Editor’s note: The home construction industry has been suffering a serious problem with construction loan financing because of mixed signals from Federal Regulators. On the one hand local banks have ample supply of money to loan but regulators have been refusing to allow them to loan above a set quota in order to “maintain a preferred portfolio ratio”. Housing is a key factor in getting the recession fixed according to industry and financial professionals, yet the lack of AD & C credit has stifled growth and the economy. On August 10 the El Paso Association of Builders will host a general meeting with Larry Patton, President and CEO of Bank of the West and a member of the Dallas Federal Reserve as the speaker. Mr. Patton will provide insight into this topic and more during the luncheon at the El Paso Club. For information on that event contact the EPAB at 915-778-5387. The National Association of Home Builders (NAHB) applauded Rep. Gary Miller (R-Calif.), Rep. Brad Miller (D-N.C.) and 29 other original cosponsors for introducing bipartisan legislation aimed at restoring the flow of acquisition, development and construction (AD&C) credit to the housing sector to help spur job growth, support a recovery in the housing market and keep the economy moving forward. "We commend Reps. Gary Miller and Brad Miller for championing a legislative solution aimed at ending the freeze in housing production credit that has forced countless home building firms across the nation to shutter their doors, resulting in grave repercussions for job growth and the overall economy," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. The credit crunch has taken an enormous toll on the nation's economy, with job losses felt most acutely in the housing sector, where more than 1.4 million construction workers have been idled since 2006. Factoring in the effect of the housing plunge on industries that provide materials and services to home builders, the total impact of the housing slump has been the loss of more than three million jobs and $145 billion in wages in all housing-related industries. H.R. 1755, the Home Construction Lending Regulatory Improvement Act of 2011, would address specific regulatory obstacles to the credit needs of the nation's home builders. In a letter to fellow lawmakers seeking support for their bill, Reps. Gary Miller and Brad Miller said that "one of the major reasons for this lack of credit is the overly restrictive actions by banking regulators which have hindered federal and state chartered banks and thrifts' ability to make and maintain loans to qualified small home builders that have viable projects." To rectify this situation, the legislation would grant authority and guidance to federal and state banking regulators to ensure that financial institutions that provide financing to America's home builders are permitted to make loans, restore liquidity and provide stable financing to the residential housing sector. In other news Reuters correspondent Corbett B. Daly reports that a bill to create a new market for financing mortgages would help wean the $10.6 trillion U.S. mortgage market off government support advanced in the House of Representatives in early May. The House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises approved the legislation on a voice vote. The bill, which the White House supports, would have to be approved by the full committee, the full House and the Senate before being sent to President Barack Obama for his signature into law. The bill aims to establish a market for covered bonds, which are securities issued by banks and backed by pools of loans. The loans underlying the covered bonds would remain on the issuer's balance sheet. That is different from the current U.S. mortgage system, in which lenders sell many of the loans they make to government- sponsored Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB), which then repackage them as securities for investors. The government seized Fannie Mae and Freddie Mac in 2008 as losses on the loans they held spiraled. The government, through Fannie Mae, Freddie Mac and the Federal Housing Administration, now backs almost nine in 10 new mortgages. In Europe, covered bonds have long been in use. But they have failed to catch on in the United States. In a covered bond system, banks can borrow against the value of the underlying mortgages to obtain fresh capital to extend further loans. The bond investors have the right to those underlying assets in the case of a bank default. The Federal Deposit Insurance Corporation has warned that a covered bond system could put its bank deposit insurance fund at increased risk for losses because the investors would have seniority over the agency in the event of default. (For Reuters, Corbett B. Daly) Issue 5 2011 Building El Paso’s tomorrow today Builders Outlook PRSRT STD U.S. POSTAGE PAID EL PASO TX PERMIT NO. 429 www.elpasobuilders.com NAHB supports legislation addressing housing lending crisis The El Paso Association of Builders is holding their June 10 meeting in Las Vegas, NV. and cordially invites all memebrs to join in on a fun filled weekend. “It’s designed as a get away with a mix of business as we come together for some good times away from the daily routine of running a business. We are using Sun Travel to book our trip which includes flying out on Southwest and then staying at the fabulous Paris Hotel, deep in the heart of the Vegas strip! The Paris is our headquarters but there’s a great selection from the Wynn to Bellagio waiting for you! Just let Sun Travel know your preference,” said Executive Vice President Ray Adauto There’s a lot to do in Vegas and it was announced last week that Paul McCartney is in concert on Friday June 10 at the MGM arena. Now that’s going to bring a lot of folks into town for sure. If you’re not a McCartney fan, then maybe one of the dozens of regular shows like the Jersey boys, Elvis, or Cirque du Soleil is more your cup of tea. Great golf, and great dining, exceptional gambling. Our meeting is scheduled for Saturday, June 11 at the Paris, place to be determined. We’ll have fun and some adventure but most of all we want you to be a part of this inaugural trip. With your help it could become an annual event! If you’re interested in finding out more contact Isabelle Caballero at Sun Travel, 747-3055. We’ll see you in Vegas June 10th! EPAB meeting set for Las Vegas Who: El Paso Association of Builders What: General Membership Meeting Where: Las Vegas, NV When: June 10-12, 2011 Info: 778-5387 “One of the major reasons for this lack of credit is the overly restrictive actions by banking regulators which have hindered federal and state chartered banks and thrifts' ability to make and maintain loans to qualified small home builders that have viable projects." Rep. Gary Miller (R-Calif.) Brad Miller (D-N.C.)
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Transcript
Editor’s note: The home construction
industry has been suffering a serious
problem with construction loan financing
because of mixed signals from Federal
Regulators. On the one hand local banks
have ample supply of money to loan but
regulators have been refusing to allow them
to loan above a set quota in order to
“maintain a preferred portfolio ratio”.
Housing is a key factor in getting the
recession fixed according to industry and
financial professionals, yet the lack of AD &
C credit has stifled growth and the economy.
On August 10 the El Paso Association of
Builders will host a general meeting with
Larry Patton, President and CEO of Bank of
the West and a member of the Dallas Federal
Reserve as the speaker. Mr. Patton will
provide insight into this topic and more
during the luncheon at the El Paso Club. For
information on that event contact the EPAB
at 915-778-5387.
The National Association of HomeBuilders (NAHB) applauded Rep. GaryMiller (R-Calif.), Rep. Brad Miller (D-N.C.)and 29 other original cosponsors forintroducing bipartisan legislation aimed atrestoring the flow of acquisition,development and construction (AD&C)credit to the housing sector to help spur jobgrowth, support a recovery in the housingmarket and keep the economy movingforward.
"We commend Reps. Gary Miller andBrad Miller for championing a legislativesolution aimed at ending the freeze inhousing production credit that has forcedcountless home building firms across thenation to shutter their doors, resulting in
grave repercussions for job growth and theoverall economy," said NAHB ChairmanBob Nielsen, a home builder from Reno,Nev.
The credit crunch has taken an enormoustoll on the nation's economy, with job lossesfelt most acutely in the housing sector, wheremore than 1.4 million construction workershave been idled since 2006. Factoring in theeffect of the housing plunge on industriesthat provide materials and services to homebuilders, the total impact of the housingslump has been the loss of more than threemillion jobs and $145 billion in wages in allhousing-related industries.
H.R. 1755, the Home ConstructionLending Regulatory Improvement Act of2011, would address specific regulatoryobstacles to the credit needs of the nation'shome builders.
In a letter to fellow lawmakers seekingsupport for their bill, Reps. Gary Miller andBrad Miller said that "one of the majorreasons for this lack of credit is the overlyrestrictive actions by banking regulatorswhich have hindered federal and statechartered banks and thrifts' ability to makeand maintain loans to qualified small homebuilders that have viable projects."
To rectify this situation, the legislationwould grant authority and guidance tofederal and state banking regulators to ensurethat financial institutions that providefinancing to America's home builders arepermitted to make loans, restore liquidityand provide stable financing to theresidential housing sector.
In other news Reuters correspondentCorbett B. Daly reports that a bill to create a
new market for financing mortgages wouldhelp wean the $10.6 trillion U.S. mortgagemarket off government support advanced inthe House of Representatives in early May.
The House Financial ServicesSubcommittee on Capital Markets andGovernment Sponsored Enterprisesapproved the legislation on a voice vote.
The bill, which the White House supports,would have to be approved by the fullcommittee, the full House and the Senatebefore being sent to President Barack Obamafor his signature into law. The bill aims toestablish a market for covered bonds, whichare securities issued by banks and backed bypools of loans.
The loans underlying the covered bondswould remain on the issuer's balance sheet.That is different from the current U.S.mortgage system, in which lenders sell manyof the loans they make to government-sponsored Fannie Mae (FNMA.OB) andFreddie Mac (FMCC.OB), which thenrepackage them as securities for investors.
The government seized Fannie Mae andFreddie Mac in 2008 as losses on the loansthey held spiraled.
The government, through Fannie Mae,Freddie Mac and the Federal HousingAdministration, now backs almost nine in 10new mortgages.
In Europe, covered bonds have long beenin use. But they have failed to catch on in theUnited States.
In a covered bond system, banks canborrow against the value of the underlyingmortgages to obtain fresh capital to extendfurther loans. The bond investors have theright to those underlying assets in the case ofa bank default.
The Federal Deposit InsuranceCorporation has warned that a covered bondsystem could put its bank deposit insurancefund at increased risk for losses because theinvestors would have seniority over theagency in the event of default. (For Reuters,Corbett B. Daly)
Issue 5 2011 Building El Paso’s tomorrow today
Builders OutlookP
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www.elpasobuilders.com
NAHB supports legislation addressing
housing lending crisis
The El Paso Association of Builders isholding their June 10 meeting in Las Vegas,NV. and cordially invites all memebrs tojoin in on a fun filled weekend.
“It’s designed as a get away with a mix ofbusiness as we come together for some goodtimes away from the daily routine of runninga business. We are using Sun Travel to bookour trip which includes flying out onSouthwest and then staying at the fabulousParis Hotel, deep in the heart of the Vegasstrip! The Paris is our headquarters butthere’s a great selection from the Wynn to
Bellagio waiting for you! Just let Sun Travelknow your preference,” said Executive VicePresident Ray Adauto
There’s a lot to do in Vegas and it wasannounced last week that Paul McCartney isin concert on Friday June 10 at the MGMarena. Now that’s going to bring a lot offolks into town for sure. If you’re not aMcCartney fan, then maybe one of thedozens of regular shows like the Jerseyboys, Elvis, or Cirque du Soleil is more yourcup of tea. Great golf, and great dining,exceptional gambling. Our meeting is
scheduled for Saturday, June 11 at the Paris,place to be determined. We’ll have fun andsome adventure but most of all we want youto be a part of this inaugural trip.
With your help it could become an annualevent!
If you’re interested in finding out morecontact Isabelle Caballero at Sun Travel,747-3055. We’ll see you in Vegas June
10th!
EPAB meetingset for Las VegasWho: El Paso Association of
BuildersWhat: General Membership MeetingWhere: Las Vegas, NVWhen: June 10-12, 2011Info: 778-5387
“One of the major reasons forthis lack of credit is the overlyrestrictive actions by bankingregulators which have hinderedfederal and state chartered banksand thrifts' ability to make andmaintain loans to qualified smallhome builders that have viableprojects."
With sixty years of experience and over10,000 quality homes built in El Paso,Tropicana Homes has become a namesynonymous with quality construction. Asthey continue to grow and expand,community involvement remains a toppriority. Their commitment to the industryand community has made TropicanaHomes the premier builder in El Paso.
country to utilize the power of the sun to supple-
ment electric consumption.
find us on facebook:elpasobuilders
BUILD abetter socialnetwork!
THANK YOU TO OUR
2011 Golf Sponsors
The annual El Paso Association of Builders golf tournament was held
at Painted Dunes Desert Golf Course in April. Twenty eight teams
competed for bragging rites on the tournament. The event was coordi-
nated by the golf Committee headed up by David Bogas, Sam
Shallenberger, Eric Lowenberg, Ray Adauto and spearheaded by John
Chaney. The wind died down on the day of play to present the golfers
and volunteers some excellent weather. Traditionally the EPAB tour-
nament signifies the start of Spring for the Association and a season of
renewal. This year the great folks at Painted Dunes, including
Anthony Bellows and Mark Gonzalez, gave the golfers a challenging
course in pretty good shape. John Chaney was really excited about the
turnout and grateful for all the volunteers. “This is one of the most tra-
ditional tournaments in the area and the benefits it gives the EPAB and
Young Designer Awards goes on for the entire year,” Chaney said.
“I’d like to thank all the folks who came out to support the event and
provide us with a fun time once again,” he concluded. Greg Bowling,
President of EPAB was eaqually grateful. “We turn out to this event
every year, rain or shine, good times and bad, but this year it was extra
special to see as many of our members and their guests come out,” he
said. “I’d like to especially thank All Precision Sheet Metal,
Interceramic, Goff’s and Tropicana Homes for their sponsorship,
along with everyone else who bought carts, signs and hole sponsor-
ships. This is a sign of commitment to the association and our
Executive Board thanks you for that, “ Bowling continued.
First place went to Aztec Construction’s team of Spencer, Forcada,
Mora, Medrano, Jurado and Elgua. Second Place went to Tropicana
Homes headed by Greg Bowling and third went to Texas Gas team
with Captain John Reich.
Golf Tournament
News from the
Texas
Real Estate
Center
recenter.tamu.edu
Builders Outlook10MAY 2011
Texas
Outperforms
Nation in Job
GrowthBy Bryan Pope, Associate Editor,
Real Estate Center
COLLEGE STATION, Tex. (RealEstate Center) — When it came tocreating jobs, Texas outperformedthe rest of the country from February2010 to February 2011.
According to the latest MonthlyReview of the Texas Economypublished by the Real Estate Centerat Texas A&M University, Texasgained 230,000 jobs during those 12months. That’s an annual growthrate of 2.3 percent. Over the sameperiod, U.S. nonfarm employmentrose 1 percent.
The state’s private sector postedan annual employment growth rateof 2.5 percent compared with 1.5percent for the U.S. private sector.
The state’s seasonally adjustedunemployment rate was 8.2 percentin February 2011, unchanged from ayear earlier. Meanwhile, the nation’srate decreased from 9.7 to 8.9percent.
All Texas industries exceptfinancial activities and informationindustries had more jobs, and allTexas metro areas had more jobs.Petroplexes Odessa and Midlandranked first and second,respectively, in job creation followedby Longview and Dallas-Plano-Irving.
The state’s actual unemploymentrate was 8.2 percent. Midland hadthe lowest unemployment ratefollowed by Amarillo, Lubbock,College Station-Bryan and SanAngelo.
Despite job growth, existing Texassingle-family home sales inFebruary were down 10 percentfrom a year ago.
Just over 12,000 homes were soldthis past February according to thelatest Multiple Listing Services(MLS) data compiled by the Center.
The median home price was up 3percent from the previous year, at$145,800. There was a 7.2-monthinventory.
For more on the Texas economy,read the Center’s Monthly Review ofthe Texas Economy. It’s online athttp://recenter.tamu.edu/econ/. TheCenter’s website also includes thelatest housing data from 47 TexasMLS areas. It’s athttp://recenter.tamu.edu/data/hs/.
Weak Home Sales
Numbers Don’t Tell
Whole Story,
By Bryan Pope, Associate Editor, Real Estate
Center
COLLEGE STATION, Tex. (RealEstate Center) — Home salesstatistics are likely to paint a pictureof a weakening market through theend of 2010 and the first half of 2011.While it’s tempting to attribute thebleak numbers to a deterioratinghousing market, an economist withthe Real Estate Center at Texas A&MUniversity said that doesn’t tell thewhole story.
“The year-over-year decline inexisting home sales will be the resultof comparing months when there wasno tax credit with those from a yearearlier, when the tax credit wasartificially increasing sales,” said Dr.Mark Dotzour, the Center’s chiefeconomist.
The $8,000 tax credit for first-timehomebuyers went into effect inJanuary 2009 and was planned toexpire in November 2009. Homesales gradually started to increaseafter the tax credit was announced,after bottoming out in January at anannual rate just above 4.5 millionsales.
Existing home sales graduallyincreased in 2009 as buyers and realestate agents became more familiarwith the program. Sales topped anannual rate of five million in July 2009for the first time since September2008.
As the tax credit deadlineapproached, home sales spiked inSeptember, October and November2009. November 2009 was the peakat an annual rate of almost 6.5million.
The tax credit was extended late in2009 to include sales with contractswritten until April 30, 2010, andclosed by June 30 (extended toSeptember 30). Initial homebuyerresponse to this extension was tepid,but sales picked up substantially in
March, April and May 2010, whensales were up 18 percent, 28 percentand 18 percent, respectively, over thesame months in 2009.
Then the process reversed itself.Pending home sales fell dramaticallyin May 2010, the month after the taxcredits expired. This was followed bya significant drop in home sales inJune and July. In Texas, July 2010sales were down approximately 25percent from July 2009.
Dotzour said August figures maynot be much better since manybuyers purchased homes before thetax incentive expired.
“When you ‘bring forward’ salesthrough tax incentives, sales will belower after the tax credit ends,” hesaid.
Unless Congress creates a new taxcredit this fall, Dotzour said monthlysales for 2010 will likely exhibitsignificant variance from 2009, and atrue reading of housing marketconditions may not be possible untilJune or July 2011.
Association of Buildersenjoy many exclusivediscounts from some of thefinest merchants in thecountry.
For Example:
Members may now receive a 2%discount on purchases using theirLowe’s Accounts Receivable, plusget free delivery on purchases of$500 or more. To be eligible for the discount,members must register their NAHBmembership on LowesforPros.comby November 1, 2011, and make apurchase with their Lowe’sAccounts Receivable by December7, 2011.