Homebuilders approve new housing regulation rules.

The nation's home builders applauded House passage of legislation that would strengthen the regulation of government-sponsored enterprises Fannie Mae, Freddie Mac and the Federal Home Loan Banks, while preserving their mission.

"H.R. 1401 offers a sound regulatory solution for our secondary market institutions," said Jerry Howard, CEO of the National Association of Home Builders.

"It would strengthen and safeguard the financial health of Fannie Mae and Freddie Mac, while enabling them to continue to fulfill their mission of providing affordable housing credit for millions of working American families."

The Federal Housing Finance Reform Act of 2005 was approved by a vote of 331 to 90. It would:

Incorporate a true housing focus by establishing a deputy director of mission oversight for all the housing GSEs;

Enhance the affordable housing requirements for Fannie Mac and Freddie Mac. Tougher mortgage purchase goals and a new affordable housing fund to be tied to Hurricane Katrina relief efforts during the fund's first two years would direct the housing finance entities to segments of the market that they previously have not reached;

Require safety to be the determining factor for any minimum capital increase. The regulator would be required to periodically assess the minimum capital standards and adjust levels based on such reviews;

Stipulate that there be no specific portfolio caps or directive for the regulator to reduce the portfolios of Fannie Mae and Freddie Mac. Instead, the regulator would have the authority to address safety and soundness concerns unique to each enterprise;

Ensure that program and activity approval processes are rigorous.

"This legislation represents a key opportunity to advance GSE regulatory reform. We urge all members of the Senate to pursue a compromise similar to H.R. 1461 that would address the nation's housing concerns at the same time as it assures the soundness and safety of institutions that are indispensable to our housing finance system," said Howard.