Some of the same builders whose companies created the excess inventory that helped push the housing industry into its current downturn are reportedly meeting today behind closed doors with Federal Reserve chairman Ben Bernanke to discuss what can be done to prevent owners from losing their homes to foreclosure.
The actual agenda of the meeting, however, is not completely clear, as NAHB - which arranged this meeting through its High-Production Homebuilders Council - and spokespeople for several large home builders declined to answer questions about it. BUILDER Online confirmed that CEOs from KB Home, Pulte Homes, and Hovnanian Enterprises are among the builders at the meeting, whereas D.R. Horton did not send a representative. NAHB refused to provide the full attendee list.
Hovnanian's chief Ara Hovnanian let the cat out of the bag last week when he told CNBC about today's meeting during an interview. Hovnanian wants the Fed to cut interest rates to stave off what he sees as the risk of a recession if the mortgage crisis isn't brought to heel, particularly in light of the estimated $2 billion in adjustable-rate loans that are will adjust into higher interest rates through 2008.
"[The] housing industry needs a psychological boost right now," Hovnanian told CNBC. There is also mounting evidence that problems with the subprime mortgage industry are spilling into the larger domestic and even global economies. (Bankers and politicians in Germany, for example, have been calling for consolidation as protection against takeovers that could follow the turmoil being caused by the U.S. subprime crisis.) Yesterday, the Fed urged lenders to help home-owning borrowers who can't make their mortgage payments by offering deferral plans and renegotiations of the terms of their debt.
Steve Zurier contributed to this article.