West Virginia's housing industry and its corresponding mortgage financing industry isn't recovering from the recession as quickly as other states in the country.
That was one of the primary issues discussed during a housing and economic development roundtable held Monday at the Home Builders Association of Greater Charleston's office. The meeting was made up of representatives from the Federal Home Loan Bank of Pittsburgh, U.S. Sen. Shelley Moore Capito's office, the West Virginia Housing Development Fund, Habitat for Humanity, some of West Virginia's largest banks and other groups intimately involved in building construction and finance.
"It's amazing how West Virginia is still lagging behind in the housing recovery," said Tim Cunningham, president of the Home Builders Association, as he opened up the meeting.
Throughout more than an hour of discussion, all of the invited guests discussed what they believed was holding back growth in housing construction, home sales and business financing in West Virginia, including the slumping economy, revised appraisal practices, the inability of millennials to put a down payment on a house and new regulations placed on the secondary mortgage markets after the subprime mortgage crisis that largely led to the economic recession.
While homebuilding and mortgage lending in other areas of the country have bounced back from the doldrums of the recession, West Virginia has been slower to respond.
According to the 2015 West Virginia Economic Outlook produced by the West Virginia Bureau of Business and Economic Research, the state had a little over 2,000 single-family residential home starts in the beginning of 2014. While that was up 11 percent from 2011, it still remained 70 percent lower than when home construction peaked in 2006.
Dale Oxley, the owner of Modern Home Concepts in Hurricane, said he believed there was enough capital flowing to home builders but there just wasn't enough equity available for home buyers to really lift the housing market and the corresponding construction industry. He questioned whether reforms of how to appraise homes and property have gone too far.
Many of the banking officials at the roundtable believed the regulations that were authorized as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 have gone too far.
The rules were meant to prevent mortgages and loans from being given to borrowers who can't afford the payments and then being packaged together and sold in derivative markets. But according to the speakers Monday, the rules have become so rigid that people who might be able to afford a mortgage can't be approved.
Brad Ritchie, the president of Summit Community Bank, talked about how they would have previously given out loans in the Moorefield area to interested homebuyers. But because of new rules on the qualifications of mortgages for secondary mortgage markets, the bank isn't able to provide that financing.
Leroy Conner, a vice president with WesBanco, suggested that the vetting of borrowers is now too reliant on traditional credit history checks and doesn't allow lenders to take other aspects of people's financial qualifications into account.
It is this type of credit issue that the Federal Home Loan Bank tries to solve.
Charleston's Patrick Bond, the chairman of the Federal Home Loan Bank in Pittsburgh, discussed how the federally affiliated bank, which serves lenders in Delaware, Pennsylvania and West Virginia, was working to ensure that home buyers, entrepreneurs and business owners had access to financing opportunities.
Bond highlighted the Banking on Business and Affordable Housing programs that allow the Federal Home Loan Bank to help securitize mortgages and business loans. Those programs help people, who otherwise wouldn't be able to obtain financing, to obtain loans from regional banks.
"It makes the project doable, where we would have turned them down," said Donna Sellers, United Bank's vice president and community reinvestment officer.
Frank Hinzman, Citzens Bank of West Virginia's senior vice president and chief lending officer, discussed using the Federal Home Loan Bank to help Mountain State Brewing in Thomas finance the expansion of their business.
Laura Rye, a community investment relationship manager for the federal home loan bank, said without the bank's work, many more homeowners, businesses and startups would have to go without the financing that they need.
Reach Andrew Brown at andrew.brown@wvgazette.com, 304-348-4814 or follow @Andy_Ed_Brown on Twitter.