For example, the Dodd-Frank Act required significant changes to mortgage lending practices, including an "ability to pay" provision that requires lenders to establish that home buyers have a reasonable chance of paying back the loan at the time that a mortgage is written. The law states that certain high-quality, low-cost loans known as qualified mortgages (QM) are presumed to meet this standard.
The new QM standard, which is currently being developed by the Consumer Financial Protection Bureau, will define the mortgage market for years to come, Rutenberg said. For that reason, NAHB supports regulatory changes aimed at more rational lending practices, greater lender accountability and improved borrower safeguards.
"However, it is critical that such reforms are implemented in a manner that causes minimum disruption to the mortgage lending process," he cautioned. "New reforms should not limit consumer financing options, increase the cost of financing or reduce the availability of mortgage credit."
Overly restrictive rules for the forthcoming QM standard will prevent creditworthy borrowers from entering the housing market even as owning a home remains an essential part of the American dream, added Rutenberg.
Another key factor in housing's current depressed state has been an ongoing lack of acquisition, development and construction lending.
"Our members are caught in an 'argument' between banks and federal regulators, who take turns pointing fingers at one another when we try to determine who is to blame for the serious lack of lending to the construction sector," Rutenberg said.
Regardless of who is at fault, with many housing markets now showing signs of recovery, Rutenberg said it is essential that Congress works with regulators and financial institutions to encourage banks to provide sound construction loans so that builders can construct viable home building projects in communities across the land that want and need them.
"Restoring the flow of credit to home builders will not only help to put America back to work, it will help provide badly needed tax revenues that local governments need to fund schools, police, firefighters and other public services," he added.
Meanwhile, changes to the Environmental Protection Agency's Lead: Renovation, Repair and Painting (RRP) rule have constrained small businesses in the home building and remodeling industry. The final rule, which went into effect on April 22, 2010, requires renovation work that disturbs more than six square feet in a home built before 1978 to follow new lead-safe work practices supervised by an EPA-certified renovator and performed by an EPA-certified renovation firm.
"Poor development and implementation by the EPA has resulted in excessive compliance costs and has hindered both job growth and energy efficiency upgrades," said Rutenberg.
In 2010, the EPA removed the "opt-out" provision in the RRP rule that allowed remodelers working in a home built prior to 1978 to forego more expensive work practices according to the owner's wish if no children under the age of 6 or pregnant women were living in the home.
By removing the opt-out provision, the EPA more than doubled the number of homes subject to the RRP, and the agency has estimated this will add more than $500 million in compliance costs to the remodeling community in the first year alone, without making young children any safer.
Moreover, the EPA has not approved reliable lead testing kits, and in many cases consumers are needlessly paying additional costs for work practices that are unnecessary, he added.
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