Realtor Legislative Issues
National Association of Realtors Government Affairs
NAR Midyear Legislative Agenda
May 2009: Realtors urging Congress to move housing forward by restructuring Fannie and Freddie, make permanent FHA and GSE loan limits, expand the $8,000 tax credit, opposes any change to mortgage interest deductions for taxes, pass health care reform to cover self-employed and small business, adopt reasonable approaches to energy efficiency, and stabilize and provide liquidity for the commercial real estate market.
Expand $8,000 first-time homebuer tax credit
NAR is advocating for the extention of this program and would include all income levels (for primary residence only) and would be extended through 2010.
Mortgage Interest Deduction (MID)
The Obama Administration has proposed changing the MID allowable percentage of deduction for higher income, higher cost homes. NAR feels MID changes would have negative repercussions on the housing market, not just on higher end homes, but across the market. This would further inhibit a national economic recovery.
Climate Change/Energy Bills (HR 2454, HR 2998)
Houses Passes Climate Bill with Energy Labeling Exemptions - NAR Legislative Analysis The American Clean Energy and Security Act 20001
The U.S. House of Representatives approved H.R. 2454, the American Clean Energy and Security Act by Reps. Waxman (D-CA) and Markey (D-MA). The bill, re-numbered H.R. 2998, includes NAR-supported provisions, championed by Rep. Perlmutter (D-CO), that exempt existing homes and buildings from the bill’s provisions to build upon an existing Energy Star energy labeling program.
Overall, Realtors succeeded in making a number of positive changes to the bill. Thanks to Realtors, the House-approved bill:
* Does not create a federal energy audit requirement for real property;
* Exempts existing homes and building from any federal guidelines for new construction energy efficiency information labels.
* Prohibits the implementation of any labeling during a sales transaction.
* Leaves the decision to states as to whether to require energy audits, disclosures, etc.
* Provides property owners with significant financial incentives, matching grants and tools to make property improvements and reduce their energy bills;
* Prohibits the Environmental Protection Agency from regulating residential and commercial buildings under the Clean Air Act;
* Eliminated an early proposal to allow citizens to sue over minor climate risks under the Clean Air Act; and
* Establishes green building incentives for HUD housing, including a loan program for renewable energy, block grants and credit for upgrades in mortgage underwriting.
While H.R. 2998 includes many positive changes, NAR will have additional opportunities to make further changes to address unresolved issues, such as the bill’s building energy code targets. The Senate must still pass its version of an energy and climate bill. There would be a House-Senate conference committee to reconcile differences between the House and Senate bills. The timing for a vote in the Senate is not clear as the Environment and Public Works Committee still must develop the climate provisions to “cap and trade” carbon emissions. The Senate Energy and Natural Resources Committee has approved energy provisions that are more realistic and preserve state flexibility to develop and enforce building codes. While the bill as approved by the House represents a significant improvement over the bill that was introduced, NAR will continue to work to address these issues as the legislative process continues.
NAR believes rebuilding consumer trust in the various markets is important to an economic recovery, and Obama’s proposed Consumer Financial Protection Agency offers the potential to regulate and protect consumers from fraud, predatory lending and other deceptive practices. NAR also appreciates elements of the proposal that will strengthen the national policy against mixing banking and commercial activities. This safeguard is in the best interest of consumers and the nation’s economy. Regulatory reform will be a monumental undertaking. NAR looks forward to working with our members, Congress, and the administration to craft a final product that allows for efficient, competitive, and innovative markets while providing consumers the protection they need and deserve.
NAR President Charles McMillan participated in meetings in Washington and New York to raise NAR’s concerns about the impact of the Home Valuation Code of Conduct (HVCC) on the housing market. The implementation of the HVCC is causing outcomes that are negatively impacting the real estate industry. Because the HVCC requires mortgage brokers to arrange for appraisals through third party organizations, appraisal management companies (AMCs) now have an increased role in the real estate appraisal process. A preliminary review of NAR survey data indicates that appraisers are not retained by AMCs for their competency and qualifications, but for their turnaround time and price. Our members are reporting delays in closings and canceled sales, which result in artificially low existing home sales. It is also impacting refinances where lenders require appraisals.
Future of Fannie Mae and Freddie Mac (GSEs)
At the November 2008 meetings in Orlando, the Board of Directors approved the GSE Presidential Advisory Group (PAG) “Principles for Ensuring a Robust Financing Environment for Homeownership.” The goal of these principles is to ensure there is sufficient capital to support mortgage lending in all types of markets for qualified borrowers. NAR believes that these principles require a continuing role for the federal government in the mortgage market. The new secondary mortgage market model must:
1. Ensure an active secondary mortgage market by facilitating the flow of capital into the mortgage market, in all market conditions.
2. Seek to ensure affordable mortgage rates for qualified borrowers.
3. Establish reasonable affordable housing goals so all qualified borrowers, including low- and moderate-income households, have an opportunity to realize the dream of homeownership. Affordable housing goals should not provide incentives for the institution that are inconsistent with sustainable homeownership.
4. Require the institution to pass on the advantage of its lower borrowing costs (and other costs of raising capital) by making mortgages with lower rates and fees available to qualified borrowers.
5. Ensure mortgage availability throughout the nation. NAR supports indexing conforming loan limits based on increases in median sales prices, including higher indexed limits for areas with high housing costs.
6. Require sound underwriting standards.
7. Require the highest standards of transparency and soundness with respect to disclosure and structuring of mortgage related securities.
8. Ensure there is sufficient capital to support mortgage lending in all types of markets.
9. Provide for rigorous oversight.
Permanent Increase to Loan Limits
Make permanent the current increased loan limits for Fannie and Freddie. Current loan limits (equal to 125% local area median home price, capped at $729,750) will expire December 31, 2009. With the current tight constraints on mortgage availability, lowering the loan limits only further restricts liquidity. Borrowers are finding it more and more difficult to find affordable mortgage options. Making the limits permanent at levels appropriate in all parts of the country will provide homeowners and homebuyers with safe, affordable financing and help stabilize local housing markets.
The National Association of Realtors® urged Congress to invest resources that will ensure FHA’s continued role in stabilizing housing to stimulate the nation’s economy. FHA’s market share has grown from less than 3 percent to more than 25 percent in a short period of time. NAR submitted testimony to the House Financial Services Subcommittee expressing support for increased FHA staffing and resources to keep up with this rising demand.
NAR strongly believes that any cost-savings or payment for health reform should be come from the health care arena. While NAR has a strong desire to see health reform for our members, the Association would have a hard time supporting reforms that are paid for by homeowners as the result of limitations being imposed on the current mortgage interest deduction rules.
* Health Care Reform must address the needs of the self-employed, independent contractors and small businesses.
* A “single payer” health care system in which the government pays allocates health care services should be opposed.
* Employers should not be required to offer employee health insurance programs.
* Individuals should have the ability to choose their preferred health insurance
* And options that offer choices in the scope of covered
* The nation and its health care system are best served by having all citizens covered by health insurance.
* Health care coverage and/or insurance should be made available to all.
* Health care coverage should enhance health and well being by providing preventive health services and chronic disease management services.
California Association of Realtors Government Affairs
Forced Over Withholding
When an agent closes a transaction, they are typically paid their commission by their broker. Now, the broker would need to withhold 3% of the commission and pay it to the Franchise Tax Board (FTB). Agents would still pay their normal quarterly estimated income tax payments to the FTB in addition to the withholding. When the agent files their state income tax return the following April, they will deduct the withholdings along with the quarterly estimated tax payments from their tax liability and, in theory, receive a refund for the 3% that was withheld.
SB 206 (Dutton) First Time Homebuyer Tax Credit
C.A.R. is sponsoring SB 206 which would create a first-time homebuyer’s tax credit, equal to 10% of the sale price of a home, not to exceed $8,000, for homes purchased as the principal residence of the taxpayer. This credit will only be available to individual purchasers whose income does not exceed $95,000, and married couples whose combined income does not exceed $170,000. SB 206 also provides this tax credit to anyone purchasing an REO property for a principal residence and makes the bill effective for one year from the date of its enactment.
Bill Number Pending (Author Pending) Local Property Maintenance Ordinances
C.A.R. is sponsoring legislation to address local property maintenance ordinances. This bill will make the existing statewide rule for maintenance of post-foreclosure properties pre-emptive of local ordinances and will provide an REO owner notice and opportunity to repair before fines for violation can attach. The amendments will also ensure that liability for maintenance of pre-foreclosure property follows the legal owner, and is not inherited by the foreclosing beneficiary or its agent. Finally, the amendments will modify the statutory Notice of Default or Notice of Sale recording to include contact information for the foreclosing entity’s designated property manager. C.A.R. will work to achieve a consensus with lenders, trustees, and local government on this proposal.
