Builders Tell Congress Inefficient Regulations Harm Housing, the Economy
- Jul 19, 2012
Washington, D.C.—The National Association of Home Builders (NAHB) told Congress today that an unwieldy federal regulatory process is hampering the housing and economic recovery.
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.
Another key factor in housing’s current depressed state has been an ongoing lack of acquisition, development and construction lending.
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.
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 six 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.