Home builders, mortgage bankers back Fed's proposals

Mortgage bankers and home builders are pressing lawmakers to examine policies to free up mortgage credit for potential homeowners. 

The National Association of Home Builders (NAHB) and the Mortgage Bankers Association (MBA) agree that findings in a white paper released Wednesday by the Federal Reserve present viable options to boost the ailing housing market and provide a boost to lift the broader economy. 

"Removing the obstacles limiting access to mortgage credit and enabling builders to obtain construction loans to build in markets where demand is firming is imperative to get housing back on track, to put our nation back to work and to keep the economy moving forward," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev.

"Housing can act as a job catalyst if regulators and lending institutions return to prudent underwriting standards that do not exclude creditworthy borrowers and if they move to restore the flow of credit to viable home building projects," Nielsen said.  

Mortgage bankers support the paper's findings that mortgage giants Fannie Mae and Freddie Mac could take steps that would help markets and homeowners by making affordable credit more available for qualified borrowers, including initiatives that may increase short-term losses but have long-term benefits for the housing market.

"We continue to urge policymakers to join us in advancing initiatives that will appropriately balance credit availability for qualified borrowers with regulation and protections for consumers that will ensure that the excesses of the past are not allowed to happen again," said David Stevens, president and chief executive of the Mortgage Bankers Association. 

The Fed's paper said "some actions that cause greater losses to be sustained by the GSEs in the near term might be in the interest of taxpayers to pursue if those actions result in a quicker and more vigorous economic recovery."

In normal times, housing accounts for more than 17 percent of the nation's economic output, according to the NAHB. 

Constructing 100 new homes creates more than 300 full-time jobs, $23.1 million in wage and business income and $8.9 million in federal, state and local tax revenue.

The lack of available credit extends to housing construction loans as well, "which is crippling the housing industry and preventing construction of new homes in markets that need and want them," Nielsen said. 

"In scores of markets across the country that are exhibiting signs of job growth and where the inventory of new homes is nearly exhausted, builders should be hiring workers to break ground on new housing developments," he said.

In a letter to congressional leaders, Fed Chairman Ben Bernanke said "restoring the health of the housing market is a necessary part of a broader strategy for economic recovery."