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Monday Morning Briefing

Monday Morning Briefing

FHA Rescinds “Credit Disputes” Rule – For Now

In good news for home buyers this week, NAHB and other housing and banking industry groups have helped convince the Federal Housing Administration (FHA) to withdraw a controversial rule slated to go into effect on July 1 that would have prohibited borrowers with any credit disputes of more than $1,000 from obtaining FHA financing. Earlier this year, FHA issued a mortgagee letter stating that buyers either had to pay off ongoing credit disputes of more than $1,000 that appeared on their credit reports or show proof that they have entered into a repayment plan with their creditors before they could qualify for an FHA loan. 

NAHB and others in the housing finance community opposed this action citing concerns that it would further restrain the flow of mortgage credit and prevent creditworthy borrowers from qualifying for an FHA-insured loan. Thankfully, on June 15, the FHA issued an updated mortgagee letter formally rescinding its earlier ruling on this matter. However, the agency is expected to issue new guidance on this topic in the near future. We'll be keeping a close eye on how this develops going forward and will keep our readers apprised.

Senate Approves Rural Housing Provision in Farm Bill

In an important victory for NAHB, the Senate on June 20 passed by voice vote an amendment to the farm bill offered by Sen. Ben Nelson (D-Neb.) that would “grandfather” all existing communities in the USDA Rural Housing Section 502 program for another 10 years, allowing them to maintain access to USDA’s Rural Housing Service. The amendment also increased the legal population threshold for the definition of a “rural” county from 25,000 to 35,000 for those currently residing in these communities.

The Senate subsequently approved the farm bill on June 21. Prior to consideration of the Nelson amendment, NAHB sent a letter to senators designating passage as a “key vote” because of its importance to the housing industry. “NAHB strongly believes that the programs offered by the Rural Housing Service (RHS) Section 502 are instrumental in providing opportunities for homeownership to families living in rural communities,” the letter stated. “The amendment does NOT expand any funding levels for rural housing programs. It simply updates the pool of communities eligible for its services and will not place additional financial burden on American taxpayers.” Looking forward, with prospects for the overall farm bill uncertain, NAHB is pursuing several other legislative avenues to address this issue.

Member Resource: FAQ on Southern Pine Design Values

NAHB's Construction, Codes and Standards experts recently completed a helpful "FAQ" document to address the most often-asked questions they are receiving from our members on recent changes in design values for visually graded Southern Pine lumber. This useful resource can be downloaded free of charge by NAHB members who are logged into our website with their username and password, and provides updated, clear information regarding the impetus for the design changes, an explanation of what the changes encompass, an idea of what to expect in the future, and a summation of how the new design values will be incorporated into today's building codes - among other topics.

NAHB Analysis Links Student Loan Debt Crisis to Lower Home Values

Newly published findings from an NAHB analysis of government data reveal a connection between rising student loan debt and the onset of the housing slump, and offer further proof of how lower home values have hurt millions of middle class households and threatened the fragile economic recovery. Coming on the heels of a recent report from the Federal Reserve showing that U.S. household wealth plunged nearly 40% from 2007 to 2010 as a result of declining home values, the findings further illuminate the consequences of that shortfall while serving as an urgent wake-up call for policymakers to do their part to ensure a full-fledged housing recovery moves forward.

In announcing the study results, NAHB called on leaders in Washington to ensure access to mortgage credit for qualified borrowers; demonstrate their support for the mortgage interest deduction; support affordable downpayments for home buyers; enact reforms in appraisal practices and oversight to ensure that appraisals accurately reflect true market values; and establish a strong housing finance system that retains a federal backstop to ensure that standard 30-year fixed-rate loans and adjustable rate mortgages remain readily available for working class households.

As NAHB Chairman Barry Rutenberg said in NAHB's press release on the study, "Young Americans need to have the ability to pay for college in order to prepare for the jobs of the future. Homeownership has historically generated a thriving middle class by creating wealth and helping families to cover higher education costs. Hard-working American families and the economy will continue to struggle until we get housing back on track.”

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  • Joanne Loftus
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