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52–889 PDF 2009

FULL COMMITTEE HEARING ON THE STATE 

OF THE NATION’S HOUSING SECTOR: AN 

EXAMINATION OF THE FIRST TIME BUYER’S 

CREDIT AND FUTURE POLICIES 

TO SUSTAIN A RECOVERY 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

OCTOBER 7, 2009 

Small Business Committee Document Number 111-049 

Available via the GPO Website: http://www.access.gpo.gov/congress/house 


Congress.#13
HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

DENNIS MOORE, Kansas 

HEATH SHULER, North Carolina 

KATHY DAHLKEMPER, Pennsylvania 

KURT SCHRADER, Oregon 

ANN KIRKPATRICK, Arizona 

GLENN NYE, Virginia 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

DAN LIPINSKI, Illinois 

JASON ALTMIRE, Pennsylvania 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

JOE SESTAK, Pennsylvania 

BOBBY BRIGHT, Alabama 

PARKER GRIFFITH, Alabama 

DEBORAH HALVORSON, Illinois 

SAM GRAVES, Missouri, Ranking Member 

ROSCOE G. BARTLETT, Maryland 

W. TODD AKIN, Missouri 

STEVE KING, Iowa 

LYNN A. WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

BLAINE LUETKEMEYER, Missouri 

AARON SCHOCK, Illinois 

GLENN THOMPSON, Pennsylvania 

MIKE COFFMAN, Colorado 

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KAREN HAAS, Minority Staff Director 

(II) 

STANDING SUBCOMMITTEES 

Subcommittee on Contracting and Technology 

GLENN NYE, Virginia, Chairman 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

KURT SCHRADER, Oregon 

DEBORAH HALVORSON, Illinois 

MELISSA BEAN, Illinois 

JOE SESTAK, Pennsylvania 

PARKER GRIFFITH, Alabama 

AARON SCHOCK, Illinois, Ranking 

ROSCOE BARTLETT, Maryland 

W. TODD AKIN, Missouri 

MARY FALLIN, Oklahoma 

GLENN THOMPSON, Pennsylvania 

Subcommittee on Finance and Tax 

KURT SCHRADER, Oregon, Chairman 

DENNIS MOORE, Kansas 

ANN KIRKPATRICK, Arizona 

MELISSA BEAN, Illinois 

JOE SESTAK, Pennsylvania 

DEBORAH HALVORSON, Illinois 

GLENN NYE, Virginia 

MICHAEL MICHAUD, Maine 

VERN BUCHANAN, Florida, Ranking 

STEVE KING, Iowa 

W. TODD AKIN, Missouri 

BLAINE LUETKEMEYER, Missouri 

MIKE COFFMAN, Colorado 

Subcommittee on Investigations and Oversight 

JASON ALTMIRE, Pennsylvania, Chairman 

HEATH SHULER, North Carolina 

BRAD ELLSWORTH, Indiana 

PARKER GRIFFITH, Alabama 

MARY FALLIN, Oklahoma, Ranking 

LOUIE GOHMERT, Texas 

(III) 

Subcommittee on Regulations and Healthcare 

KATHY DAHLKEMPER, Pennsylvania, Chairwoman 

DAN LIPINSKI, Illinois 

PARKER GRIFFITH, Alabama 

MELISSA BEAN, Illinois 

JASON ALTMIRE, Pennsylvania 

JOE SESTAK, Pennsylvania 

BOBBY BRIGHT, Alabama 

LYNN WESTMORELAND, Georgia, Ranking 

STEVE KING, Iowa 

VERN BUCHANAN, Florida 

GLENN THOMPSON, Pennsylvania 

MIKE COFFMAN, Colorado 

Subcommittee on Rural Development, Entrepreneurship and Trade 

HEATH SHULER, North Carolina, Chairman 

MICHAEL MICHAUD, Maine 

BOBBY BRIGHT, Alabama 

KATHY DAHLKEMPER, Pennsylvania 

ANN KIRKPATRICK, Arizona 

YVETTE CLARKE, New York 

BLAINE LUETKEMEYER, Missouri, Ranking 

STEVE KING, Iowa 

AARON SCHOCK, Illinois 

GLENN THOMPSON, Pennsylvania 

(IV) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Vela ́zquez, Hon. Nydia M. ....................................................................................... 1 

Graves, Hon. Sam .................................................................................................... 2 

WITNESSES 

Jacob, Mr. Mickey, Managing Principal, Urban Studio Architects, Tampa, 

FL, on behalf of The American Institute of Architects ..................................... 3 

Robson, Mr. Joe, Robson Companies, Broken Arrow, OK, President, National 

Association of Home Builders ............................................................................. 5 

Pryor, Mr. Michael B., President and CEO, Lenders Title Company, Little 

Rock, AR, on behalf of The American Land Title Association .......................... 6 

Canfora, Mr. Joseph, Broker/Owner, Century 1 Selmar Realty, East Islip, 

NY, on behalf of National Association of Realtors ............................................ 8 

Volm, Ms. Pamela, Owner, Annapolis Contracting, Annapolis, MD ................... 9 

APPENDIX 

Prepared Statements: 

Vela ́zquez, Hon. Nydia M. ....................................................................................... 24 

Graves, Hon. Sam .................................................................................................... 26 

Jacob, Mr. Mickey, Managing Principal, Urban Studio Architects, Tampa, 

FL, on behalf of The American Institute of Architects ..................................... 28 

Robson, Mr. Joe, Robson Companies, Broken Arrow, OK, President, National 

Association of Home Builders ............................................................................. 38 

Pryor, Mr. Michael B., President and CEO, Lenders Title Company, Little 

Rock, AR, on behalf of The American Land Title Association .......................... 46 

Canfora, Mr. Joseph, Broker/Owner, Century 1 Selmar Realty, East Islip, 

NY, on behalf of National Association of Realtors ............................................ 58 

Volm, Ms. Pamela, Owner, Annapolis Contracting, Annapolis, MD ................... 69 

Statements for the Record: 

Clarke, Hon. Yvette ................................................................................................. 73 

Appraisal Institute/ American Society of Appraisers/ American Society of 

Farm Managers and Rural Appraisers/ National Association of Independent 

Fee Appraisers ...................................................................................................... 74 

International Council of Shopping Centers ........................................................... 78 

(V) 

(1) 

FULL COMMITTEE HEARING ON THE STATE 

OF THE NATION’S HOUSING SECTOR: 

AN EXAMINATION OF THE FIRST TIME 

BUYER’S CREDIT AND FUTURE POLICIES 

TO SUSTAIN A RECOVERY 

Wednesday, October 7, 2009 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, Washington, DC. 

The Committee met, pursuant to call, at 2:10 p.m., in Room 

2360, Rayburn House Office Building, Hon. Nydia M. Vela ́zquez 

[Chair of the Committee] presiding. 

Present: Representatives Vela ́zquez, Moore, Dahlkemper, Clarke, 

Graves, Westmoreland, Fallin, Luetkemeyer, and Thompson. 

Chairwoman VELA ́ ZQUEZ. I call this hearing of the House Small 

Business Committee to order. 

In the last few years, it has become increasingly clear that the 

health of our economy hinges on the state of the housing market. 

That is why Congress has placed such an emphasis on recovery in 

that sector. Already, we are seeing promising results, but our momentum remains fragile and we need to be sure it is allowed to 

continue, not just for the sake of homeowners but for the sake of 

our economy and the small businesses that sustain it. 

Housing is a small business driven industry. In fact, most mortgage brokers, realtors, home builders, home inspectors and architectural design firms are small ventures. For these businesses recent business upticks have gone a long way in restoring confidence 

and boosting the bottom line. In August, pending home sales rose 

6.4 percent, marking 7 straight months of improvement. Meanwhile, July home values climbed at their highest rate in almost 4 

years. But this progress is no pretext for complacency. Home values 

are still way below what they were 3 years ago and industry businesses continue to face challenges, like tightened credit and slowed 

consumer spending. 

One year after the real estate bubble burst, the housing market 

is at something of a crossroads. While we have seen encouraging 

bright spots, small businesses in this industry are still struggling. 

This afternoon we have an opportunity to evaluate the state of the 

housing sector and the role that small firms are playing in its recovery. In doing so, we hope to pinpoint which policies are working 

and where we still have work left to be done. 

Even today, you don’t need to look very far to see the impact of 

the housing crisis. In neighborhoods across the country, thousands 

2 

of houses still sit empty. This glut in the market has dealt a heavy 

blow to virtually every firm in the industry, including small banks 

and lending institutions. For these businesses, measures like the 

First-Time Home Buyer’s Credit have been a lifeline. That $8,000 

incentive has galvanized consumers, sparking an increase in home 

purchases. Some experts predict it will generate an additional 

350,000 sales before December and are calling for its extension. 

Increased home sales will be a key component in the housing recovery, but it will not be the only means for revival. Entrepreneurs, 

like electricians and efficiency contractors, are already benefiting 

from measures that encourage green building. In a recent survey 

by the Air Conditioning Contractors of America, 75 percent of respondents said they had enjoyed improved sales as a result of Recovery Act tax credits. Increased incentives for green building could 

go a long way in continuing that growth and are worth considering. 

For the first time in years we have seen stabilization in the housing market. In order to build on this emerging recovery, economists 

have suggested extension for our most effective measures, some of 

which will soon expire. It is important that we have a chance to 

examine these incentives and determine their value moving forward. Meanwhile, we need to be certain that small firms have the 

capital they need to stay afloat. Loans to small businesses in the 

housing sector are down on most accounts. Efforts to get credit 

flowing again to both builders and buyers will mark an important 

step in addressing that issue. 

While it is clear that the housing market has come a long way, 

we are not out of the woods just yet. Entrepreneurs, ranging from 

realtors and appraisers and home builders and architects, are still 

facing challenges. These are the men and women who not only 

comprise the foundation of American real estate, but also of our 

economy. They will play a vital role in our Nation’s recovery efforts 

and it is critical that they have all the tools they need to incite a 

rebound. 

I would like to thank all of the witnesses for being here and I 

know that we were supposed to start our hearing at 1 o’clock, but 

I want to take this opportunity really to thank you for helping us 

come to terms to see what are the measures that are working in 

terms of the Recovery Act, and how can we be helpful to make sure 

that those tools are still here for months to come. 

And I will now will yield to Ranking Member Graves for his 

opening statement. 

Mr. GRAVES. Thank you, Madam Chair, and I would like to 

thank you for holding this hearing on the state of the Nation’s 

housing sector and how temporary tax provisions have affected our 

Nation’s ailing housing market. I also want to thank all of our witnesses for being here today. I know that you have come a long 

ways in many cases to be with us. 

Recent statistics point to a slight improvement in America’s 

housing market. Buyers appear to be slowly reentering the market 

and housing prices seem to be stabilizing. However, the housing 

market is in no way robust and the current health of the housing 

market is still a great concern. Foreclosures remain close to record 

levels, with one in every 357 houses in the United States receiving 

3 

a foreclosure notice in August. The aftershock of the market’s 

downfall continues to be felt by all sectors of the economy. 

Across the country small lumber mills, contractors, electrical 

manufacturers, realtors, and others in the housing industry have 

been forced to shrink their workforce, cut workers’ pay and employ 

a variety of creative methods just to stay in business. The FirstTime Home Buyer’s Tax Credit, signed into law in the summer of 

2008, was intended to provide a jolt to the sluggish housing market, providing those would be first-time home buyers an incentive 

to make that first purchase. 

Many have attributed the slight uptick in the housing market in 

August to the First-Time Home Buyer’s Tax Credit, which was increased and extended in the American Recovery and Reinvestment 

Act of 2009. The credit is set to expire on November 30th. With 

this date looming, we must now evaluate the success of this credit 

versus the cost of extending it and its long-term impact on the deficit. This hearing will provide an opportunity to hear from those effected directly by the housing market and examine how this credit 

and other incentives have impacted them. 

Again, thank you, Madam Chair, for holding this hearing and I 

thank the witnesses and I look forward to hearing the testimony. 

Chairwoman VELA ́ ZQUEZ. Thank you. Our first witness is Mr. 

Mitch Jacob, the Managing Principal of Urban Studio Architects in 

Tampa, Florida. Urban Studio Architects was founded in 1989 as 

an architectural space planning and interior design practice. Mr. 

Jacob is testifying on behalf of the American Institute of Architects. 

The Institute has more than 83,000 licensed architects and associate professionals. Welcome. You will have 5 minutes to make 

your presentation. 

STATEMENT OF MICKEY JACOB 

Mr. JACOB. Madam Chairwoman Vela ́zquez, Ranking Member 

Graves, and members of the Committee, I am Mickey Jacob, FAIA 

Managing Principal of Urban Studio Architects, a seven-person architectural and interior design firm located in Tampa, Florida, and 

I want to thank you for giving me the opportunity to testify today 

on behalf of my firm and the American Institute of Architects. 

As the global financial crisis continues to threaten the livelihood 

of American business, the American Institute of Architects, the 

AIA, strongly supports the Committee in its efforts to pursue policies that will allow small business to prosper in these times of economic crisis. 

A large majority of AIA’s 85,000 members own or work for small 

firms. America’s architects, like millions of small businesses around 

the country, have been particularly hard hit by the recent economic 

downturn. The tightening of credit markets has put the financing 

of construction projects at risk, resulting in reduced work for architects and in many cases the outright cancelation of ongoing 

projects. 

The AIA’s Architecture Billings Index forecasts a significant reduction in activity within our sector over at least the next 12 

months. Firms with a single family residential specialization have 

been reporting increased scores since mid-spring due in part to the 

4 

$8,000 First-Time Home Buyer’s Tax Credit. However, on the 

whole the architecture profession is reeling. As the building sector is responsible for 1 of every $10 of the 

United States GDP, a large portion of which is directly created by 

small business, continued stagnation within the economy will only 

further magnify the financial hardship and increasing job loss. As 

a small business owner I would like to share with you my firm’s 

experiences in this economic climate as they are emblematic of the 

larger challenges we all face. 

Urban Studio Architects celebrated its 20th year in business this 

past August. Our business model of slow and steady growth during 

the first 18 years focused on projects in the commercial, institutional and residential sectors. The residential side of our practice 

represented about 65 percent of our total revenue. By 2007, we had 

a vibrant staff of 33 people, creating an average of $300,000 a 

month in billings. However, in early 2008 our two largest residential projects, worth over a million dollars in fees to us, were suddenly put on hold due to the inability to acquire financing. 

The continuing decline in the real estate market has seriously affected our firm by making it almost impossible for our clients, most 

having a successful track record in development, to acquire financing and build. Additionally, the collapse of the housing market in 

Florida has put on indefinite hold all residential projects in our 

firm. Our revenue has gone from averaging $300,000 a month to 

$30,000 a month. 

The result of this real estate economic downturn is that our firm 

has laid off 25 people in the last 20 months, representing 75 percent of our workforce. We have slashed our overhead, renegotiated 

the terms of our lease and asked our employees to take three different pay cuts, the last of which reduced salaries to half what they 

were earning just 15 months ago. 

Our financial situation has left with us with only two choices: 

Merge with another firm to stay open and save jobs, or close our 

business. 

Sadly, our firm’s story is not unique. Small design firms across 

the country are facing the same severe challenges and difficult 

choices. But America’s architects believe that this economic crisis 

presents an opportunity not only to build but to build better. The 

AIA is launching a new campaign to bring about both short- and 

long-term recovery to our communities with programs that invest 

in our infrastructure and the built environment. 

Our plan, which is available at AIA.org/rebuildandrenew, focuses 

on five key areas: Making financing available for design and construction project; providing needed financial relief and access to affordable short-term credit to small businesses; making tax policy 

work for recovery and beyond; improving our Nation’s infrastructure and built environment; developing incentive for a new sustainable economy that will save jobs. 

With these incentives the AIA is proposing a number of policy 

ideas that, if pursued by Congress, will assist architects, their 

small business firms, and the Nation as a whole to rebound from 

this economic crisis. 

In conclusion, small business does not want a bailout. We want 

access to low-interest or no-interest loans to bridge the economic 

5 

downturn to help fund operational costs. We want relief from the 

skyrocketing premium increases of health insurance. We want tax 

incentives for people to build, buy, and renovate their homes and 

businesses. We want Congress to hold accountable the recipients of 

billions of dollars of stimulus money to ensure it reaches the local 

marketplace as it was intended to do. 

These ′′wants′′ by small business are not a stimulus package. 

They are an investment in the economic foundation of the country. 

My fellow architects and I are happy to utilize our knowledge and 

experience to work with you in creating realistic and attainable solutions to help small business recover and prosper. It is vital to the 

healthy future of our profession, our people, the healthy future of 

my firm, and the economy. 

So I thank you for the opportunity to participate today and tell 

you a story about our firm. Thank you. 

[The statement of Mr. Jacob is included in the appendix.] 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Jacob. 

Our next witness, Mr. Joe Robson, is the President of the Robson 

Companies, a builder of residential and commercial properties in 

Broken Arrow, Oklahoma. Mr. Robson is testifying on behalf of the 

National Association of Home Builders. The National Association of 

Home Builders has represented more than 800 State and local 

home builder associations since its founding in 1972. 

Welcome, sir. 

STATEMENT OF JOE ROBSON 

Mr. ROBSON. Great. Thank you, Chairman Vela ́zquez, Ranking 

Member Graves, and members of the Committee. 

The current housing recession is the worst since World War II. 

Housing starts are down 80 percent since January of 2006, and virtually every housing indicator reached an all-time low in the last 

2 quarters. And while there are glimmers of hope that the 3-year 

decline in housing may have stabilized, there remain significant obstacles to recovery, including excess inventory, foreclosures feeding 

this inventory, continued downward pressure on home prices, constricted mortgage lending and low appraisals, and difficult financing terms and limited availability for acquisition development and 

construction loans. 

I am pleased to report that the First-Time Home Buyer Tax 

Credit is having a demonstrably positive effect on housing demand. 

NAHB estimates that 200,000 additional home sales are attributable to the tax credit and resulted in an increase of 187,000 jobs. 

And as the November 30th deadline for the program approaches, 

NAHB urges extending and enhancing the tax credit. 

In particular, NAHB recommends extending the sunset date 

until December 1, 2010, and expanding the eligible buyer definition 

to include all purchasers of a principal residence. We estimate that 

these enhancements would increase home purchases by 383,000 in 

the next year, increase housing starts by 82,000, and create more 

than 347,000 jobs. 

On the topic of appraisals, there are increasing complaints of real 

estate appraisers using foreclosures and other distressed sales as 

comparables in determining values of single family homes without 

properly adjusting the comparable property values to reflect the 

6 

relative condition of the properties. Further appraisal problems 

have been exacerbated due to the unintended consequences that resulted from the implementation of the Home Valuation Code of 

Conduct, which has called into question the experience and qualifications of appraisers. NAHB strongly supports the intent of the 

HVCC. However, we also strongly believe that additional clarifications and reforms are needed in order for the HVCC to work effectively. 

Further, Federal agencies and those that establish appraisal requirements for home mortgages should require appraisers to obtain 

sufficient information and make appropriate adjustments in the 

prices of comparable sales. 

Another persistent problem for home builders is the availability 

of credit for acquisition, development, and construction, or AD&C 

loans. Banks increasingly refuse to extend new AD&C credit or to 

modify outstanding AD&C loans in order to provide builders more 

time to complete their projects and pay off these loans. As a result 

more builders are being required to put up additional equity or collateral due to reappraisal of collateral or reevaluation of the loan. 

Since most home building companies are small businesses and do 

not have the capacity to meet significant equity calls, the result is 

often foreclosure on a loan that had been performing. This places 

more foreclosed properties on the market, blunting the housing recovery. NAHB is urging Members of Congress to tell the Federal 

banking regulators to put a halt to these short-sighted practices. 

Lastly, I want to raise a recent development having to do with 

the Small Business Administration’s ARC program. As you know, 

NAHB testified in support of this program in front of this Committee this past summer and at that time we were hopeful that 

ARC would help many of NAHB’s members to stay afloat. Unfortunately, home builders are being told by bankers and SBA field staff 

that their businesses are not eligible for this assistance. We urge 

the Committee to encourage the SBA to revisit the way it views 

home builders and to reconsider the eligibility requirements for 

ARC program loans. 

Thank you. I look forward to answering questions. 

[The statement of Mr. Robson is included in the appendix.] 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Our next witness, Mr. Michael B. Pryor, is the President and 

CEO of Lenders Title Company in Little Rock, Arkansas. Mr. Pryor 

is also the President of the Board of Governors of the American 

Land Title Association. ATLA was founded in 1907 and is the national trade association of the abstract and title insurance industry. 

Welcome. 

STATEMENT OF MICHAEL B. PRYOR 

Mr. PRYOR. Thank you, Chairwoman Vela ́zquez, Ranking Member Graves, and members of this Committee. I operate a title insurance and settlement agency in Little Rock, Arkansas. I entered the 

title business over 20 years ago operating with just myself and two 

employees. We truly began as a small business. 

I am currently honored to be President of the American Land 

Title Association, and it is on behalf of our many small businesses 

that I am pleased to be with you today. 

7 

At the outset, I wish to thank the chairwoman and so many 

members of this Committee for your support of America’s small 

businesses. I could call the roster of this Committee and recollect 

your individual and Dear Colleague letters of support through 

many of our most difficult times, and we thank you. 

Nowhere in the world is the creation and transfer of interest in 

real property accomplished more efficiently and securely than in 

the United States. Economic success in America is entirely rooted 

in a clear system of property rights. Individual claims of property 

interest are transparently placed in the public records and daily reviewed by members of the land title industry whose active diligence 

alerts public officials and interested parties of recording errors, 

title defects, and attempts to fraudulently cloud or impair legitimate property rights. It is precisely this work by our industry that 

allows a family to sit at a closing table to buy or sell a home. 

No matter how many simplification rules we pass, transferring 

real estate is and always will be a complex process. In my experience, there is no such thing as a normal closing or title issue. 

Every property, every buyer, and every seller add uniqueness to 

every transaction. It is a credit to the superb job of title professionals that anyone might even think the closing process is routine. 

But we regularly face well-intended regulators who, seeing the 

hammer in their hand, consider every problem to be a nail. Many 

of the frustrations of our small business members come as a result 

of unintended consequences of simplification. 

New RESPA regulations by the Department of Housing and 

Urban Development have created serious new costs. Implementation of the new regulations is frantically under way and will be 

fully required less than 90 days from now. While we still have 

issues with the new RESPA rules, we have forged a productive relationship with HUD and hope to continue a constructive and consumer beneficial dialogue. 

Last year, this Congress provided badly needed assistance to the 

real estate economy with the passage of the First-Time Home 

Buyer Tax Credit. I would be reluctant to declare its effect a boom, 

but I can tell you without that action many in our industry would 

have closed their doors. Unfortunately, the threat of closure still 

exists. In fact, unless Congress acts quickly, I believe it will be a 

very long winter for many of us. 

As you know, the real estate economy is both cyclical and seasonal. We know the cycle is down, and recovering slowly. But the 

summer season, absent the tax credit stimulus, essentially did not 

happen. The lack of summer reserves, coupled with exhausted or 

unavailable credit, has left too many of our members struggling for 

their economic lives. 

The proposal for a new regulator, such as the Consumer Financial Protection Agency, could not come at a worst time. We simply 

cannot absorb or even effectively engage in a new regulatory regime at this time, especially one with such a vague and overreaching mission. America’s small business owners do not have HR 

and IT departments. They do not have in-house general counsels 

or government compliance divisions. Those hats are all worn by the 

same small business owner/manager who is struggling to comply 

8 

with existing regulations in a difficult economic time. The CFPA is 

simply ill-timed and ill-conceived. 

From my experience I know that optimism and hope are required 

traits for small business survival, and I can also say that right now 

neither is in great supply for America’s small businesses. I ask this 

Congress for three things: 

First, raise the Fannie Mae and Freddie Mac conventional loan 

limits from the current $417,000 to $625,000. This will provide 

badly needed credit availability to the move-up buyers, thereby creating a velocity throughout the real estate column. 

Second, extend and expand the home buyer tax credit to include 

all buyers of principal residences. 

And third, to provide better consumer awareness enact a borrower’s right of inspection, giving buyer borrowers a mandatory inspection period prior to settlement to review their completed closing statement. 

Again, I am deeply grateful for your time, your attention and the 

opportunity to be here. Thank you. 

[The statement of Mr. Pryor is included in the appendix.] 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Pryor. 

Our next witness, Mr. Joseph Canfora, is the owner of Century 

21 Selmar Realty, located in East Islip, New York. Mr. Canfora is 

testifying on behalf of the National Association of Realtors. Founded in 1908, the National Association of Realtors is the Nation’s 

largest trade association with over 1.2 million members. 

Welcome. 

STATEMENT OF JOSEPH CANFORA 

Mr. CANFORA. Madam Chairwoman and Ranking Member 

Graves, I am Joseph L. Canfora, broker and owner of Century 21 

Selmar Realty in East Islip, New York. I am pleased to appear 

here today on behalf of the National Association of Realtors. I serve 

as an elected volunteer officer of the organization as the Regional 

Vice President of New York and New Jersey and Pennsylvania. 

Our oral testimony will focus on the First-Time Home Buyer Tax 

Credit and the challenges our members and consumers alike are 

facing as new appraisal standards are being put into place. Our 

written statement will also include discussion of challenges in Federal Housing Administration, FHA, programs. We ask that the 

written statement be entered into the record. 

Chairwoman VELA ́ ZQUEZ. Without objection. 

Mr. CANFORA. The tax credit has been a tremendous success. 

Over 70 percent of the purchasers coming into my company have 

been due to the tax credit, compared to 40 percent last year for 

first-time home buyers. So we have seen a tremendous increase. 

The demand to purchase and close by the tax cutoff date of November 30th is the prime reason buyers are entering the market. Properties that title cannot be delivered by November 30th are not even 

being considered for viewing. 

Right now in our area the tax credit is virtually shut off. And the 

reason I say that is because if we purchase a house today it takes 

normally 60 to 90 days to close. So we are into October already so 

we have seen a tremendous—we have seen a decline of people comVerDate Aug 31 2005 11:44 Dec 14, 2009 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\52889.TXT DARIEN
9 

ing into the office. Nobody is going after the tax credit anymore because in their mind it is over. So it has to be addressed. 

I spoke with many of our closing attorneys who all virtually gave 

the same scenario. At closing buyers are asked what prompted 

them to move forward and 90 percent of the time it was because 

of the tax credit being offered. 

I make a point to question realtors throughout the Long Island 

area and the Pennsylvania and New Jersey area, and the buyer activity is due only to the tax credit. So this is important. 

Personally I would like to see the tax credit to be given to all 

buyers. The tax credit must be entered into the—must be extended 

to the end of 2010. 

I would like to talk about appraisal situations. It is a very stressful situation when people are selling and buying. Most often home 

sellers need every dollar from the equity in their home to be able 

to purchase their new home. They could be moving to a retirement 

community or they could be moving their families to either a smaller or larger property. Many of our sellers, due to the increase in 

the cost of ownership, come to a point where they have to sell their 

homes. 

Buyers are also in a very stressful situation where every dollar 

counts. When we have an appraisal come in and the appraisal is 

not accurate, then there goes the sale for both parties. I would like 

to give an example. I see that time is coming on me. 

We just had a veteran purchaser come into the office to purchase. 

The veteran offers 100 percent financing. The house went to contract for $335,000. It appraised for $315,000. The veteran purchaser was turned away from purchasing the house. The house was 

truly worth every penny of the $335,000. The appraiser did not 

come from the area. The comparables used were wrong. 

And we had another situation, very similar situation, that happened in Massapequa, where the appraiser came from the Brooklyn 

area, and we are in Long Island. And like we wouldn’t know the 

Brooklyn area, they would not know Long Island as well. The appraisal was just the opposite. We sold the property for 260- and the 

appraiser brought it in—and it was worth 260- and 270-, and it 

was brought in for a very high amount. You can say, gee, why am 

I saying that it was a high amount? What is wrong with that? 

Well, the problem is that it is not accurate and the appraisal 

should be correct and each appraisal is important. 

I would like to ask Congress to pass language imposing 18 

months mandatory on the HVCC. Thank you. 

[The statement of Mr. Canfora is included in the appendix.] 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Canfora. 

Next witness is Ms. Pamela Volm, the owner of Annapolis Contracting, located in Annapolis, Maryland. Annapolis Contracting 

provides residential and commercial framing in the Baltimore and 

D.C. area. The firm works with national home builders as well as 

local contractors. 

Welcome. 

STATEMENT OF PAMELA VOLM 

Ms. VOLM. Thank you, Chairwoman Vela ́zquez, Ranking Member 

Graves, and members of the Committee for giving me the opporVerDate Aug 31 2005 11:44 Dec 14, 2009 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\52889.TXT DARIEN
10 

tunity to be here today. It is a privilege to help provide you with 

a firsthand perspective on the housing market that goes beyond the 

statistics as we as a Nation struggle to recover from the worst economic crisis since the Great Depression. 

My name is Pamela Volm, and I am the owner of Annapolis Contracting. I am just located up the road. It was a short trip for me 

from Annapolis. I have been in the construction business since 

1992. I founded my company in 2003, and we specialized in framing multifamily housing in the Maryland area until the downturn. 

Our small company started out with 31 employees and at our 

peak we grew to 37. We all worked together on numerous job sites 

each year. Approximately 95 percent of our workload was residential construction. The remaining consisted of light commercial. Our 

employees include foremen, carpenters, carpenter helpers, laborers, 

estimator, office manager, and a safety director. We also employed 

numerous framing crews. 

When the bottom fell out of the housing market in 2006, Annapolis Contracting went into survival mode. The multifamily work 

that had grown the company was hardly available. We began to 

build single family homes. We reached out to the commercial general contractors we were currently working for in search of replacement work. In 2007 our residential framing as a percentage of our 

business had dropped from 95 percent to 85 percent. In 2008, it 

dropped to 73 percent. And this year we are at about 68 percent 

and we will do about 50 percent of the work that we did in 2005. 

Our jobs dried up in the residential market. We lost about 20 

employees. The framing crews that we once employed went from 12 

to 16 men crews to 4 to 5 men. Clients canceled jobs, condensed 

their subcontractor base. Banks pulled funding, and the small but 

successful firm that we had built over the past 6 years faced the 

critical question of whether we could survive. 

We were forced to lay off another 17 employees and by the time 

2008 came to a close many small businesses like mine were fearful 

that they would not make it through 2009. While we started this 

year fearing for our livelihoods, in March the First-Time Home 

Buyer Tax Credit gave oxygen to our ailing residential marketplace. The passage of the tax credit represented the proverbial light 

in the darkness as it jump-started the market, pulling buyers off 

the sidelines and getting capital flowing in this critical segment of 

our economy. 

We started to see more housing starts from our home builders. 

It was really a welcome sign. It is by no means a full recovery for 

our company, but it is a sign that things are starting to turn 

around. I feel and my employees feel, even our customers feel, a 

certain momentum driving us back to a more stable economic footing. 

As of today, it seems like the worst may be behind us. But as 

those of us who work in the construction business know, winter is 

the toughest of times. I cannot imagine a worst time for the ending 

of the $8,000 tax credit. 

We are rebuilding and the growth of our small company does 

look possible again. My story is not unique. There are thousands 

of small businesses over all the country from builders, retailers, 

manufacturers, to landscapers, who are finally starting to feel that 

11 

same momentum as the wheels of their company start turning 

again. 

We know we are not out of the woods, but the First-Time Home 

Buyer’s Tax Credit gave us all a glimpse of economic security. We 

hope that anecdotal stories like mine help you to see beyond the 

facts and figures. But it should also be noted that our anecdotal experience is supported by those same studies and reports released 

from the housing market that will likely provide you evidence for 

the path ahead. 

Last week, Dr. Kenneth Rosen of the Haas School of Business at 

Berkeley released a study providing quantifiably that the tax credit 

was successful in jump-starting the industry. He found that the tax 

credit has accomplished one of the most important tasks in getting 

the market moving again: Reducing the supply of homes that are 

for sale. The inventory of for-sale homes priced less than $300,000 

has decreased by 26 percent, meaning not only is the supply moving again but given the price of the homes that are being sold, 

America’s working families are using that tax credit. 

Thank you for the time. 

[The statement of Ms. Volm is included in the appendix.] 

Chairwoman VELA ́ ZQUEZ. Thank you, Ms. Volm. I would like to 

address my first question to all the panelists. 

Recently there have been some encouraging signs in the housing 

market. In fact, home prices have been increasing on a month-tomonth basis. Do you believe the recent price increases can be attributed to the first-time tax credit, Mr. Jacob? Or if you believe 

that there are some other factors that should be factored in. 

Mr. JACOB. I think that that has somewhat of a factor in it. I 

don’t think it is ′′the′′ factor. I think it is giving an opportunity to 

young people—and I hire a lot of young people out of school—to 

have an opportunity to go and buy a home. And we are also looking 

at, in terms of what we are doing in Tampa, the urban environment where it is more high density urban living and those kinds 

of people are being given an opportunity to be in that environment 

as a first-time buyer with a condominium or a townhouse in an 

urban environment. So I think it is spurring it on along with other 

factors, but I think it is generating some optimism, which I think 

is very important. 

Chairwoman VELA ́ ZQUEZ. Mr. Robson. 

Mr. ROBSON. I don’t think it is any coincidence that the timing 

of home sales and stabilization of home prices occurred at the same 

time that the $8,000 tax credit came into being. I think it is a primary driver. And actually if you look at some of the recent data— 

maybe it hadn’t been published yet for September and that sort of 

thing—but you will see a leveling off of sales. Because like the 

other panelists have said, you cannot sign a contract today and 

take advantage of the $8,000 tax credit. The housing recovery is 

very, very fragile, and I am afraid without the $8,000 tax credit we 

could slip back very quickly. 

Mr. PRYOR. I am not familiar with the statistic and its genesis, 

so I can only relate my personal experience in response to your 

question. And that is that I don’t see the price increasing going on. 

This is a very narrow range of—in our marketplace it is a very narrow range of stimulus that has taken place and we haven’t really 

12 

see it move throughout the column as it needs to because of credit 

availability in the upper ends of the market. 

I do think that coupled with the opportunity to increase the conforming loan limits, it is a very important step to increase and extend the tax credit and provide that credit availability through 

Fannie and Freddie to all home buyers. 

Mr. CANFORA. The tax credit—when the tax credit went into effect, we saw immediate increase in activity. It was night and day 

that was the difference. And now we see it turned off. As far as 

prices are concerned, what we didn’t see was continuing declining 

of prices. Had there not been that tax credit put in place, I don’t 

know where we would be. Prices still would be constantly falling. 

Ms. VOLM. I called numerous of our contractors that we build for, 

builders—national builders as well as the local builders that we 

build for, and in the communities that we have that are the firsttime home builder communities we have seen a great increase in 

starts in those communities since the tax credit was started. 

I had several of them call me because I had asked for statistics 

or numbers and they said that—these were communities that we 

were building that had really kind of leveled off, there wasn’t a lot 

of activity. And they actually see movement in these. We have a 

lot more starts in those first-time home buyer communities. 

Chairwoman VELA ́ ZQUEZ. Mr. Canfora, the percentage of home 

loans in foreclosure has been rising rapidly since 2006. How do 

foreclosed properties affect a local real estate market? And have 

the recent measures taken by the administration helped slow foreclosure rates? 

Mr. CANFORA. Yes, I feel they have. Whenever you have foreclosures and short sales in any geographical area, it does have a 

negative impact on house prices. People look to buy the cheapest 

possible house they can get. 

But here again the tax credit—without the tax credit being in 

place, I think it would have been worse. I really do. And we really 

need to see it brought back and extended to 2010. 

Chairwoman VELA ́ ZQUEZ. Ms. Volm, we have conducted a lot of 

hearings here since we have been dealing with the Recovery Act, 

when we were drafting it, regarding the tightening of credit and 

the lack of access to credit for small businesses. And while so many 

industries have been faced with the credit crunch, the real estate 

sector particularly have been hit hard. Has your business found it 

difficult to obtain credit? 

Ms. VOLM. We haven’t had a need to obtain credit. We have been 

positioned very well, so—and had planned for and have worked 

through this downturn so far, but I know firsthand that we have 

had numerous jobs that we have contracted for ready to start and 

the credit for the jobs or the financing for the jobs has fallen out. 

To the point, Madam Chairman, where we had moved equipment 

to the job site and were informed that it wasn’t going to start. 

Chairwoman VELA ́ ZQUEZ. Would any of the other witnesses like 

to comment on the question about obtaining credit in your industry? 

Mr. ROBSON. I would be happy to. It is virtually nonexistent as 

far as construction loans are concerned. The reality is in what, late 

2007, coming into this downturn, the regulators implemented the 

13 

commercial real estate concentration guidelines. That has exacerbated the ability to borrow money at this point where we are trying 

to recover. 

We have builders that are ready to build and they can’t get financing. They have development loans. They have sold all of their 

inventory but they can’t replace their inventory because they can’t 

get a construction loan to replace the inventory that have already 

sold. 

Chairwoman VELA ́ ZQUEZ. What strategies have you employed to 

cope with this crisis? 

Mr. ROBSON. We have gone and begged to the regulators and we 

are pleading with Congress maybe to help us out, because we are 

not going to see a recovery, especially from small business, because 

they rely on credit, especially from the banks around the country. 

Chairwoman VELA ́ ZQUEZ. Thank you. Mr. Graves? 

Mr. GRAVES. Thank you, Madam Chair. I have got—there are a 

lot of questions back up on this side. If it is all right, I will reserve 

my time and pass to Mr. Thompson. 

Chairwoman VELA ́ ZQUEZ. Mr. Thompson. 

Mr. THOMPSON. Thank you, Madam Chairwoman, Ranking Member. 

Mr. Jacob, could you please—you talked about the impact of the 

stimulus. Could you elaborate further on what could have been 

done to make the stimulus more effective for smaller firms? 

Mr. JACOB. Yes, I can give you an example. We are going after 

a stimulus project right now, a GSA project in Gainesville, Georgia, 

a small courthouse renovation project. One of the problems is that 

the money that has been set aside they have not been able to figure 

out the exact amount yet or how to budget it with what they want 

to do with the project. So we were technically awarded this project 

3 months ago, but we were told it is probably going to be 6 or 7 

months before they finally get it under way. 

So the issue is not so much as the money coming down; it is how 

quickly we can get it acting the way it should be into the marketplace. And that is an example of what we are personally experiencing. If we had that project right now, it would certainly give 

some relief to us financially and we could have kept a few people 

working. It was a nice project for a firm our size. 

Mr. JACOB. But that is a good example of what we need. What 

I would like to see done is just how can we get that money quicker 

into the marketplace? And it has been coming. 

Mr. THOMPSON. Kind of following up with that personal experience you just had, or maybe others, what type of paperwork, what 

kind of reporting requirements has that been, and has that been 

easy to comply with? Is it a fairly easy process to cut through? 

Mr. JACOB. It is not a hard process, it is an arduous process. I 

mean, it takes time to do it. So you have to look at that, at what 

it does to your profitability on a project as you are doing time management on a project. It is more paperwork, but it is not hard paperwork, it is just more. And you have to make sure that you have 

all your numbers correct, from our side, of what we are doing with 

the contract portion of the stimulus money. But it is a time issue. 

Mr. THOMPSON. Okay. Thank you. 

14 

Mr. Robson, in your testimony you stated that the sale of an additional 200,000 homes is attributed to first-time homebuyers’ credit. Is it possible to estimate how many of these buyers accelerated 

their purchase to receive their credit or would not have purchased 

at all without it? 

Mr. ROBSON. I think those estimates are additional that would 

not have. I think those are the additional sales that would have 

happened without the tax credit 

Mr. THOMPSON. Okay, very good. 

Now, you expressed support for monetizing the credit. Would you 

explain why this, and why you feel it is important? 

Mr. ROBSON. I think any time you can help, especially with the 

mortgage criteria the way it is now, obviously for first-time homebuyers, the down payment is the most difficult, you know. But 

monetization allows them to do it. There have been several States 

that have done it, and they have actually seenan increase in sales 

because of it. I think it is proven. FHA has certainly come out and 

helped create that. But it is a proven stimulus to help people come 

up with the down payment in order to buy a home. 

Mr. THOMPSON. Okay, thank you. 

Mr. Pryor, how would the borrower right of inspection, that you 

made reference to, protect consumers and provide better consumer 

awareness? And how does this help the housing sector? 

Mr. PRYOR. The transparency of it is enormous. A family coming 

to a closing table that has not had advance notice of what their 

closing costs are going to be, or even how much money they are 

going to have to bring to the table, because of some delay in receiving closing instructions and the last-minute preparation of the settlement statement, it creates confusion in the marketplace and dissatisfaction as people leave. So the confidence factor is impaired in 

an enormous way. That is an outstanding and very important way 

for consumers to regain confidence in the process, and once they do 

that, stability will ensue. 

Mr. THOMPSON. Thank you. 

Mr. Canfora, what is the average amount of time a closing is delayed since the inception of the Home Valuation Code of Conduct? 

Mr. CANFORA. Well, it can be delayed—to canceled completely. 

We are having appraisals come in inaccurate. We have to then go 

out and question them. So the question is just absorbed. I would 

say anywhere from the transaction falling apart to at least 4, 4 

weeks, you know, as far as delay is concerned. 

But remember, when somebody gets an appraisal that is not correct, it is a negative feeling on the house that they are buying. So 

with that, they are tarnished. And that is what we are seeing; we 

are seeing transactions falling apart. 

Mr. THOMPSON. Thank you. I yield back, Madam Chairwoman. 

Chairwoman VELA ́ ZQUEZ. Ms. Clark. 

Ms. CLARKE. Thank you, Madam Chairwoman, Ranking Member 

Graves, and thank you to our panelists for coming to discuss this 

very important issue with us. I am pleased that we are discussing 

expanding this important first-time homebuyers’ tax credit. 

It is no secret that the housing sector’s continued weakness is 

causing a great deal of pain out there. With 9.8 percent unemployVerDate Aug 31 2005 11:44 Dec 14, 2009 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\52889.TXT DARIEN
15 

ment and rising, we need to explore all options available that will 

stimulate economic activity to put our people back to work. 

I believe it is important to be supportive of small businesses that 

benefit from the resurgent housing sector. The increased demand 

that will result from an extension of this credit will have positive 

effects on economic activity across many sectors. There are a slew 

of options on the table to strengthen this credit, and we will be 

studying all of them very closely. 

At a minimum, I think we should give deep consideration to extending the credit for at least another full year, and also to increasing the credit’s value. Those that would criticize increasing the 

credit’s value because of the revenue cost to Treasury would do 

well to remember that increased activity in the housing market 

will result in increased activities elsewhere, increasing government 

revenues ultimately. 

Perhaps we might explore a credit to incentivize purchases in 

areas most affected by high foreclosure levels and take a look at 

adjusting the income eligibility for the credit. 

As I said, there are a number of options available to us. Let me 

be clear; whatever we choose, we should study these options and 

make our decisions in an expedited fashion. People are hurting out 

there, and the extension of this credit would really be helpful. 

I look forward to working with my colleagues to act on this extension so that we can provide a shot in the arm to our economy. 

I want to thank you, Madam Chair. 

I have a question for you, Mr. Jacob. In your statement you say 

that the crisis is deeper and more profound than either you or your 

peers can remember, and it will take more than just a stimulus to 

help bring small businesses like yours back from this challenging 

place. 

I personally think we need to wait for the rest of the 60 percent 

of the stimulus dollars to come down the pipeline. But generally, 

do you feel that the Federal Government needs to be more active 

in helping small businesses? And do you think more Federal Government resources can be devoted directly to supporting small businesses? 

Mr. JACOB. Yes, I do. I think there are a couple of things. One, 

as I discussed earlier about trying to get the stimulus money faster 

into the marketplace so it will affect more people. Secondly, I would 

like to look at how the Small Business Administration can provide 

short-term bridge loans at very low interest rates that can be paid 

back at a later date, a pushback date, so that businesses like mine 

can have enough money to make our expenses and get through 

this. And thirdly, it is getting the lending industry, the people who 

receive stimulus dollars, to lend that money back into the private 

sector so we can stimulate projects going on. 

Chairwoman VELA ́ ZQUEZ. Will the gentlelady yield? 

Ms. CLARKE. Yes, Madam Chair. 

Chairwoman VELA ́ ZQUEZ. Mr. Jacob, when you mention the 

Small Business Administration providing bridge loans, do you have 

an average number of the size of the loan that will be helpful? 

Mr. JACOB. I could probably tell you that—I can tell you what my firm would need. My firm probably needs between $25- and 

$35,000 a month right now in a bridge loan for expenses, based on 

16 

the revenues we have, to keep paying our people. I want to keep 

salaries as high as you possibly can without having to cut more 

people. But that would be an example of what you would have. And 

as we see movement in the economy, I am hopeful that there is 

going to be more revenue coming into our firm. But at this point, 

that would be the number. 

Chairwoman VELA ́ ZQUEZ. Would the gentlelady continue to yield? 

Ms. CLARKE. Yes. 

Chairwoman VELA ́ ZQUEZ. So the Small Business Administration 

has a loan program that will provide a $35,000 interest-free loan, 

and the person will have up to 5 years to start paying it. Did you 

hear about that program? 

Mr. JACOB. I think one of the things that we haven’t done a good 

job on is getting that information into the marketplace for those of 

us who don’t utilize those resources as small business. And how do 

we get that information out would be my question; better communication in that regard. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Ms. CLARKE. Just very quickly, my question is to Ms. Volm. I believe that the construction sector is one of the most dynamic and 

effective for small business and job creation. Do you think that the 

Federal Government can do more to be supportive of firms in the 

construction sector? And what are your observations in that regard? 

Ms. VOLM. I think that the government has done a lot to support 

us. In Maryland, we have some programs that are available for 

women-owned businesses like mine, or minority-owned businesses, 

that have helped in the construction industry. 

I am not quite sure what else they could do. We are seeing so 

many of my friends, so many companies that have folded and gone 

out of business and have lost employees. When you look at this tax 

credit, this $8,000 tax credit, and you realize the value of the housing industry, you know, it is such a mover of this economy. The 

people that it affects, from architects, designers, carpenter contractors, HVAC, plumbing, all the manufacturing, it is such a mover 

of our economy. What would help is let’s extend this tax credit. 

Let’s get people out here buying houses. Let’s get people moving in 

this market. This is something that makes a huge difference to all 

of us. 

Trucking. We have to get these things to the houses, to the developments. We need that. 

Chairwoman VELA ́ ZQUEZ. Time has expired. 

Ms. CLARKE. Thank you, Madam Chairman. 

Chairwoman VELA ́ ZQUEZ. Mr. Luetkemeyer. 

Mr. LUETKEMEYER. Thank you, Madam Chairwoman. 

Mr. Robson, during your testimony you talked about the number 

of homes that are in inventory out there, that you have been able 

to bring them down as a result of the tax credit. Can you give me 

an idea of how many excess homes we have in America right now 

that we need to get rid of? 

Mr. ROBSON. Specifically, I have heard anywhere 2- to 3 million. 

The problem is the pipeline kind of keeps filling. 

17 

Mr. LUETKEMEYER. What is the normal amount of inventory, let’s 

say, over the last 10 years? What was the average inventory on 

something like that? 

Mr. ROBSON. The average inventory is around 6 months; so probably around 1 million. 

Mr. LUETKEMEYER. So we are two to three times what we normally have; is that correct? 

Mr. ROBSON. Right. 

Mr. LUETKEMEYER. If we don’t extend the tax credit, how long 

will it take to get rid of that excess? 

Mr. ROBSON. I don’t know. It is going to be a very, very slow recovery. 

Mr. LUETKEMEYER. If we implement the tax credit, how long will 

it take to get rid of the inventory? 

Mr. ROBSON. It will certainly speed it up by 2 to 3 years; a couple 

of years, I would think. And it depends on whether you are just extending it or expanding it. If you expand it, it is going to shorten 

the time frame. 

Mr. LUETKEMEYER. That was my next question. I was also getting to it looks to me like we don’t need to go out and build any 

more. We have this excess. And because of this excess, we are holding prices down; is that a fair statement? 

Mr. ROBSON. Well, it is kind of hard to—it is a very broad brush. 

Certainly in specific markets and in specific segments of markets, 

we probably don’t need to build any more. In Oklahoma, we need 

houses. So it depends on the market. 

I mean, real estate is very, very local in nature. And frankly, we 

are looking at low starts not seen since 1940. So essentially we are 

building no houses. And if you look at the new home inventory, it 

is down substantially. It is the foreclosures of existing inventory 

that is really swamping the market. It is not because of new construction, though new construction is where the jobs are. 

Mr. LUETKEMEYER. Okay. Thank you. 

Mr. ROBSON. One other thing on the expansion, what we are seeing—and I think some of the other panelists have said—you are 

seeing the most activity in the entry-level market. We are not seeing the ripple effect up that we normally see. I think probably the 

reason for that is people are underwater on their home. They are 

going to sell their house, they have no money left. 

Mr. LUETKEMEYER. Let me have a follow-up question on that. 

One of the suggestions was made here that we need to raise the 

Fannie and Freddie loan limits from 417 to 625. At what point do 

you no longer have an incentive to purchase a home? If somebody 

is going to buy a $1 million house, $8,000 is not going to be an incentive to buy that house. At what point is enough? Is the value 

of the home more than—and people that buy that level of house, 

is it no longer attractive? Is this 417 to 465, is that where we need 

to be? 

Mr. ROBSON. I don’t know where it needs to be. Certainly, I 

would be supportive of that. The problem is when you get past the 

conforming loan limits and into the jumbo market, there is no 

money. If you look at where the market is right now, FHA has 33 

percent of the market, and Fannie and Freddie have the rest. 

18 

There is no other private mortgage money which normally would 

fund those mortgages on the higher end. 

Mr. LUETKEMEYER. Okay. My time is about out here, but I have 

one other question. 

Mr. Pryor, you mentioned something about title folks are regulated. Can you tell us how you are regulated? 

Mr. ROBSON. Yes, sir. Most States regulate their title industry 

because of the locality of the State loss with regard to property 

rights; you have to know how property is transferred in a particular State, and you have State insurance departments that regulate those. In addition, at the Federal level, we have HUD under 

the Real Estate Settlement Procedures Act, that regulates the closing process. 

Mr. LUETKEMEYER. Are there still discounted premiums going 

on? 

Mr. ROBSON. Premiums are not regulated in every State in the 

same manner. Some States do allow some discounting of premiums, 

other States require the premium to be at the published rate that 

the Department sets. 

Mr. LUETKEMEYER. Because I know in the past, that is where 

some of the problems have been with title insurance folks is the 

fact that there is discounting going on; they are trying to go out 

and buy the business; as a result, that entity goes under because 

it prices itself right out of the marketplace. 

Mr. PRYOR. That clearly is an issue that is and has been addressed. And it is localized in certain marketplaces where the State 

regulation is not as encompassing, shall we say, as it is perhaps 

in some other States. 

Mr. LUETKEMEYER. What is the enforcement on something like 

that? 

Mr. PRYOR. Well, it depends from State to State in that particular environment. Now, the Real Estate Settlement Procedures 

Act does take a look at the purpose behind the discounting, if there 

were a thing of value being given as an inducement—as you were 

calling—for the referral of business. So that is a Federal enforcement action. 

Mr. LUETKEMEYER. Thank you, Madam Chair, appreciate your 

indulgence. 

Chairwoman VELA ́ ZQUEZ. Mrs. Dahlkemper. 

Mrs. DAHLKEMPER. My husband and I own a landscape, design, 

build business, so obviously selling of houses and building of homes 

is something that we are very connected with. We work a lot with 

architects, we work a lot with home builders and we work a lot 

with realtors. 

I have a couple of questions. And I guess I want to go back a little bit to the supply and demand thing, but I want to talk about 

something that is a little bit off the subject. I am from western 

Pennsylvania, and we have a lot of older communities. And what 

I see as I drive around through a lot of these older communities 

is there are a lot of empty homes and empty lots within these 

smaller communities that really are great communities, but people 

have kind of moved out. 

And as I said, this question is quite a bit off from what we are 

talking about, but if we are looking at somehow incentivizing peoVerDate Aug 31 2005 11:44 Dec 14, 2009 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\52889.TXT DARIEN
19 

ple to buy new homes or build new homes, is there anything that 

we can do to actually try to infill rather than going further and further and further out, but trying to actually rebuild our cities while 

we are doing this, or rebuild our small communities? So take a 

crack at that. 

Mr. CANFORA. You know, we talk about incentives. There are no 

two ways about it, the tax credit was an incentive and it worked 

and it is working very well. But it just stops it here. If we continue 

the incentive maybe to allow people who are purchasing homes for 

$600,000, or whatever the case may be, that will bring more people 

in the market. 

It has been very slow in the higher-priced as well. I know there 

was a question that somebody said concerning that. We have to 

take a look at incentives to help all people in all price ranges. 

Ms. DAHLKEMPER. Anybody else have an opinion on that? 

Mr. ROBSON. Yes. I think it is a wonderful idea. There are programs out there on a local level. I think Bowling Green, Kentucky 

has a great program. 

Ms. DAHLKEMPER. What is their program? 

Mr. ROBSON. It is community-based. But they have been able, 

where there are blighted homes or empty lots, the city has gone in 

and bought them, turned them over, maybe to Habitat for Humanity or some other thing, or for market houses. So infill is certainly 

important, and I think we ought to look at that. 

Ms. DAHLKEMPER. I have seen some of that on the local level in 

my area, too. But I am just wondering if there is anything that you 

think we can do here on the Federal level as we are doing these 

incentives and trying to get more people to look at purchasing their 

first home. A lot of those homes might be those infill homes in 

those older neighborhoods or in those communities. 

Mr. PRYOR. Congresswoman, this is still a credit availability 

issue, fundamentally, because if you are going to infill and remodel, 

there has to be credit availability in order to carry forward that 

purpose. And that, again, is where we come back to the expansion 

of the homebuyer credit and the raising of the credit limits to allow 

for those things to happen on a conventional basis. 

Ms. DAHLKEMPER. Mr. Jacob, did you want to say something 

about this? 

Mr. JACOB. Yes. We are big believers in that you have got to reinvest in the infrastructure of what you have, whether it is transportation infrastructure or your building infrastructure. And that 

is a perfect example of how to do it. 

We have proposed in the past looking at how do you give incentives through tax credits to people that would take an infill project 

like that on a transportation system, and if they give up traveling 

by an automobile, how can we incentivize them for using public 

transportation and invest in that public transportation so we can 

more effectively move people around the country and into communities like yours and not have to rely on the automobile. That, I 

think, is the key to the success of getting greater density and a better urban population, and those projects will happen because of 

that. 

Ms. DAHLKEMPER. I have just one other question. 

20 

Mr. Jacob, I know that some small businesses have expressed 

concern about the paperwork and reporting requirements associated with the Recovery Act contracts. And I apologize I was not 

here for all your testimony, I have another markup hearing that 

I am kind of running in between, but what has been your experience in dealing with the administrative burdens associated with 

those contracts? 

Mr. JACOB. We spoke about that earlier; but very quickly, it is 

more. It is not so much it is a difficult process, it is just that there 

is a lot more paperwork that we have to do in the accounting. 

Ms. DAHLKEMPER. Is there a way to reduce those burdens? 

Mr. JACOB. Go back to the way we normally did projects previously. The accounting of a project from my end on a contract, our 

normal process is sufficient and has been in the past with Federal 

projects that we have done several years ago. To put this on now 

just increases time, it increases our profitability. 

Ms. DAHLKEMPER. How much time would you say? 

Mr. JACOB. I would say it is probably 10 to 15 percent more time 

with my project manager on the project; not my production people, 

but my project manager. 

Ms. DAHLKEMPER. Thank you very much, I yield back. 

Chairwoman VELA ́ ZQUEZ. Mr. Westmoreland. 

Mr. WESTMORELAND. Thank you, Madam Chair. I want to thank 

you for having this hearing. 

I am a builder by trade, so I appreciate—I feel your pain, all of 

you. I have been in the framing business also. 

Let me say this. And, Madam Chair, you asked a question. There 

are builders out there right now that have qualified buyers, presale 

contracts that cannot get any loans to build a house. And so Ms. 

Volm was talking about going out on a job. Her builder may have 

told her that he had a presale, they are expecting to frame it, and 

then he can’t get the construction loan. And this is a qualified 

buyer. 

And, Mr. Canfora, I know from a real estate standpoint, when 

you sell a house and are expecting to get a commission and the 

builder can’t even get a loan to build it, it is quite bad. 

Let me say this. I hope that we will continue the tax credit of 

$8,000, but I hope we will expand it to an anytime buyer. When 

we did Cash for Clunkers, it was $4,500, and I think the maximum 

a car could cost was $45,000, which was a 10 percent tax credit or 

really go toward a purchase. An $8,000 tax credit on an $80,000 

house—and there are just not that many $80,000 houses out 

there—I don’t know what the average sales price is for a house, but 

if it is $160,000, let’s say, which is probably low, you can see that 

there is just not the same percentage there that there is for somebody in the Cash for Clunkers. So I think it needs to be to an anytime homebuyer. But that is only a small part to me that needs to 

be helped. 

It is a credit issue that we have right now. Even if the tax credit 

was $20,000 to anybody, we are not sure what it would do to help, 

because the builder might not be able to get the money to do it. 

So while I appreciate what Mr. Robson said about the inventory—and that sounds about the numbers that I have heard too— 

even if we got all those houses off the market with some type of 

21 

tax credit, we are not sure that the real estate business or the construction business would still be cranked up, because if credit is 

still frozen, it is not going to start back. 

I would like to ask Mr. Canfora another statement about the 

RESPA and the HVCC and the TILA. These are more regulations 

that are going into effect that are possibly going to slow down the 

home building business in itself. And these are just government 

regulations that are going into effect. Could you comment on those? 

Mr. CANFORA. Yes. And again, I see the need for that, and the 

discussion to revise RESPA has been going on for how many years? 

Forever. But I don’t think that this is the right time; all it can do 

is just slow down things. It certainly can’t expedite the selling process. 

Mr. WESTMORELAND. Well, I believe that we need to have consumer protection. But I have been to many real estate closings 

where the attorney hands the purchaser a piece of paper and says, 

here is the security deed. I have yet to have anybody read all the 

paperwork. So having additional paperwork there for somebody to 

sign, to me is not real consumer protection. Some of the programs 

HUD and others offer where they can go to a pre-buying session 

is much better than some of the additional paperwork that they are 

adding. 

And one other quick comment. On the HVCC, I notice you mention a part of that that concerned me—I think you or Mr. Robson, 

one did—the fact that the lender had an ownership position in that 

appraisal business.That is definitely not the way to go. 

Mr. CANFORA. Yes. And that is exactly how we see it. There 

should not be a lender having any process in the AMC at all. And 

we also feel that there should be a State regulation as we move forward. States should start regulating the AMCs of their State because there is a big difference between each State. It is not the 

same, and it does need State supervision. So we certainly would 

like to see that moved in that direction. 

Mr. WESTMORELAND. Well, I am trying to put together a piece of 

legislation now that will address some of the lending as it comes 

to the acquisition, development and construction of some of the 

community banks where we are having the most problem. And so 

I would welcome the input of any of your organizations into what 

we are trying to do. And any member, Madam Chairman, that is 

on this committee that would be interested in doing that—because 

I honestly believe until we get that addressed, this first-time homebuyer credit will be good, but it will be a very, very small part. 

With that, Madam Chair, I yield back. 

Chairwoman VELA ́ ZQUEZ. Ms. Fallin. 

Ms. FALLIN. Thank you, Madam Chair. I would like to welcome 

our Oklahoma gentleman, Mr. Robson, for his testimony today. And 

all of you, thank you for attending this important hearing. It is 

very enlightening to hear your testimony from the industries that 

you represent. 

I have a question. We have been talking a lot about freeing up 

credit and how to get the home building business and all the different industries associated with that jump-started and back on its 

feet. And we can extend the tax credit and do some things that 

22 

would encourage the continuation of purchase of homes, yet we 

talked about credit not being available. 

So a lot of you have mentioned about how the Feds have tied up 

the credit, and some of the standards and regulations and threshold levels that they put in place are hurting the credit market. So 

what would you recommend that the Feds do? What are they doing 

right? What are they doing wrong that is hurting the availability 

of credit? What would you like to see them do? 

Mr. ROBSON. Well, I think there are a couple of things. One, with 

the existing credit, they have got to help work out a loan; right now 

they are not. They are making reappraisals every 6 months, if not 

sooner, on loans. 

I will give you an example, a development loan in Tulsa, Oklahoma. Prices have not decreased in Tulsa, Oklahoma; we have actually had appreciation through this whole downturn—not much, 

but appreciation. Because of the slowing of the economy, the loan 

was revalued, and with the net present value, they went to the developers to say we want more money. Even though they are selling 

lots and the price per lot has never diminished, they are calling it 

a nonperforming loan. But you go through the whole country, and 

if you have problems in places that maybe aren’t as good as, say, 

in Oklahoma, it is even worse; homes that are ready to be built 

that you can’t build them. 

So there has got to be an easing of some credit somewhere. You 

have got to be able to look at the value of something and not look 

at other income. I mean, that is basically what a small business 

and home builder does, is they borrow the money. It is not that 

they have a CD that is going to go towards a construction loan. 

They just don’t have it, and that is what you need in order to do 

it. So there has got to be a loosening of the credit in order to move 

things along, and they have got to work out some sort of system 

in order to work out existing construction loans. 

Ms. FALLIN. Okay, Mr. Canfora. 

Mr. CANFORA. As far as commercial is concerned, it is an issue. 

Commercial properties, commercial homeowners, commercial people who own properties, a lot of their tenants are disappearing due 

to the recession. Their rent roll is not what it used to be. 

Traditionally, a commercial loan would be a loan that every 5 

years is called in, and it wouldn’t be a fixed-rate loan like residential loans are. And these commercial loans now are going to start 

hitting the market, and we are very fearful that you are going to 

see a lot of people go into foreclosure, a lot of buildings, a lot of 

property owners not being able to afford the properties anymore. 

And we have to address this, we have to do something. 

As far as the residential side, FHA has been wonderful—and it 

really has been wonderful, and we would like to see it increased. 

Fannie and Freddie products, we have to start bringing some of 

those Fannie and Freddie products back, because sometimes FHA 

doesn’t handle for everybody. And unless the financing is in place, 

there is no home sale, there won’t be a home sale. And we are kind 

of pushing people away that would want to enter the market, that 

would want to buy, but because the financing isn’t there, they are 

not. 

Ms. FALLIN. Mr. Pryor. 

23 

Mr. PRYOR. Congresswoman, I think everyone here that operates 

a business would tell you that they can design models based upon 

interest rates. Tell us what the interest rate is going to be for home 

credit and we can tell you approximately how our businesses will 

correspond to that. 

Without the government being involved in those expanded levels 

of conventional loans, the market right now is not supporting rates 

in a way that planning can be done. And that means that experienced framers or experienced title people or people that have experience, I can’t keep those people. They can’t keep their jobs because 

I can’t plan long enough ahead. Credit rates and availability. 

Ms. FALLIN. Thank you, Madam Chairman. I think my time is 

expired. 

Chairwoman VELA ́ ZQUEZ. Any other member who wishes to ask 

questions from this side? 

Well, let me take this opportunity. I think that the time couldn’t 

be better. Since there are discussions regarding extenders that will 

expire now on December 31, we will have an opportunity to share 

with the Democratic leadership, at least from my side, as to those 

extenders that should be extended or expanded in a way that could 

continue to help small businesses, especially in the housing industry. 

I want to take this opportunity to thank all of you for being here. 

You shed some light into the challenges and obstacles that are still 

there. 

So with that, I ask unanimous consent that members will have 

5 days to submit a statement and supportive materials for the 

record. Without objection, so ordered. 

Chairwoman VELA ́ ZQUEZ. This hearing is now adjourned. 

[Whereupon, at 3:30 p.m., the committee was adjourned.] 

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