NAHB Adopts Risk-Sharing Policy

Adding its voice to the forthcoming debate on the future of housing finance, the politically powerful National Association of Home Builders has adopted a five-point policy statement that calls for continued federal support of both the primary and secondary mortgage markets. But the group also wants lenders to share the rate and credit risk investors in mortgages now shoulder alone. As envisioned by the NAHB, the sharing concept would be a "cooperative structure loosely based on the Federal Home Loan Bank model, and lenders would be liable for a "significant portion of the risk" in direct proportion to the volume of loans they sell to Fannie Mae and Freddie Mac. The policy resolution was passed by unanimous vote at the NAHB's annual convention in Las Vegas after President Jerry Howard told the NAHB board that "we need to be very very engaged if the secondary market is to remain intact." The resolution passed through eight committees this week and then the board. Though it cleared its final hurdle with no discussion, during one committee session, Dallas builder Kent Conine, who headed the NAHB in 2003, urged members to move more slowly and run the sharing concept by those it would more directly impact. But Rick Judson, who chaired the Housing Finance Task Force that produced the recommendations, said there already has been "a vocal, good exchange of information" among his members. "No one member agreed with everything," the Mathews, N.C., builder said, "but if implemented, the (task force's) advice will solve a majority of the problems caused by the financial crisis." Noting some would turn the government-sponsored enterprises into public utilities while others would totally privatize the GSEs, Mr. Howard said, "We are concerned about the future of Fannie Mae and Freddie Mac."