Tom Woods, a builder in Blue Springs, Mo., with 40 years of experience in the housing industry, started his one-year term as NAHB chairman of the board in January. Woods has served on the NAHB's board of directors since 1983, and has been on the executive board for nearly 15 years.
He also is the president of Kansas City, Mo.–based Woods Custom Homes, which has constructed numerous communities and more than 1,000 homes in the Greater Kansas City area. Shortly after taking office, Woods shared his thoughts on some pressing industry issues with BUILDER assistant editor Kayla Devon.
Fannie Mae and Freddie Mac have recently set terms to accept down payments as little as 3 percent for first-time home buyers. How will this affect the market?
It will bolster and help the recovery of the housing market. As you know, one of the biggest obstacles to achieving homeownership is the ability to come up with the down payment, and if you reduce the upfront cash requirements and establish tough but fair underwriting guidelines that include a number of safeguards, it will help many Americans gain access to credit while maintaining safe and sound lending practices.
While there are other impediments that remain, this will open the door to homeownership to more American families—particularly first-time home buyers and young households—while minimizing the risk of default. We're very pleased.
Many have predicted that 2015 will be a good year for the home building industry. What is the NAHB doing to help keep up the recovery?
We believe that reform of the U.S. housing finance system is still necessary for complete recovery. We've long advocated for and strongly support a housing finance system that relies on private money and capital and has a federal backstop that would be triggered only under some real severe circumstances after significant levels of private capital are first exhausted.
The NAHB will continue to try to engage legislators and financial regulators on the need for a system that provides a consistent and affordable supply of mortgage credit, including a 30-year fixed-rate mortgage as well as financing for new single-family and multifamily construction. We also will emphasize the importance of a consistent and regulated appraisal system and accurate valuations on new-home construction.
Some fear these low limits are similar to the conditions that led to the Great Recession. Do you see this being a problem, or are there enough safeguards in place?
I think they have a much better idea of what actually took place. I think there are some indicators, quite frankly, that the down payment amount was not the problem or not the largest part of the problem. Sound lending practices are the key. The VA has offered no down payment loans forever, and if you look at the numbers, they perform quite well even through all of this. Lowering the down payment has little, in my mind, to do with the default underwriting. Just some of the product itself probably had more to do with it.
The NAHB has taken a critical stance on President Barack Obama's executive action on immigration. Why?
It's a piecemeal approach to reform and it doesn't provide a long-term solution to this complex and ongoing issue. The executive action could be overturned by a future presidential administration, and that puts the employers in a precarious position with regard to uncertain employment verification requirements.
It's imperative that Congress enact comprehensive immigration reform legislation. Some pretty significant progress was made toward developing comprehensive immigration legislation during the last congressional session, and the administration in the new Congress should build on that foundation to develop a lasting, fair, and workable policy solution.
Do you see any positives in President Obama's plan, such as a lessening of the labor shortage or increased homeownership by immigrants?
The problem is the uncertainty, the fact that it could be reversed ... which would mean that workers who were at one time legal are no longer legal, so then what do I do? Builders will have all kinds of employment issues at that point.
What would you like to accomplish this year as chairman of the board?
We certainly want to keep the economy growing, but I think it's probably outside my purview. We expect to focus on reform of the housing finance system. This important issue has languished for far too long and we would do everything in our power to see our Congress move forward with comprehensive housing finance legislation.
Likewise, we're going to continue to work with regulators to protect our members' interests on issues ranging from the environment to government housing programs, jobsite safety, energy efficiency, sustainability, and more.