The National Association of Home Builders (NAHB) has approved a new policy stating its position for improving the nation's housing finance system, a stance that calls for continued government backing of a secondary mortgage market.

At its annual convention in Las Vegas, the politically potent group adopted a posture that it believes will ensure a reliable flow of credit at the lowest possible cost "in all geographic areas and under all circumstances."

The 175,000-member organization outlined a framework that fails to specifically mention Fannie Mae and Freddie Mac, suggesting instead that "a number of entities" should be encouraged to compete in a secondary market "in a manner that creates greater innovation and efficiency."

But it still wants Uncle Sam to be involved, saying the federal government should establish a fund to guarantee the timely payment of principal and interest to investors in mortgage-backed securities. In addition, it backs a requirement that secondary marketing entities benefiting from federal guarantees should pay a fee to capitalize the fund. The federal government would incur exposure only for "catastrophic risk" beyond that covered by the fund, the statement said.

"We can't have the federal government on the hook every time some missteps occur," David Ledford, the NAHB's senior vice president for housing economics and land development, said during the NAHB's internal debate.

The new statement went through a four-day vetting process that required clearance by five different committees before it was approved unanimously by the NAHB's board of directors.

During the discussion in the housing finance and federal government affairs committees, members slaved over words and phrases to write a carefully crafted document. "We're trying to decide how to carry a dozen eggs without a carton," said Kerville, Texas-based affordable housing developer Granger MacDonald, the group's outgoing finance committee chair.

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