Voices of Real Estate
By 2014 NAR President Steve Brown
Because of NAR’s efforts and the REALTOR® Party‘s diligence, I am pleased to report that the United States House of Representatives passed the Mortgage Choice Act this past month. This bill would return many options to consumers as they shop for mortgages and other settlement services.
As a broker with affiliated companies, I know first hand how the current definition of points and fees for affiliated services in the qualified mortgage regulation has limited consumer options and healthy competition.
The opponents of the service fee cap reform say that the cap protects the consumer. This argument is based on assumptions that simply find no merit in practice. Rather the current cap can force consumers to use less than desirable title and insurance providers, at rates and/or services not as good as can be offered by an affiliate service provider.
The bill passed by the House would end the current 3% cap on fees and points paid to joint venture services and bring them under similar rules applicable to non affiliated services, such as title and insurance. Under the Mortgage Choice Act, affiliated and non affiliated service providers are treated the same, while still protecting borrows from risky loan products.
We applaud the House for listening to the concerns of consumers by passing this important piece of legislation. Now the Senate must take action.
Thank you to all — both our professional lobbying staff and our members who communicated with Congress about this legislation.
We will keep you posted on the progress of the bill.
By 2014 NAR President Steve Brown
Two hundred and thirty-eight years ago, this July 4th, a new nation was conceived, different from all others — a nation that could and would capture the imagination of the world for centuries to come…a nation that captured a dream.
As REALTORS®, we have dedicated our professional lives to helping those around us help achieve one part of the dream, the right to own property. But today, helping our fellow Americans achieve that dream is not easy.
Facing a less than robust economy, lending restrictions and growing concerns in regards to both regulatory and legislative reform, our work is challenging. It requires persistent, ongoing effort to protect the right of property ownership, and to ensure access to achieve property ownership. But I believe with all my heart, that it is our American duty to do so.
As REALTORS®, we may not serve in uniform but we serve America and her people in a profound way.
This July 4th I hope all of us would feel a sense of pride in our work as REALTORS®, and feel a sense of duty in promoting and protecting that which our forefathers 238 years ago envisioned as one of the key elements of this new nation. In doing so, we will be able to help generations of future Americans realize an important part of that “American” dream.
Have a great 4th!
By 2014 President Steve Brown
NAR recognizes that the current system for secondary mortgages is unsustainable. We fully support moving forward with legislative reform of Fannie Mae and Freddie Mac. NAR, however, insists than any specific legislative proposals must protect the interests of all consumers.
That’s why we created the Housing Finance Work Group. It will examine the reform bill introduced by Senators Johnson and Crapo. The Work Group members represent a broad sector of our association’s membership, including those who are concerned that the current legislation will have a negative impact on underserved communities.
It is vital that we have many voices in this discussion so as to develop policies that have wide support from our membership. The Work Group met in April to review the pending legislation and they already have begun to develop policy recommendations for our Leadership Team.
As the Work Group re-affirmed, NAR believes the secondary mortgage market must be reformed to protect taxpayers, yet reform must also guarantee that the government plays a role in ensuring access to credit during all economic conditions.
Therefore, we urge lawmakers to move forward on comprehensive, bipartisan legislation that will protect both taxpayers and the flow of capital to our markets including a 30-year fixed rate mortgage product.
We believe the bill introduced by Senators Johnson and Crapo is a solid starting point. It phases out Fannie Mae and Freddie Mac, but retains the federal government as an insurer of last resort, much like the FDIC is the insurer of last resort for troubled banks.
The bill continues the current conforming loan limits and a lower down payment for first-time homebuyers. It also ensures that private investors have “skin in the game” and would bear their share of any losses.
We do remain concerned that the Johnson-Crapo’s proposal may raise overall mortgage costs for consumers, and this legislation could lead to a market dominated by large financial institutions. NAR strongly supports equal and competitive access for financial institutions of all sizes.
I will have more to report in a few weeks about the progress of our Work Group and an update on the legislative discussions.
By 2014 NAR President Steve Brown
With the passage of the NAR-supported Homeowner Flood Insurance Affordability Act in early April, REALTORS® were able to help bring property buyers and owners relief from exorbitant rate shocks and potentially inaccurate rate quotes that were causing uncertainty in the real estate market.
But, the story doesn’t end there. In fact, that is only the first half. Now, the new legislation must be implemented and there are both concerns and questions that remain unanswered.
Last week, I met with David Walker. He is a Director of the National Flood Insurance Program at the Federal Emergency Management Agency.
We discussed four critical issues that need to be implemented immediately because of their importance to our members and property owners.
Implement Rate Relief
The first issue dealt with immediate and desperately-needed rate relief to home buyers by preventing an immediate jump to full-risk premiums at the time of purchase. Buyers of property will be allowed to “assume” the policies and current rates of sellers. However, to deliver this relief, FEMA must act immediately to implement this provision. I asked the director when FEMA will issue the appropriate instructions and guidance to “Write Your Own” insurance companies allowing for the assumption of current rates and policies.
The second issue we discussed was the refund provision. It is vital that refunds to property owners who paid the full actuarial premium, between July 2012 and when this new legislation was passed, happen as soon as possible.
Establish Flood Insurance Advocate
The third issue we discussed was the establishment of an office of the Flood Insurance Advocate within FEMA to help consumers with concerns related to flood insurance rates, quotes and appealing flood zone determinations. This office is an idea created by NAR, and we were thrilled it made into the final passage of the bill. Now, we want to make sure the office is established and fully funded.
Create Technical Mapping Advisory Council
The final issue requires that FEMA implement a Technical Mapping Advisory Council. It is critical to ensure the flood maps are accurate. I asked the director if they have developed a timeline to re-establish the Technical Mapping Council so it can begin reviewing and improving the accuracy of FEMA’s flood maps.
As the meeting progressed, I was struck by the fact that Mr. Miller seemed to be that rare federal government official who had a grasp of how well-intentioned policies enacted in Washington, D.C. could have negative impacts on real estate markets across the nation.
The challenge, Mr. Miller said, is to implement the law as required by Congress, while mitigating the impacts on people who can least afford expensive flood insurance premiums – low and middle-income property owners.
The other good news coming out of the meeting is that the director told me that FEMA understood the urgency to implement these provisions and are working “aggressively” to develop and circulate the appropriate guidance and information.
Still from our perspective, this new legislation does not solve the challenges created by the reauthorization of the National Flood Insurance Program in 2012. It only gradually phases in rate increases; it does not prevent them from occurring.
Because this is still a continuing issue for our members and consumers, I recently created a President’s Advisory Group to develop further recommendations about how NAR should proceed as the changes are implemented. Our concern is simple; what will be the impact on the value and marketability of properties that require flood insurance at the new rate premiums?
I promise we will keep you updated on further developments as they come out of FEMA and the President’s Advisory Group. But, for now, I am pleased to report the good news that FEMA heard our concerns and is working hard to resolve them.
By 2014 NAR President Steve Brown
Just as the winter snows melt, and spring begins to bloom, there are also signs of renewal for the Federal Housing Administration (FHA).
The White House released its fiscal 2015 budget proposal last week, and it indicates that the FHA should not need additional taxpayer funding in the coming year. This excellent news couldn’t have come at a better time. This announcement puts the FHA on the right path not only towards achieving compliance, but being positioned to cover any future losses without seeking additional funds from the federal government.
When private lenders fled the market after the 2008 financial crash, the FHA was left carrying an oversized burden. I saw this up close in my own company in Dayton, Ohio. During the depths of the Great Recession, FHA-backed loans were more than 60 percent of my affiliated mortgage company’s business. Even today, FHA-backed loans are nearly 30 percent of my book. There is no question that my business would not have survived without the FHA. In fact, the housing recovery we are now experiencing would not have happened if the FHA had not been there when times were tough.
Understandably, FHA paid a price for this commitment. It suffered financial losses and needed additional funding to cover an accounting shortfall in its emergency reserve account. For the first time in the agency’s 80-year history, the FHA drew $1.7 billion from the Treasury Department last year.
To ensure the agency does not need additional funds, the FHA made significant changes. The White House budget announcement indicates these reforms are producing positive results.
NAR continues to be a strong supporter of the FHA. We are pleased that Congress allowed the FHA to put its house in order without enacting hasty reforms that would have stalled the real estate market’s fragile recovery.
Of course, we aren’t out of the woods, yet. This is why we support needed housing finance reforms, especially the Senate’s Johnson-Crapo “FHA Solvency Act of 2013.” This bill is a strong step forward in strengthening the FHA.
But, for now, everyone across the political spectrum should welcome the news that the FHA is on the path to financial solvency. It demonstrates that the FHA’s mission of providing low cost loans to qualified borrowers—particularly low- and middle-income buyers – does not have to come at the expense of America’s taxpayers.
In his latest video, NAR President Steve Brown explains why NAR supports an extension on mortgage debt cancellation relief. Take a look.
On behalf of the entire 2014 leadership team, NAR President Steve Brown wishes REALTORS® everywhere a very happy holiday season.
By NAR 2014 President Steve Brown
I want to personally thank everyone who responded to our most recent Call for Action about delaying the changes in the new National Flood Insurance Program law. I appreciate the continued grassroots support of REALTORS® across the country who makes their voices heard on important legislative and regulatory issues, like NFIP, that impact housing and commercial real estate interests.
NAR’s fight to improve the implementation of changes in NFIP will continue to be an important priority in 2014.
Here’s an update on where things stand:
· The House has not taken a vote on the NAR-supported “Homeowner Flood Insurance Affordability Act.”
· The Senate bill has not yet been taken up for consideration by the requisite committees.
· A different bill to delay implementation for one year was withdrawn due to various objections from conservative Republicans, who do not support any delay, and Democrats who support a more costly, but longer, four-year delay.
Over the holidays, let us rest, renew and recharge so that we are ready to start a new year of REALTOR® grassroots advocacy in 2014. When Congress returns to work in January, you can be sure that NAR will be there to stand up for you.
By NAR 2014 President Steve Brown
It’s a tremendous honor to serve as the 2014 President of the National Association of REALTORS®. At our Annual Conference in San Francisco last week, I laid out my goals and direction for our Association in the coming year. For those of you unable to attend the inaugural, let me give you a brief outline of what I shared there, and what I believe we can accomplish together this year.
The goal of NAR has, and always will be, to keep the American Dream of homeownership alive by ensuring that property ownership remains accessible to all, affordable to the many, and sustainable well into the future. Fortunately, the public continues to recognize that real estate, especially residential sales, cannot be reduced to a mere transaction, no matter how sophisticated the technology. In fact, survey after survey shows increasing use of REALTOR® services.
Twenty years ago, past NAR President Bill Chee warned of a “lion coming over the hill”. He used this as a metaphor for all the forces of “disintermediation”—the Internet, technology and other entities—that could come between REALTORS® and consumers.
We have long lived in fear of that lion. Today, we need no longer fear change. REALTORS® are now the “lions coming over the hill”. We have not only weathered disintermediation, we have survived the Great Recession. Even in the age of the Internet, clients need and rely on the benefits offered by REALTORS®.
Further developments in technology will only help us to expand available information, participation and commitment from our members and real estate consumers. We will continue to pursue the latest and greatest technology for our members.
NAR will continue to adapt. One example is how we are increasingly becoming an organization that crosses borders. As we do so, our international mission must be to encourage global participation in our Association, and global membership in the REALTOR® family.
As you well know, being a REALTOR® is not just a job. Its rewards, like any profession done well, are deeper and richer than any salary can provide. Moving forward, our goal must be to continually raise the bar of professionalism through education, training and designations, as well as by our own example.
This will require a renewed emphasis on communication, both inside and outside of NAR. To be truly effective we must act and move as one body, with common vision, purpose and goals.
There are many reasons for renewed optimism. I believe the time is now for us to plant and cultivate the seeds of progress from which we will reap numerous benefits in the years ahead.
I look forward to what will be an exciting year, full of new issues, new people and new challenges. Together, we will prosper. I hope you’ll join me in making NAR an even greater organization.
By NAR 2013 President Gary Thomas
Last week I met with Ed DeMarco, Acting Director of the Federal Housing Finance Agency. We had a very positive discussion in which I reiterated NAR’s position of opposing lower conforming loan limits for Fannie Mae and Freddie Mac.
Earlier this year, NAR acknowledged the reduction of current FHA limits from $729,500 to $625,500 at the end of the year. However, we believe that further action of lowering the size of mortgages for Fannie and Freddie now would disrupt the housing finance market and negatively impact the availability of affordable housing credit.
NAR Research estimates that if the national conforming limit were lowered to $400,000, roughly 154,000 total mortgages and 49,000 purchase mortgages would have been impacted in 2012.
Many of these borrowers would not have qualified under the high minimum down payments and tight credit standards currently required by the private market. For example, one bank offered a loan to borrowers with an average credit score of 769 that required nearly a 34 percent down payment.
How many buyers have this much to put down on a home, especially first-time buyers.
Furthermore a number of changes are already in the wind. In January, many adjustments to Dodd-Frank changes will take effect, including the new QM rules. We expect the QRM rules to follow shortly after, as well as actions by the Federal Reserve.
The housing market is coming back, but its recovery is still fragile. It’s crucial that the federal government act to maintain market stability, not add disruptive and unnecessary changes at this critical time.
Many in the industry agree with us. NAR intiated the call to not lower the limits in a letter to Acting Director DeMarco September 19th and spearheaded a coalition of more than a dozen trade groups to show broad-based, grass roots support for maintaining loan limits at this time. Let’s hope our positive discussion with Acting Director DeMarco has resonance.
I believe he understands our message: Let’s enact what has already been decided. Regarding the rest, for now, just let it be.
Earlier today, NAR President Gary Thomas testified to the Senate Banking Committee about the impact a default would have on the housing market, calling it the type of event that would cause great harm to real estate’s recovery. Watch more below.
By NAR 2013 President Gary Thomas
If you’re considering how nice it would be to own a larger home, this may be the time to buy.
For the first time in history, interest rates on jumbo mortgages actually fell below the interest rate of conforming 30-year fixed-rate loans.
As REALTORS® well know, jumbo loans are those over the local limit that can vary from $417,000 to $729,750, depending on the county.
Traditionally, consumers who needed a home loan bigger than a conforming mortgage would pay a higher rate of interest for the privilege of borrowing more money—often a quarter of a percent or greater, and for a brief period it was nearly two percentage points.
But with mortgage rates much higher than a year ago and declining profits from refinances, banks have become more aggressive in pricing mortgages. As a result, it is now cheaper to borrow in the jumbo market which is currently dominated by private lenders.
With interest rates at historic lows, more buyers are willing to stretch to buy bigger properties and more buyers are able to qualify for a jumbo loan. But even non-jumbo home buyers should look into the competitive rates at banks and credit unions.
There’s no telling how long it will continue, but this unusual circumstance may offer an opportunity for REALTORS®. Think big!
By NAR 2013 President Gary Thomas
When it comes to rules and regulations, the National Association of REALTORS® must always be vigilant. We have heard your concerns about the Federal Housing Administration’s (FHA) proposal to prohibit “dual agency” in pre-foreclosure transactions.
Know that NAR is working hard on your behalf to address this issue. On September 18, I sent FHA Commissioner Carol Galante a letter expressing NAR’s concerns about the new policy. As a result, the Department of Housing and Urban Development (HUD) has delayed implementation of its proposal, which would have been implemented on October 1. This gives NAR more time to continue our dialogue with agency officials.
Under the proposed policy, the Department of Housing and Urban Development (HUD) would no longer allow dual agency agreements in short sale transactions. This is when two agents, working for the same broker, represent the buyer and the seller. It also applies to a single agent representing both parties in a short sale transaction. In either case, under current law, dual agency transactions must be disclosed in writing and accepted by both parties.
According to HUD, the new policy comes as a result of the detection of fraud and abuse in pre-foreclosure sales. However, no statistics or reports were provided to NAR, detailing short sale fraud by real estate agents. As you are well aware, REALTORS® adhere to a strict Code of Ethics. Indeed, it was the founding principle on which NAR was created.
In our view, the fact that the policy would put excessive restrictions on agents representing buyers or sellers in the short sales process will only add to delays in the process. Some large brokers have hundreds of agents across multiple offices. Under HUD’s new policy, if one of those offices lists a short sale, none of the other agents can bring a buyer to that property.
One large broker told us that in his market, there are over 2000 agents across multiple offices. His firm has buyer’s and seller’s agents work on the same transaction in more than 30 percent of their sales. In rural areas with fewer agents, those numbers are even higher.
Brokers have also expressed concerns that the policy would conflict with certain MLS guidelines and state license laws. In every state, except Colorado, dual agency is allowed, as long as it is disclosed in writing to the parties involved in the real estate transaction and accepted by them. Most states have established standards and a complaint process in the event of suspected fraud.
We believe there are other ways that HUD could address concerns about the short sale process without restricting so many real estate agents from participating in pre-foreclosure transactions.
For example, Fannie Mae allows dual agency on short sales. They recently implemented a policy that requires all properties being considered for a short sale to be listed on an MLS, according to certain specifications. They provide relevant training and contact information to report potential fraud regarding a short sale.
NAR stands strongly against fraud of any kind, but we believe there is a more effective way to solve the problem then unnecessarily restricting dual agency. Let’s not kill the patient to cure the cancer. Instead, we should take the long view: establish a national standard that most states have already adopted and crack down on violations when and where they occur.
The new Military Relocation Professional Certification helps REALTORS® hone their knowledge and skills for working with veterans and active duty military buyers and sellers to ensure that homeownership remains affordable and accessible to them. President Gary Thomas explains more in his video below.
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NAR’s 2013 Leadership Team and CEO Dale Stinton attended President Obama’s briefing on the current state of the economic recovery. REALTORS® were invited because of the critical role they played to stabilize and revitalize the real estate market. President Gary Thomas recaps in the video below.
By NAR 2013 President Gary Thomas
Although August is time for the annual Congressional recess, activity in our nation’s capital is not slowing down. We’re continuing to work hard on vital issues like tax reform, flood insurance and mortgage lending.
We are especially focused, right now, on the future of housing finance. NAR is urging lawmakers to move forward on comprehensive, bipartisan legislation that will restructure Fannie Mae and Freddie Mac. We believe it’s vital for the protection of the 30-year mortgage. In a speech last week, the President also expressed his support for the 30-year mortgage and stated his commitment to ensuring consumer access to safe, reliable mortgages.
While NAR supports the idea of reforms that protect taxpayers, we believe government plays a critical role in mortgage lending, especially when private lenders flee the marketplace, which leaves too many buyers unable to access mortgage credit.
We’ve long supported reform of the Federal Housing Administration, and I have testified twice before Congress on the issue. Our position is clear—it’s important to shore up the long-term solvency of FHA, but not at the expense of the consumers it was designed to serve.
In Congress three different bills on reforming the secondary mortgage market have been introduced.
The House Financial Services Committee passed a bill, called “the Path Act” that would increase down payments, putting homeownership out of reach for many of our customers. We oppose the PATH Act because it does not include an explicit federal guaranty—meaning no public backing. If it were to pass the 30-year mortgage may no longer be available to buyers.
A Senate bill, introduced by Senators Corker and Warner, does include the government guarantee, but we are concerned that when private capital chooses not to participate in the market the flow of credit could dry up. We will continue to express our concerns, and are working to help shape the bill.
The third bill, introduced by Senators Johnson and Crapo, focuses on ensuring the long-term viability of FHA. It would fulfill FHA’s mission of providing low cost loans to qualified borrowers—particularly to low- and middle-income buyers.
Last week, the President came out for a government guarantee, the Senate has acted, and now it’s time for the House to get on board. Members of Congress are in their districts this month, so we’re encouraging our members to visit their representatives. Let them know “Home Ownership Matters.” We expect a lot of activity when Congress returns. So stay tuned, and be ready to take action!
By NAR 2013 President Gary Thomas
REALTORS® are finally being heard, and it makes you want to jump and shout!
Today President Obama delivered the message loud and clear—Home Ownership Matters!
I’m pleased to say that our efforts to make our voices heard by the Administration have had a positive impact. The President agrees with the National Association of REALTORS® (NAR) on an overwhelming majority of the housing finance issues of the day.
In a speech at the Desert Vista High School in Phoenix, the President spoke to area REALTORS® and others about housing policy and his vision for reform of the housing finance system. In the speech, he stated his commitment to ensuring consumers retain access to the 30-year mortgage—traditionally the quickest route into the middle class—and cutting red tape so that families have access to safe, reliable mortgages.
Additionally, the President expressed support for reform of the Federal Housing Administration (FHA) and the Government Sponsored Enterprises (GSEs). He said the Administration plans to continue the phase-out of GSEs Fannie Mae and Freddie Mac, now in conservatorship. At the same time, he supports the creation of a common securitization platform to encourage investment in mortgage-backed securities. NAR agrees with the Administration’s view that any new system includes a government guarantee.
The President said he supports the historic affordability role of the FHA, which is critical to first-time homebuyers. While we support the goal of maintaining the FHA as an affordable option, NAR believes the FHA should preserve access for all qualified middle class families.
The Administration calls on Congress to approve refinance programs that provide more relief to troubled borrowers. NAR supports the government’s refinancing program, known as “HARP,” along with “bright line” standards that provide certainty to community banks selling loans on the secondary mortgage market.
While we have concerns about specific FHA reforms, protecting loan limits and keeping down payments low, we believe recent bipartisan legislation introduced in the Senate is a good place to start. President Obama made good use of the bully pulpit in stating his commitment to protecting the dream of homeownership for all Americans.
Over the past year, REALTORS® have sometimes felt like a voice in the wilderness. No longer.