Fannie Mae plans to meet tomorrow with its safety and soundness regulator about re-starting its controversial acquisition, development and construction loan purchase program, and hopes to come away with a "time frame" about when it can begin purchasing participations in residential ADC loans.

"As soon as we get an okay from the Director's office, we're going to be back in business," Fannie Mae's Wayne Curtis said at the National Association of Home Builders's annual convention in Orlando. "I'm hoping days, not weeks or months."

Fannie Mae suspended the program in July at the request of Director James Lockhart of the Office of Housing of Federal Housing Oversight, who voiced strong concerns over risk management reporting, policies and procedures and oversight. The ADC program was approved by the Department of Housing and Urban Development, which has oversight over Fannie Mae's mission, shortly after OFHEO suspended it.

Two weeks ago, the company turned in a "very thick document" to the OFHEO staff that address the agency's concerns and contains "first-rate, state-of-the-art policies and procedures," said Mr. Curtis, who is vice president for the company's AD&C and lender channel.

The Fannie Mae official did not discuss the details of the new guidelines it is proposing, but he told an NAHB finance committee meeting that they "adequately address the inconsistent and ill-conceived policies and procedures" OFEHO was concerned about.

"I'm not going to speculate," Mr. Curtis said, "but I feel really good about this. We're prepared to get back in this business."

NAHB has been pressing Fannie Mae for some time to move into ADC financing in a big way, but banks and other traditional lenders maintain they've got the market covered and Fannie Mae's presence is unnecessary. Under the original program approved by HUD, Fannie was cleared to buy participations in ADC loans where the mortgages on the dwelling units would be no greater than the conforming loan limit.

Meanwhile, the Federal Housing Administration is willing to consider backing acquisition, development and construction loans for single-family houses, according to a former NAHB president. FHA Commissioner Brian Montgomery did not mention the possibility of insuring ADC loans made to builders during his talk to a convention committee. But Dallas builder Kent Conine, a former NAHB president, said Montgomery was "intrigued" about the idea when the two met in Washington recently.

The FHA Commissioner "asked for a cost-benefit analysis," Conine said. "If we can show him how it would work and how it would benefit consumers, he said he would do a pilot."

According to the Dallas builder, Montgomery "made no promises." Nevertheless, he called the Commissioner's willingness to entertain a proposal "good news." "If we can get our nose under the tent, sooner or later we can get a full-scale program," he told a NAHB leadership committee.

Conine said he believes ADC funding is "an area where the FHA could really shine," especially in rural markets and places builders find it difficult to secure financing from conventional lenders.

Published: February 8, 2007

Use of this article without permission is a violation of federal copyright laws.

When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.