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NAHB proposes housing finance overhaul

BY Brae Canlen

The National Association of Home Builders (NAHB) has announced a comprehensive reform plan for the housing finance system that would transition Fannie Mae and Freddie Mac to a new mortgage securitization system for single-family and multi-family conventional mortgages.

"Our plan seeks to overhaul the housing finance system to ensure that housing credit is available and affordable in the future and is delivered through a competitive, efficient, sound, safe and stable system," said NAHB chairman Barry Rutenberg, a home builder from Gainesville, Fla.

Rutenberg said the system must include private, federal and state sources of housing capital; offer a reasonable menu of sound mortgage products for both single-family and multi-family housing that is governed by prudent underwriting standards and adequate oversight and regulation; and provide a federal backstop to ensure that 30-year, fixed-rate mortgages are available at reasonable interest rates and terms.

The replacement of Fannie Mae and Freddie Mac would be done over time; they would be operational during the phase in of a new securitization system, backed by private capital and a privately funded federal mortgage-backed securities fund for conventional mortgages.

Under this scenario, Fannie Mae and Freddie Mac would be gradually replaced by private housing finance entities (HFEs) that would be chartered to purchase single-family and multi-family mortgages from loan originators and package the loans into securities for sale to investors worldwide. The federal government would guarantee the securities, not the mortgages.

The HFEs would only purchase mortgages that are well understood and have reasonable risk characteristics, such as standard 30-year fixed-rate loans. The HFEs would operate under the oversight of a strong independent regulatory agency to ensure all aspects of safety and soundness. NAHB believes the 12 regional Federal Home Loan Banks could serve as HFEs. 

Federal support would consist of a privately funded insurance fund, where the government would guarantee its solvency in a manner similar to the Federal Deposit Insurance Corporation’s backing of the fund that insures savings deposits. Under this system, mortgage originators would pay premiums to capitalize the insurance fund, which would cover losses and ensure full payment to investors. The federal government would be required to pay investors only if the insurance fund was depleted.

"The intent is for the government to be in a secondary position and to be the insurer of last resort in order to reduce the risk to taxpayers," Rutenberg said.

NAHB’s housing finance reform blueprint also proposes to:

• Restart a carefully regulated fully private mortgage-backed securities system. NAHB believes reforms are needed in the system for rating mortgage-backed securities and is supporting the development of new securities ratings agencies that would use criteria developed by securities investors to assure objective evaluations and avoid conflicts of interest.

• Continue the role of the federal government housing agencies. The housing finance support roles of the Department of Housing and Urban Development, Federal Housing Administration, the Department of Veterans Affairs, the Department of Agriculture and the Government National Mortgage Association (Ginnie Mae) would be preserved.

• Enhance the position of state and local housing finance agencies (HFAs) as a source of housing funds. The HFAs should have a more prominent housing finance role through the development of original programs for new homes and multi-family rental units involving partnering with federal and private providers of housing capital.

• Expand the role of the Federal Home Loan Banks (FHLBanks) in the housing finance system. The FHLBanks should continue their current activities to serve as an ongoing liquidity source for institutions providing housing credit. Existing programs, such as the FHLBanks’ mortgage purchase programs, should be enhanced by allowing the banks to move beyond portfolio purchases to securitization.

• Repair flaws that produced the housing boom and bust. It is extremely important to continue and complete steps to close the gaps in standards and oversight that allowed and facilitated the improper and illegal activities in financial and mortgage markets. This should be done by undertaking a series of comprehensive reforms to ensure sound mortgage products and prudent underwriting; requiring sound mortgage securities structures and full transparency for investors; and imposing adequate oversight on previously unregulated segments of the mortgage and financial markets.

To view the NAHB’s full white paper, visit nahb.org/GSEwhitepaper.

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Chemcraft partners with Rugby Architectural Building Products

BY HBSDEALER Staff

Chemcraft, a brand of AkzoNobel, has announced a distribution agreement with Rugby Architectural Building Products throughout its network of North American distributors. Chemcraft develops and manufactures innovative wood coatings with a focus on sustainability.

Rugby Architectural Building Products is based in Concord, N.H., and has 13 distribution centers that cover 25 states. They currently distribute a full line of interior architectural building materials that serve a variety of manufacturing segments, including cabinet, casework, commercial millwork and store fixture manufacturers, countertop fabricators, office, residential and contract furniture manufacturers, and other specialty industries.

“Over a year ago, we identified Industrial Wood Coatings as a key product category for growth,” said Drew Dickson, Rugby’s chief operating officer. “It was essential to partner with one of the top brands. AkzoNobel’s Chemcraft brand delivers exactly that with products, technology and support that is second to none in the industry. A perfect fit for us in the Atlanta market.”

Dickinson added, “We are expecting Chemcraft to help complete the already broad product offering that is available from our Atlanta Distribution Center. With the addition of Chemcraft, we can truly supply the cabinet manufacturers with all of their needs from start to finish. We are very pleased to be part of the Chemcraft distribution team.”

Starting Feb. 20, 2012, Rugby will begin to distribute the AkzoNobel Chemcraft brand line of products from its Atlanta distribution center. 

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BFS executive departs

BY Brae Canlen

Brad Leist, the VP, controller and principal accounting officer at Builders FirstSource, has resigned his position to pursue other opportunities, according to a Feb. 28 filing with the Securities and Exchange Commission (SEC). Until the company fills that position, Chad Crow, senior VP and CFO at Builders FirstSource, will serve as the acting principal accounting officer.

The SEC filing also noted that Ramsey Frank will leave the company’s board of directors in connection with his resignation as a managing director of JLL Partners. Frank was a member of the board’s compensation committee. Brett Milgrim, who has served on the board since 1999, will now serve on the compensation committee. 

The board appointed Daniel Agroskin to serve as a director to fill the board vacancy on Feb. 28, 2012. At that time, the board also appointed Agroskin as a managing director of JLL Partners, which he joined in August 2005. Prior to joining JLL, Agroskin worked at JP Morgan Partners, a private equity investment firm, and in Merrill Lynch’s mergers and acquisitions group. Agroskin is also a director on the boards of PGT and Patheon. He was previously a director on the board of PharmaNet Development Group until July 2011.

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