and they are also providing support through their Affordable Housing Programs; WHEREAS, financial institution regulators, FHA, Fannie Mae, Freddie Mac and lender groups are helping subprime borrowers refinance into lower-rate loans by providing home buyer counseling and encouraging lenders to work out loan restructurings prior to foreclosure; and WHEREAS, the Internal Revenue Code defines any discharged mortgage debt as taxable income, thereby increasing tax liability for struggling homeowners seeking to renegotiate their loans with mortgage lenders to the benefit of all parties, NOW, THEREFORE, BE IT RESOLVED that the National Association of Home Builders urge the Federal Reserve Board, the Administration, the Congress and federal regulators to recognize the seriousness of the housing credit crunch and to take steps that are necessary to calm and stabilize financial markets by restoring confidence and liquidity to the nation’s mortgage markets; BE IT FURTHER RESOLVED that NAHB urge Congress, the Administration and financial institution regulators to work with the housing and lending communities to develop solutions to the subprime and foreclosure problems without unduly restricting credit to the broader housing market; 5/4/2010 14:49:41 a5/p5
  • 3. Resolution No. ___1 Addressing the Mortgage Credit Crunch – September 2007 BE IT FURTHER RESOLVED that NAHB calls on: • The Federal Reserve Board to cut the federal funds rate on or before its September 18 meeting, eliminate the penalty for borrowing at the discount window and, if warranted, make additional rate cuts in the future to stabilize financial markets and increase liquidity in credit markets; • The Office of Federal Housing Enterprise Oversight (OFHEO) to temporarily lift the portfolio limits on Fannie Mae and Freddie Mac to allow these housing government-sponsored enterprises (GSEs) to purchase and hold single and multifamily loans and mortgage-backed securities (MBS) from institutions needing additional liquidity; • Congress to adopt legislation already passed by the House of Representatives that would strengthen regulatory oversight of Fannie Mae and Freddie Mac and that would allow these enterprises to buy loans that exceed the conforming loan limit in high-cost markets; • OFHEO to withdraw proposed guidance that would permit a decline in the conforming loan limit; • Congress to adopt pending legislation that would give the Federal Housing Administration (FHA) more flexibility to lower minimum downpayment requirements, raise the mortgage ceilings, simplify the condo insurance program and price insurance more closely to its risk; • The Department of Housing and Urban Development (HUD) to promptly implement regulatory changes that would allow FHA borrowers with adjustable rate loans who have fallen behind on their monthly payments to refinance with fixed-rate FHA mortgages; • Fannie Mae and Freddie Mac to purchase or refinance subprime mortgages that had or have sufficient documentation and ratings to qualify for prime or Alt-A status; • The Federal Home Loan Bank System to enhance liquidity to member banks and to provide assistance to creditworthy existing subprime borrowers to refinance out of their ARM loans; • The Federal Housing Finance Board and other financial institution regulators to support increased utilization of advances by the FHLBanks and their member institutions to support single and multifamily financing as well as higher limits on MBS investments by Federal Home Loan Banks, and • Congress to modify Internal Revenue Code Section 108 to exclude from gross income any discharge of indebtedness associated with a homeowner’s mortgage. Board of Directors Action: Approved Joint Executive Board Action: Recommends Approval Resolutions Committee Action: Recommends Approval Single Family Production Builders Committee Action: Recommends Approval Single Family Small Volume Builders Committee Action: Recommends Approval Federal Government Affairs Committee Action: Recommends Approval Taxation Subcommittee of the Federal Government Affairs Committee Action: Recommends Approval Multifamily Council Board of Trustees Action: Recommends Approval Housing Finance Committee Action: Recommends Approval Single Family Finance Subcommittee of the Housing Finance Committee Action: Recommends Approval Multifamily Finance Subcommittee of the Housing Finance Committee Action: Recommends Approval Financial Institutions and Capital Markets Subcommittee of the Housing Finance Committee Action: Recommends Approval 5/4/2010 14:49:41 a5/p5

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