Home Builders Announce Housing Finance System Reform Plan

WASHINGTON, March 2 – 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.

Happy Monday – it’s almost over! Attached are current rates for purchase money mortgages. Pricing is still excellent, and our jumbo pricing is best in market.

Note that rates improve ¼% on jumbo loans for customers who autodraft their mortgage from a ST checking account, so we could be at 3.875% on a jumbo 30 fixed for such clients buying a new home. That is as good as conforming pricing, so there’s really no need for clients to avoid jumbo loans (other than the pesky 20% down payment requirement). Our DR loan pricing is same/better than regular jumbo pricing up to 100% financing for loans up to 650k. Always remember SunTrust for your DRs as we have the best financing options in the market for them.

e have started taking applications for HARP II which allows us to refinance many ST Mortgage servicing clients with Fannie/Freddie loans – regardless of how underwater they may be. So if you have clients we have done loans for and who think they can’t refinance, please have them check with us again!

Have a great week!

Laura Joines

Mortgage Banker

SunTrust Mortgage, Inc.

404.983.2848

404.962.3914 efax

laura.joines@suntrust.com

NMLSR# 658938

Apply online: www.suntrustmortgage.com/ljoines

The Office of Buildings of the City of Atlanta has increased their Permit Fees. And though the information is just making the rounds on the customer level (that would be the builders and remodelers – aka. taxpayers), the increases were adopted by the City Council last fall, effective October 18, 2011. Very interesting!? Clearly as the number of new projects requiring building permits has been reduced by the economy, so has the revenue from permit fees. The new fee structure makes a big effort to try to recoup some of that lost income with both increases in most existing fees as well as the addition of new fees.

For example, there is now a Permit Processing Improvement Fee of $25 per permit. We are all looking for those improvements, yes? The Minimum Permit Fee has increased from $100 to $150. The Change Contractor Fee has increased from $50 to $100. For new construction, the Certificate of Occupancy fee has doubled from $50 to $100. These are just a few examples that will affect many common permits.

The biggest change that will cause the most increase in the cost of permits is the base fee factor – increasing from $5 per $1000 of cost of construction to $7 per $1000. On a large project this could easily add several hundred dollars to the total.

Ultimately, every remodeler and builder who works in the City of Atlanta will have to pay the new higher permit fees, and consequently pass these along to the clients.

Welcome to 2012!!

The results of the Atlanta Public Schools (APS) meeting from Monday January the 22nd has been digested and posted. Information is available on the following website showing proposals.  The neighborhood voice appears to have been heard!

http://www.atlanta.k12.ga.us/cms/lib/GA01000924/Centricity/Domain/45/OptionSummaryWriteUp.pdf

As the economy is slowly picking up steam, so does the remodeling industry. On January 26th Bob Peterson of the National Association of Home Builders, wrote the following:

Remodeling Market Index Rises to Five-Year High in Fourth Quarter of 2011

In the fourth quarter of 2011, professional remodelers saw remodeling market conditions rise to their highest level in five years, according to NAHB’s latest Remodeling Market Index (RMI), which climbed to 46.6, up from 41.7 in the third quarter. The RMI component measuring current market conditions rose to 48.4 in the fourth quarter from 43.0 in the previous quarter. The component measuring future indicators of remodeling business also saw positive movement, increasing to 44.8 from 40.4 in the previous quarter. An RMI below 50 indicates more remodelers reporting market activity is lower than in the prior quarter than those reporting it is higher. Based on results from a survey of remodelers, the overall RMI averages ratings of current remodeling activity with indicators of future activity. “As more consumers remain in their homes rather than move in this economy, remodelers benefited from a gradual increase in home improvement activity, taking us to a five-year high,” said NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, a remodeler from Ft. Collins, Colo. “2011 ended on a strong note for the remodeling industry,” Peterson added. Current market conditions improved significantly in all four regions over the third quarter of 2011. The RMI reported higher market activity in two important categories: major additions 52.3 (up from 45.2) and minor additions 50.1 (up from 45.7). Future market indicators in each region also experienced gains from the previous quarter. Two of the indices climbed above the level of 50: calls for bids at 50.7 (up from 45.4) and appointments for proposals at 50.1 (up from 43.3).