DATE	08/19/2008
TIME	10:00 - 11:00
STATION	CNBC
LOCATION	National
PROGRAM	Squawk On The Street
BROADCAST TRANSCRIPT

ERIN BURNETT, co-host:

All right, housing starts dipping to levels that we haven’t seen since 1991 when the first President Bush called the White House home.

Bob Moulton is president of Americana Mortgage Group, thinks housing could be stabilizing.  David Seiders is chief economist with the National Association of Home Builders.  Not as optimistic, says we could see weakness for the next few quarters, which would put us into 2009.

Bob, what do you mean when you talk about stabilization?  I mean, in a sense you could see that in some of the numbers.  Prices aren’t dropping as much as they were.  Is that what you mean?  Or are you being even more optimistic?

Mr. BOB MOULTON (Americana Mortgage Group President):  And when you look at where we were a year ago and you look at how the financial institutions all started to come out and started to go under.  And you look at where mortgage money was, because it was so uncertain how to price different jumbo products and conforming products.  And you look at pricing at 9 percent last year and you look at pricing right now at 6, 6-1/2 percent.

There are still transactions that are occurring, particularly in the bedroom communities to New York City and the areas where the job market is still strong.

Yes, the news is bad.  It was expected for housing starts and for building permits.  But until this continues to flush out, I think we’re going to see it stabilize.  Of course the bottom of the numbers coming out.  But I think that the numbers for pricing...

BURNETT:  Right.

Mr. MOULTON:  ...and buying a house is still at optimal time.

BURNETT:  One issue, though, for that theory, David, I’d like to get your view on, is what’s going on in employment.  As long as this economy doesn’t keep losing jobs, we could be all right, but we are losing jobs at what appears to be, from the weekly claims data, an accelerating pace.

Mr. DAVID SEIDERS (National Association of Home Builders Chief Economist):  Yeah.  I think the economy definitely is in a major slowdown phase here in the second half of the year and into early 2009.  I’ve got a couple of negative GDP quarters, end of this year, early next year.

Job market inevitably will be continuing to lose ground.  Probably we’ll get an official recession call out of the dating committee on this one.

Also, facing very difficult financing conditions not only for home buyers but for the builders as well.  I think for the housing starts, I think probably, hopefully early next year I see the bottom.  Sales activity, new home sales, stabilization before the end of the year, I think helped to some degree by the new first-time home buyer tax credit.

MARK HAINES, co-host:

Bob, I’ve seen it written and heard it said that we really can’t get out of this mortgage mess until all of the dead wood is flushed out.  Do you buy that?  Or can we start the recovery even before that happens?

Mr. MOULTON:  Well, what we’re seeing now are new sources of money emerging from savings and loans, from hedge funds, new groups of investors.  Yes, there are still a lot of bad loans that are on the balance sheets from some of your major financial institutions, and until those two meet and probably when it does flush out, you won’t see a full recovery, which might be in the beginning of next year.

HAINES:  But mortgage money is available, as you said, probably in the upscale suburbs of people who have impeccable credit.

Mr. MOULTON:  Well, we’re back to traditional lending.  The exotic products, the toxic products, the option arms.

HAINES:  It’s 20 percent down and you have to have a job?

Mr. MOULTON:  Twenty percent down, and you have to have a job.  Just like it was in the old days.

BURNETT:  It’s a ridiculously high standard.

Mr. MOULTON:  The ninja loans are gone.  The no income, no asset, no job.  I mean, they are available from very obscure lenders, but they’re very, very pricey at a point where it’s cost-prohibitive and doesn’t make sense.

But if we get back to traditional lending standards, money is still available, and there’s a lot of wealth in the generation above us.  So if the home buyer doesn’t have the money for a down payment, maybe they can get the down payment from the generation above us or even get a seller to help with financing with an additional 5 or 10 percent.

BURNETT:  All right, David.  So when you take all this commentary...

Mr. SEIDERS:  Yeah.

BURNETT:  ...into consideration, what do you think, then, about what we hear from Home Depot, which is now that they’re not seeing anything into--they said slowdown into the first half of ‘09, which is probably intentionally vague.  It could be through January or all the way through June, right?

Mr. SEIDERS:  Yeah.  Again, I think on the production side, starts probably bottom early next year with eventual fixed investment maybe a quarter later.

I think right now the financing side.  I mean, the Fannie and Freddie are absolutely critical to mortgage finance right now.  About all we really have going out there are FHA and VA, just essentially doing fine but not big enough.

But we’ve got to have solid purchase activity by Fannie Mae and Freddie Mac at reasonable rates.  And the question marks about that now are just humongous.

BURNETT:  All right.  Well, gentlemen, thank you very much.  We appreciate it.  Bob, David, thank you today for coming in.

Mr. MOULTON:  Thank you very much.

Mr. SEIDERS:  You bet.
                       
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